Stephen Durland
U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 26075 / August 13, 2024
Securities and Exchange Commission v. Stephen Durland, No. 3:24-cv-02062 (N.D. Tex. filed Aug. 13, 2024)
SEC Charges Former New York CPA in Penny-Stock Fraud Scheme
The Securities and Exchange Commission today filed a complaint against North Carolina resident Stephen Durland, formerly a certified public accountant licensed in New York, for his role in an alleged $112 million pump-and-dump scheme orchestrated by Texas resident Philip Verges. The Commission previously filed charges against Verges and others on September 26, 2023, for their roles in the alleged scheme.
The SEC's complaint against Durland, filed in U.S. District Court for the Northern District of Texas, alleges that, from approximately August 2017 through September 2022, Durland prepared financial statements for three companies whose stock price and volume were artificially inflated so that scheme participants could sell their shares for a substantial profit. The SEC alleges that financial statements that Durland prepared for at least one company contained misleading statements, concealing debt-conversion terms that allowed a scheme participant to receive stock at a discount. According to the SEC's complaint, the three companies published disclosure statements on a public website maintained by OTC Markets Group, Inc., falsely stating that the companies' CEOs-not Durland-had prepared the financial statements. The SEC alleges that these false statements served to conceal Durland's significant disciplinary history, including two actions filed by the SEC and a felony securities-fraud conviction.
The SEC's complaint charges Durland with violating the antifraud provisions of Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. Without admitting or denying the SEC's allegations, Durland has agreed to settle the matter by consenting to the entry of a final judgment that permanently enjoins him from future violations of these antifraud provisions; imposes a penny-stock bar; orders disgorgement of $83,000 plus prejudgment interest of $16,196.38; and imposes a civil penalty of $230,464. The settlement is subject to court approval.
The SEC's investigation was conducted by Derek B. Kleinmann, Christopher Reynolds, and Carol Stumbaugh of the Fort Worth Regional Office, with assistance from Cristy Hart, Robert Nesbitt, Raymond Wolff, and Jason J. Lee. The investigation was supervised by Timothy S. McCole and B. David Fraser. The litigation will be led by Jason P. Reinsch and supervised by Keefe M. Bernstein.