U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 21252 / October 16, 2009
SEC v. Forest Resources Management Corp., et al., Civil Action 09 Civ. 903 (JSR) (SDNY)
Court Permanently Enjoins Attorney William J. Reilly in Fraudulent Sale of Securities
The Securities and Exchange Commission announced that on October 15, 2009 the United States District Court for the Southern District of New York entered a judgment on consent against defendant William J. Reilly, of Boca Raton, Florida, an attorney admitted to practice in New York. Without admitting or denying the allegations of the Commission's complaint, Reilly consented to the entry of judgment, entered by Hon. Jed S. Rakoff, that permanently enjoins him from further violations of Sections 5(a) and 5(c) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder. The judgment permanently bars Reilly from serving as an officer or director of any public company, and from participating in an offering of any penny stock. Finally, the judgment provides that Reilly will disgorge his ill-gotten gains and prejudgment interest and pay a civil penalty in amounts to be determined by the Court.
The Commission's complaint alleges that Reilly and others made material misrepresentations concerning Forest Resources Management Corp. to Forest's transfer agent in order to obtain millions of restricted shares without the required restricted legend. A registration statement was never in effect for the shares issued to Reilly and his nominees. Reilly and his nominees then sold these unlegended shares on the open market, falsely holding them out to the investing public as free-trading shares, when in fact they were restricted stock. Reilly received more than $84,000 from the improper sale of these shares. In addition, Reilly filed a Form 8-K with the Commission on behalf of Forest which Form 8-K falsely represented that Forest had acquired substantial timber rights in Central America.
The litigation is continuing to determine the amount of disgorgement, prejudgment interest, and civil penalties against Reilly and the other defendants, Chaim Justman and Pinchus Gold.