Litigation Release No. 21462 / March 25, 2010

Securities and Exchange Commission v. Richard V. Priddy, Charles L. Sample, and J. Michael Broullire, Civil Action No. 1:10-cv-00739 (BEL)(D. Md.)

SEC Charges Three Individuals with Fraud Relating to TVI Corporation

On March 25, 2010, the Commission filed a settled injunctive action in the United States District Court for the District of Maryland against the former CEO and President of TVI Corporation, Richard V. Priddy of Severn, Maryland; the former Executive Vice President of TVI, Charles L. Sample of Annapolis, Maryland; and their personal accountant, J. Michael Broullire of Bethesda, Maryland; for violating the antifraud and other provisions of the federal securities laws. The Commission alleged that, from 2003 through 2006, Priddy and Sample, in some instances aided by Broullire, engaged in multiple schemes to defraud TVI and its shareholders. The schemes involved undisclosed related party transactions and compensation. At the time, TVI was a public company based in Glendale, Maryland, but the Commission revoked TVI’s securities registration in a settled proceeding in 2009. 

According to the Commission’s complaint, in two schemes, Priddy and Sample had Broullire create corporate entities that purchased products from a supplier and then resold the products to TVI at significantly marked-up prices. Priddy also had TVI pay one of the entities a finder’s fee for a corporate acquisition even though the entity did nothing to earn the fee. The Commission alleged that Priddy, Sample, and Broullire had agreed to split the ill-gotten profits from their schemes 42.5%, 42.5%, and 15%, respectively. These related party transactions were not disclosed to TVI and, consequently, were not disclosed in TVI’s filings with the Commission.

In another scheme, Priddy increased Sample’s compensation and Sample kicked-back a portion of the increased compensation to Priddy in return. Neither Priddy nor Sample disclosed to TVI this arrangement or their actual compensation, and, consequently, TVI did not disclose their accurate compensation in its filings with the Commission or in its proxy statements.

Without admitting or denying the allegations in the Commission’s complaint, Priddy and Sample have agreed to permanent injunctions from violating Sections 10(b) and 14(a) of the Securities Exchange Act of 1934 (Exchange Act) and Rules 10b-5, 13a-14, and 14a-9 thereunder and from aiding and abetting violations of Section 13(a) of the Exchange Act and Rules 12b-20 and 13a-1 thereunder; Priddy also agreed to a permanent injunction from violating Rule 13b2-2 under the Exchange Act; and Broullire agreed to a permanent injunction from violating Section 10(b) of the Exchange Act and Rule 10b-5 thereunder and from aiding and abetting violations of Section 13(a) of the Exchange Act and Rules 12b-20 and 13a-1 thereunder. Priddy and Sample each also agreed to a permanent officer and director bar. The settlements are subject to Court approval.

In a related criminal case, the U.S. Attorney’s Office for the District of Maryland announced the filing of a criminal information charging the defendants with conspiracy to commit wire fraud in connection with the self-dealing scheme. Priddy and Sample each also are charged with filing a false federal income tax return. The offenses carry possible penalties that include imprisonment, fine, and restitution to the company.

The Commission thanks the U.S. Attorney’s Office for the District of Maryland, the Federal Bureau of Investigation, and the Department of the Treasury for their cooperation and assistance in connection with this matter.

See Also: SEC Complaint


Last modified: 3/25/2010