SEC Freezes Funds in Trans-Atlantic "Pump and Dump" Scheme
FOR IMMEDIATE RELEASE
Washington, D.C., Aug. 15, 2008 — The Securities and Exchange Commission announced today that it has obtained an emergency court order freezing the profits from an alleged $13 million international fraud involving a Seattle-area microcap company and a Barcelona stock promoter.
The SEC charged Bremerton, Wash.-based GHL Technologies, Inc., and its CEO Gene Hew-Len with issuing a series of false press releases touting the company's business dealings. The Commission also charged Francisco Abellan (also known as "Frank Abel") of Barcelona, Spain, with coordinating the scheme, sending glossy promotional mailers to more than two million U.S. recipients and unloading more than $13 million in GHL stock on unsuspecting investors.
At the SEC's request, the federal district court in Tacoma, Wash., on Thursday issued an order freezing Abellan's assets and prohibiting him from further dissipating the proceeds of the scheme - most of which, according to the SEC, he transferred to multiple bank accounts in the principality of Andorra.
Marc J. Fagel, Regional Director of the SEC's San Francisco Regional Office, said, "By flooding the market with misleading information while evading the disclosure requirements of the federal securities laws, these individuals raised millions of dollars over just a few days, while duped investors were left holding essentially worthless stock. This action continues the Commission's efforts to take the profit motive out of these schemes."
GHL (later renamed NXGen Holdings, Inc.) is an installer of GPS-based navigation equipment. According to the SEC's complaint, in early 2006, Hew-Len and stock promoter Abellan arranged for GHL to issue millions of shares of GHL stock to offshore entities designated by Abellan. In April 2006, the SEC alleges, Abellan caused the dissemination of "The Street Stock Report," a full-color glossy mailer sent to millions of U.S. addresses urging investors to purchase GHL stock quickly to see huge trading profits. Around the same time, Hew-Len issued nine press releases over a nine-week period hyping the company. Among other things, according to the SEC, the press releases made false claims about contracts with large customers, fraudulently touting millions of dollars in potential revenues.
Following this concerted promotion campaign, GHL's stock price doubled and trading volume spiked nearly 1,500 percent. Abellan and his entities sold their GHL stock holdings for profits in excess of $13 million. The stock, which reached a high of nearly $9 per share at the height of the scheme, now trades at under a penny.
The SEC's complaint charges GHL, Hew-Len, Abellan, and three foreign entities controlled by Abellan with violating the registration and antifraud provisions of the federal securities laws, and seeks preliminary and permanent injunctions, disgorgement, penalties, and other permanent and emergency relief. Pursuant to the court's order, a hearing will be held on Aug. 27, 2008, to determine whether the asset freeze will remain in place during the remainder of the litigation.
The Commission acknowledges the assistance of the Financial Industry Regulatory Authority (FINRA) in this matter.
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For more information, contact:
Marc J. Fagel
Regional Director, SEC's San Francisco Regional Office