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U.S. Securities and Exchange Commission

U.S. SECURITIES AND EXCHANGE COMMISSION

Litigation Release No. 20714 / September 12, 2008

Securities and Exchange Commission v. Larry W. Kerschenbaum, Case No. 08-61452-CIV-ALTONAGA/BROWN (S.D. Fla. filed Sept. 12, 2008)

On September 12, 2008, the Securities and Exchange Commission ("Commission") filed a civil injunctive action in federal district court for the Southern District of Florida against Larry W. Kerschenbaum for violating a 2004 Commission administrative order prohibiting him from selling penny stocks. The Commission's complaint alleges Kerschenbaum violated the order by soliciting investors to purchase shares in a now defunct Fort Lauderdale-based penny stock company.

According to the complaint, in June 2004, an Administrative Law Judge entered an order by default against Kerschenbaum barring him from participating in any offering of penny stock. The judge imposed the bar against Kerschenbaum based on his 2003 conviction for conspiring to commit securities fraud by agreeing to bribe brokers to artificially increase the stock price of a public company.

The Commission's complaint alleges that after the penny stock bar was issued, Kerschenbaum accepted employment with Great Cities Media, Inc. ("Great Cities"), a company purportedly in the business of producing high-definition television shows. It further alleges that, throughout 2005, Great Cities conducted a private offering of its common stock which was a penny stock. According to the complaint, Kerschenbaum participated in the offering in contravention of the penny stock bar by soliciting investors to buy the Great Cities' securities.

The complaint alleges that, in January 2008, after a five-day hearing, another District Court Judge within the Southern District of Florida revoked Kerschenbaum's probation, which included a provision prohibiting him from selling securities. The Court found that Kerschenbaum violated the terms of his probation by being part of a team that solicited investors in Great Cities from at least January to December 2005. In addition to revoking his probation, the Court sentenced Kerschenbaum to twenty-one months in prison.

The Commission's complaint charges Kerschenbaum with violating Section 15(b)(6)(B)(i) of the Securities Exchange Act of 1934. The complaint seeks a permanent injunction, a judicial penny stock bar, disgorgement and a civil money penalty against Kerschenbaum.

 

http://www.sec.gov/litigation/litreleases/2008/lr20714.htm


Modified: 09/12/2008