U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 23526 / April 26, 2016
Securities and Exchange Commission v. Asher Z. Zwebner, No. 3:16-CV-1013-WQH-NLS (S.D. Cal., filed Apr. 26, 2016)
Securities and Exchange Commission v. Luke C. Zouvas, et al., No. 3:16-CV-998-CAB-DHB (S.D. Cal., filed Apr. 25, 2016)
SEC Charges Israeli Accountant for Conducting a Sham IPO Offering and Five U.S. Residents for Perpetrating a Subsequent Pump-And-Dump Market Manipulation
The Securities and Exchange Commission today announced fraud charges against Israeli Asher Z. Zwebner for engaging in a scheme to create a publicly-traded shell company, Crown Dynamics Corp., through a sham registered initial public offering. In a separate case, the SEC announced fraud charges against five U.S. residents - California resident Luke C. Zouvas and Arizona residents Cameron F. Robb, Christopher D. Larson, Jason M. Schiprett, and Robert D. Jorgenson - for engaging in a "pump-and-dump" scheme to manipulate the market for the stock of Crown. Both actions were filed in the U.S. District Court for the Southern District of California.
According to the SEC's complaint against Zwebner, filed today in federal court, Zwebner secretly controlled every aspect of Crown's registration and the IPO. He filed a false Form S-1 registration statement with the SEC on behalf of the company, and after the registration became effective, placed Crown's free-trading shares with nominees residing in Israel, most of whom were unaware of their role as nominees. Zwebner then gained physical control of their stock certificates. He subsequently engaged a U.S. broker-dealer to submit to the Financial Industry Regulatory Authority (FINRA) a false Form 15c2-11 under Rule 15c2-11 of the Securities Exchange Act of 1934, so that Crown's common stock would be quoted on the Over-the-Counter Bulletin Board (OTCBB) and the OTC Link (an SEC-registered Alternative Trading System). Throughout the registration process, Zwebner did not disclose his control over Crown, made false statements about Crown's business purpose and plans, and used unwitting nominees as the purported IPO purchasers. After Zwebner registered Crown's offering and arranged for its stock to trade on the OTCBB and on OTC Link, he secretly sold the Crown shell to stock promoter Larson.
According to the SEC's complaint against Zouvas, Robb, Larson, Schiprett and Jorgenson, filed on April 25, 2016 in federal court, Larson obtained controlling shares of Crown from Zwebner and, although Larson controlled Crown and acted as its de facto chief financial officer, his name did not appear in any of Crown's filings with the Commission. With the assistance of Luke C. Zouvas, an attorney based in San Diego who served as Crown's general counsel, Larson transferred free-trading Crown shares from Zwebner's nominees - purported shareholders in Crown's IPO - to Larson's nominees, including Jorgenson and Schiprett. Larson then paid $400,000 for a "call center" to promote Crown and placed manipulative trades in his own brokerage account to create the appearance of market interest in the stock. Robb prepared materially misleading press releases about the company's business success. As Crown's stock price became inflated as a result of Larson's and Robb's efforts to pump the stock, Larson's nominees Jorgenson and Schiprett sold Crown shares and wired most of the sale proceeds - at least $865,000 - to accounts controlled by Larson. Jorgenson and Schiprett retained some of the proceeds as compensation for their assistance in the scheme as nominees.
The SEC's complaint against Zwebner charges him with violations of Section 17(a)(1), (2) and (3) of the Securities Act of 1933 and Section 10(b) and Rule 10b-5(a), (b) and (c) of the Securities Exchange Act of 1934. The SEC seeks a permanent injunction, disgorgement of ill-gotten gains with interest, a civil penalty, and a penny stock bar and officer and director bar against Zwebner.
The SEC's complaint against Zouvas, Robb, Larson, Schiprett and Jorgenson charges each of them with violations of Section 17(a)(1) and (3) of the Securities Act and Section 10(b) and Rule 10b-5(a) and (c) of the Exchange Act. The SEC seeks a permanent injunction, disgorgement of ill-gotten gains with interest, civil penalties, and a penny stock bar against all defendants, and an officer and director bar against Larson and Robb.
The SEC's investigation was conducted by Carolyn Kurr, Keith O'Donnell, and Daniel Rubenstein and supervised by C. Joshua Felker. The SEC's litigation will be led by Patrick Costello. The SEC appreciates the assistance of the United States Attorney for the Southern District of California, the Federal Bureau of Investigation, the Financial Industry Regulatory Authority, the Israel Securities Authority, and the United Kingdom's Financial Conduct Authority.
SEC Complaint - Asher Z. Zwebner
SEC Complaint - Luke C. Zouvas, et al.