U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 19846 / September 26, 2006
SEC v. US Global Nanospace, Inc., John D. Robinson and Julie E. Seaman, Civil Action No. 4-06CV-680-Y, (N.D. Texas, Fort Worth Division) (Fort Worth Division) (September 26, 2006)
SEC Files Suit Against Arlingtion, Tx. Company, Its Former CEO, and Former CFO; Company Settles Charges
On September 26, 2006, the United States Securities and Exchange Commission filed a civil complaint in the Fort Worth federal court against US Global Nanospace, Inc. ("USGN"), a developmental stage "penny stock" company, its former chief executive officer, John D. Robinson, and the company's former chief financial officer, Julie E. Seaman. Robinson, age 51, of Alvarado, Texas, is alleged to have violated the anti-fraud provisions of the federal securities laws by causing the Arlington, Texas public company to issue materially misleading press releases regarding the company's purported defense and homeland security products. The complaint also alleges that Robinson, USGN, and Seaman, age 46, of Granbury, Texas, violated the registration provisions in connection with the offer and sale of approximately 3.1 million shares of USGN common stock for approximately $1.4 million.
According to the complaint, between March 2003 and January 2004 (the "relevant period"), Robinson authorized USGN to issue five press releases which contained materially misleading statements about the company's supposed development and seemingly imminent sale of several products intended for defense and homeland security applications. For example, in April 2003, a press release announced that the company had received "orders" from two commercial airlines to purchase USGN's reinforced cockpit door. In fact, according to the complaint, the company had merely received non-binding letters of intent from the two airlines, neither of which ever resulted in actual sales by USGN. The complaint also alleges that during relevant period, USGN's common stock, which was quoted on the Over the Counter Bulletin Board and the Pink Sheets, rose in price from $0.10 or less to more than $1.22 per share on an average daily volume of approximately 1 million shares.
The complaint also alleges that during that during the relevant period, Robinson and Seaman publicly sold approximately 3.1 million shares of USGN common stock for total proceeds of approximately $1.4 million. The shares were issued to Robinson and Seaman in lieu of cash salary and were offered and sold pursuant to several Form S-8 registration statements filed with the Commission. Contrary to the provisions of Form S-8, it is alleged that the defendants utilized approximately $500,000 of the stock sale proceeds to fund the operations of USGN. Accordingly, the complaint alleges that the defendants violated the registration provisions.
USGN has consented to the entry of an order permanently enjoining it against future violations of Sections 5(a) and 5(c) of the Securities Act of 1933. Robinson and Seaman are also charged with violating Sections 5(a) and 5(c) of the Securities Act and Robinson is charged with violating Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The SEC is seeking a permanent injunction, disgorgement, prejudgment interest, and civil money penalties against Seaman and Robinson, and an officer director bar against Robinson.