U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 20979 / March 30, 2009
Securities and Exchange Commission v. CyberKey Solutions, Inc. and James E. Plant, Civ. Action No. 07 1084 (CMR) (E.D. Pa, filed March 20, 2007); Crim No. 07-375 (E.D. Pa.)
CEO receives 97-month sentence for promoting stock touting a bogus Homeland Security deal and ensuing cover-up
The Securities and Exchange Commission today announced that on March 23, 2009, the Honorable Norma L. Shapiro sentenced James E. Plant to serve 97 months in federal prison for securities fraud, making false statements to the SEC, witness tampering, and obstruction of an agency proceeding, charges to which Jim Plant pled guilty on June 30, 2008.
Plant was arrested on March 13, 2007, in St. George, Utah, by agents of the Federal Bureau of Investigation's Philadelphia Economic Crimes Squad and the United States Postal Inspection Service on charges of securities fraud and aiding and abetting securities fraud. That same month, the Commission charged CyberKey Solutions, Inc. and Plant for engaging in an ongoing unregistered offering of CyberKey shares while promoting a bogus purchase order from the U.S. Department of Homeland Security ("DHS") for more than 150,000 USB "thumb" drives. Plant falsely claimed that this purchase order was worth more than $24 million, and resulted in net profits of more than $12 million in 2006. In fact, CyberKey had practically no revenues or profits and had never received any purchase order from DHS (or any other governmental agency).
In late 2006 and early 2007, Plant unsuccessfully tried to cover up his fraud by providing the SEC with numerous fake and fraudulent documents, including bogus purchase orders, wire transfers, and bank statements meant to verify the multi-million dollar DHS order. On March 7, 2007, in sworn testimony before the Commission, Plant repeated the false claims that CyberKey had a multi-million dollar contract with DHS and had been receiving payments of several million dollars pursuant to that contract. In addition, when asked by the SEC staff why DHS had no record of any business relationship with CyberKey, Plant fabricated another story, claiming falsely that CyberKey's DHS purchase order was actually through another company, Kikomac.
Finally, after the testimony concluded, Plant convinced a CyberKey employee to provide a false confession to federal law enforcement and to take sole responsibility for the creation of the bogus DHS contract as well as the phony documents submitted to the SEC.
A restitution hearing is set for April 28, 2009, to determine Plant's responsibility for the monetary damages he caused by perpetrating his scheme.