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U.S. Securities and Exchange Commission

U.S. SECURITIES AND EXCHANGE COMMISSION

Litigation Release No. 20742 / September 25, 2008

SEC v. Ryan M. Reynolds, Desmond J. Milligan, Jason W. Brola, Timothy T. Page, Market 99, Ltd., formerly known as eCarfly, Inc., Tryst Capital Group, L.L.C., Griffdom Enterprises, Inc., Testre, L.P., and Bellatalia, L.P., Civil Action No. 3:08-cv-01687-M (N.D. Tex.)

On September 24, 2008, the United States Securities and Exchange Commission filed a civil complaint against four individuals and five entities alleging that during 2006 and 2007, they engaged in a scheme to offer and sell millions of shares of penny stock to the public through false and misleading statements, while evading the registration requirements of the federal securities laws. The alleged scheme involved the stock of eCarfly, Inc., now known as Market 99, Ltd. Named as defendants are Texas residents Ryan M. Reynolds, Jason W. Brola, and Desmond J. Milligan, and Timothy T. Page, who resides in California. Also named as defendants are Market 99, Bellatalia, L.P., a Texas limited partnership that Reynolds allegedly controlled, Testre, L.P., a Texas limited partnership that Page allegedly controlled, Tryst Capital Group, L.L.C., a Texas limited liability company that Brola allegedly controlled, and Griffdom Enterprises, Inc., a Texas corporation.

According to the complaint, Brola approached Reynolds in 2006 seeking to create a publicly-trading company which would sell used automobiles over the Internet and raise funds to operate by selling its shares to investors. Reynolds engaged Page to purchase a shell corporation and to give a controlling position in the shell corporation's stock to Milligan. Milligan became president and CEO of the shell corporation and changed its name to eCarfly, Inc. Milligan subsequently caused eCarfly to issue shares to Testre, Griffdom, and Bellatalia. Page, Reynolds, and Brola deposited the shares held in the names of the entities into various brokerage accounts and sold them to the public. The stock sales allegedly were not registered with the Commission.

The complaint alleges that, to create public demand for the eCarfly stock that Page, Reynolds, and Brola were selling, eCarfly issued numerous false and misleading press releases about its business operations, which were drafted and distributed by Milligan and Brola. The complaint alleges that, among other things, the press releases falsely claimed that eCarfly had partnerships with major national automobile dealers, that it was operating an internet automobile sales business, that it had substantial expertise in the automotive industry, and that it was opening a finance division. The press releases also allegedly made projections concerning eCarfly's revenues and the price for its stock, which lacked any reasonable basis.

The complaint further alleges that eCarfly made later unsuccessful attempts to merge with another company in the Internet automobile sales business. Thereafter, according to the complaint, Milligan and eCarfly engaged in further fraudulent acts by issuing false and misleading press releases about potential mergers between eCarfly and other companies, including an Australian company that was purportedly in the alternative fuels business, while eCarfly continued to issue stock to Bellatalia, Griffdom Enterprises, and Testre, who continued to sell stock to the public in unregistered transactions.

Milligan, Brola, Tryst Capital, and Market 99 are charged with violating the antifraud provisions of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The complaint charges all defendants with violations of the provisions of Sections 5(a) and (c) of the Securities Act of 1933, which prohibit interstate offers and sales of securities unless a registration statement is filed or in effect with the Commission. Reynolds, Page, Griffdom Enterprises, Testre, and Bellatalia are also charged with violating Section 15(a) of the Exchange Act, which prohibits persons from acting as brokers or dealers without registration with the Commission. The Commission seeks permanent injunctions against all defendants, an accounting of stock sales proceeds, disgorgement of ill-gotten gains, and civil penalties. The Commission also seeks penny stock bars against all defendants except Market 99, and officer-and-director bars against Milligan and Brola.

SEC Complaint in this matter

 

http://www.sec.gov/litigation/litreleases/2008/lr20742.htm


Modified: 09/25/2008