U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 21692 / October 14, 2010
Accounting and Auditing Enforcement Release No. 3197 / October 14, 2010
Securities and Exchange Commission v. LocatePlus Holdings Corporation, 10-CV-11751 (D. Mass. October 14, 2010)
SEC FILES SECURITIES FRAUD CHARGES AGAINST MASSACHUSETTS-BASED INFORMATION TECHNOLOGY COMPANY
The Securities and Exchange Commission filed a civil enforcement action today in federal district court in Massachusetts alleging that Beverly, Massachusetts-based LocatePlus Holdings Corporation ("LocatePlus") violated the anti-fraud and the books and records provisions of the federal securities laws. LocatePlus sells on-line access to public record databases for investigative searches. Locate Plus' stock is registered with the Commission pursuant to Section 12(g) of the Exchange Act and is currently quoted in the Pink Sheets, operated by Pink OTC Markets, Inc.
The Commission's Complaint alleges that from 2005 through 2007, LocatePlus engaged in securities fraud by misleading investors about its funding and revenue, in violation of, among other provisions, Section 17(a) of the Securities Act of 1933, and Section 10(b) and Rule 10b-5 of the Securities Exchange Act of 1934. During that time period, LocatePlus's then-CEO and CFO abused their positions to fraudulently inflate the company's publicly-reported revenue for fiscal years 2005 and 2006 by creating a fictitious customer called "Omni Data." LocatePlus then improperly recognized millions of dollars in payments from Omni Data as revenue. As the Complaint alleges, Omni Data was actually funded by approximately $2 million in cash routed from entities secretly controlled by the former LocatePlus CEO and CFO.
The Complaint further alleges that, to date, LocatePlus has not made public disclosure of the fraud or disclosed the fictitious nature of the previously-reported Omni Data revenue in any SEC filing, restatement or other public document.
In its Complaint against LocatePlus, the Commission is seeking an injunction prohibiting future violations of the federal securities laws, disgorgement plus prejudgment interest, and civil monetary penalties.
The Commission's investigation is continuing.
The Commission acknowledges the assistance of Secretary of the Commonwealth of Massachusetts William F. Galvin and the Massachusetts Securities Division in its investigation.
See Also: SEC Complaint