U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 23353 / September 17, 2015
Securities and Exchange Commission v. George Ivakhnik and The Mobile Star Corporation, Civil Action No. 15-CV-7263 (S.D.N.Y., filed September 15, 2015)
SEC Charges Penny Stock Company and CEO with Fraud and Issuing False Press Releases
On September 15, 2015, the Securities and Exchange Commission ("Commission") charged a microcap issuer, The Mobile Star Corporation, and its CEO George Ivakhnik, with defrauding investors by issuing false press releases about the company's business and prospects.
The Commission alleges that shortly after Ivakhnik became CEO of the company in the spring of 2012, he began concocting and issuing press releases that had no factual basis. These press releases portrayed a company with considerable financial acumen and resources actively engaged in a wide variety of business ventures including: a ski resort, the manufacture of karaoke booths, the funding of an "event center" in Long Beach, California, and an agreement with a "major higher education institution" to provide financial consulting expertise" and to help "restructure and secure financing."
On September 17, 2012, the Commission suspended trading in the securities of Mobile Star after the dissemination of the press releases. The Commission's complaint, filed in federal court in Manhattan on September 15, 2015, alleges that Ivakhnik participated in drafting the false press releases and approved their public dissemination, knowing that the press releases contained false statements.
The Commission's complaint charges Mobile Star and Ivakhnik with violations of the antifraud provisions of the federal securities laws. Ivakhnik is also charged with control person liability under Section 20(a) of the Securities Exchange Act of 1934 and with aiding and abetting Mobile Star's violations. The Commission's complaint seeks permanent injunctions, return of any ill-gotten gains with prejudgment interest, and civil money penalties. The Commission also seeks to bar Ivakhnik from serving as an officer or director of a public company or participating in a penny stock offering.
The Commission's investigation has been conducted by Bennett Ellenbogen and Michael Paley of the Microcap Fraud Task Force and Charles Riely in the New York Regional Office. The Commission's litigation will be led by Mr. Ellenbogen and Paul Gizzi.
For further information concerning the prior trading suspension of Mobile Star, and fifteen other issuers, see Release No. 34-67868 (September 17, 2012).