Securities and Exchange Commission v. Premier Holding Corp. et al., Civil Action No. 1:17-cv-09485 (S.D.N.Y. filed December 4, 2017)
Litigation Release No. 24000 / December 4, 2017
SEC Files Fraud Charges Against Microcap Company and Its CEO
The Securities and Exchange Commission today charged a microcap company and its CEO with conducting a fraudulent scheme to mislead investors about the company's success and prospects, hide its losses, inflate the value of its assets, and artificially prop up its stock price.
The SEC's complaint, filed on December 4, 2017, alleges that Premier Holding Corp. ("Premier"), a California-based company that describes itself as a green energy services provider, and its CEO, Randall Letcavage, orchestrated a series of purportedly important transactions with related parties designed to create the false appearance of an active company with a vibrant and promising business. According to the complaint, Premier and Letcavage used these transactions to mislead investors about the financial health of the company and to hide losses in Premier's financial statements. Among other things, Premier and Letcavage assigned a high value to Premier's most significant tangible asset, a promissory note, that they knew, recklessly disregarded, or should have known was incorrect. Premier and Letcavage allegedly misled investors about the value of this promissory note in filings with the SEC in 2013 and 2014.
The SEC also charged Joseph Greenblatt, a consultant who provided accounting services to Premier. According to the SEC's complaint, Greenblatt assisted Premier in preparing certain of its fraudulent financial statements, which included a valuation of the promissory note that he knew, recklessly disregarded, or should have known was inadequately supported.
The SEC's complaint, filed in the U.S. District Court for the Southern District of New York, alleges that:
- Premier is liable for violating Section 17(a) of the Securities Act of 1933 ("Securities Act"), Sections 10(b), 13(a), 13(b)(2)(A), and 13(b)(2)(b) of the Securities Exchange Act of 1934 ("Exchange Act"), and Rules 10b-5, 13a-1, 13a-11, and 13a-13 thereunder;
- Letcavage is liable: (i) for violating Securities Act Section 17(a) and Exchange Act Section 10(b) and Rule 10b-5 thereunder, Exchange Act Sections 13(a) and 13(b)(5) and Rules 13a-14 and 13b2-1 thereunder; (ii) as a control person under Exchange Act Section 20(a) for Premier's violations of the Exchange Act; and (iii) under Exchange Act Section 20(e) and Securities Act Section 15(b) for aiding and abetting Premier's violations of Securities Act Sections 17(a)(2) and 17(a)(3), Exchange Act Sections 13(a), 13(b)(2)(A), and 13(b)(2)(B), and Rules 13a-1, 13a-11, and 13a-13 thereunder; and
- Greenblatt is liable: (i) for violating Exchange Act Section 13(b)(5) and Rule 13b2-1 thereunder; and (ii) under Exchange Act Section 20(e) and Securities Act Section 15(b) for aiding and abetting Premier's violations of Securities Act Sections 17(a)(2) and 17(a)(3), Exchange Act Sections 13(a), 13(b)(2)(A), and 13(b)(2)(B), and Rules 13a-1, 13a-11, and 13a-13 thereunder.
The SEC complaint seeks permanent injunctions, disgorgement of ill-gotten gains plus prejudgment interest thereon, and civil monetary penalties as to all defendants, as well as a penny stock bar and an officer-and-director bar against Letcavage.
The SEC's investigation was conducted by Bennett Ellenbogen, Leslie Kazon, James Addison, and Michael Paley, members of the Microcap Fraud Task Force in the SEC's New York Regional Office. The litigation is being led by Howard Fischer and Mr. Ellenbogen. The case is being supervised by Sanjay Wadhwa.
