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U.S. Securities and Exchange Commission


Litigation Release No. 22189 / December 12, 2011

Securities and Exchange Commission v. Alternative Green Technologies, Inc., et al., Civil Action No. 11-cv-9056 (S.D.N.Y. December 12, 2011) (DAB)

SEC Charges “Shell Packaging” Firm and Its CEO in Fraudulent Scheme

The Securities and Exchange Commission today charged a shell packaging firm and several others involved in a penny stock scheme to issue purportedly unrestricted shares in the public markets.
The SEC alleges that Joseph Meuse and his firm Belmont Partners LLC – which is in the business of identifying and selling public shell companies for use in reverse mergers – fabricated and backdated documents used to convince a transfer agent and an attorney writing an opinion letter to issue free-trading shares of Alternative Green Technologies Inc. (AGTI). The SEC also charged AGTI and its CEO Mitchell Segal as well as Segal’s business partner Howard Borg and stock promoters David Ryan, Vikram Khanna and Panascope Capital Inc. for their roles in the scheme that resulted in unknowing investors purchasing fraudulently issued AGTI shares without the protections afforded by the securities laws.

According to the SEC’s complaint filed in U.S. District Court for the Southern District of New York, Long Island, N.Y.-based AGTI and Segal, an attorney licensed to practice in New York, knowingly submitted false documents to a transfer agent and an attorney, who relied on them to conclude that free-trading shares of AGTI could legitimately be issued. Virginia-based Belmont and Meuse aided and abetted AGTI’s fraud by knowingly creating and sometimes backdating the false documentation, including a sham assignment of debt and a fabricated and backdated corporate resolution and convertible note. Segal then used the stock certificates illegally issued to fund promotional campaigns promoting AGTI’s stock. The stock promoters – Ryan, Panascope Capital and its president Khanna – were charged with selling the unregistered securities.

The SEC’s complaint charges all defendants with violating Section 5 of the Securities Act of 1933, and AGTI and Segal with violating Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5(a) and (c) thereunder. Segal, Meuse and Belmont are charged with aiding and abetting the fraud by AGTI. The SEC’s complaint seeks permanent injunctions and disgorgement against all defendants; a financial penalty against AGTI, Segal, Belmont, Meuse and Ryan; and officer and director and penny stock bars against Segal and Meuse. The SEC’s complaint also names several relief defendants for the purposes of recovering proceeds they received from the illicit stock sales.

Borg, Khanna and Panascope Capital have consented to the entry of a final judgment enjoining them from further violations of Section 5 of the Securities Act without admitting or denying the allegations in the SEC’s complaint. Khanna and Panascope Capital agreed to pay $81,477.10 to settle the charges, and Borg agreed to pay $35,264.05 and surrender to the transfer agent for cancellation more than four million shares of AGTI stock that were illegally issued. The settlements are subject to court approval.

The SEC’s investigation was conducted by Megan R. Genet and Steven G. Rawlings of the SEC’s New York Regional Office. The SEC’s litigation effort will be led by Todd Brody and Megan R. Genet.




Modified: 12/12/2011