SEC Charges North Carolina Businessman and His Companies with Fraudulent Offering Scam
Litigation Release No. 24502 / June 14, 2019
Securities and Exchange Commission v. Alton Perkins, et al., Civil Action No. 5:19-cv-00243-BR (|E.D.N.C., filed June 13, 2019)
On June 13, 2019, the Securities and Exchange Commission charged Alton Perkins and two companies he controlled, Yilaime Corporation of NC ("Yilaime NC") and Perkins Hsu Export Corporation ("Perkins Hsu"), with raising approximately $1.1 million from investors based on multiple misrepresentations and omissions and diverting more than 75% of the funds for personal use. A number of the investors were from Congolese immigrant communities in North Carolina and Pennsylvania.
The Commission's complaint, filed in the U.S. District Court for the Eastern District of North Carolina, alleges that, between approximately January 2014 and April 2015, Perkins and the two companies made numerous representations to investors regarding their planned uses of the investment proceeds, entity expenses, related party transactions and Perkins's own compensation. The complaint alleges, however, that through a series of self-dealing transfers and withdrawals, Perkins misappropriated approximately $800,000 of the investors' funds, including approximately $580,000 to purchase his home. Further, Perkins allegedly touted his successful business background, while failing to disclose his prior criminal and disciplinary history, including his felony nolo contendere plea for fraudulent misappropriation in Maryland and a desist and refrain order from California relating to his offer and sale of securities. The complaint further alleges that Perkins and another defendant, Mabiala Phuati, the former Vice Chairman and Managing Director of Yilaime NC, violated the securities registration requirements when offering and selling some of these securities.
Additionally, as alleged, between approximately November 2015 and July 2016, another Perkins-controlled entity, AmericaTowne Holdings, Inc. ("AmericaTowne"), claimed in its public filings with the Commission that it had nearly $2 million in contracts, when Perkins and AmericaTowne knew that the contracts had little to no value.
The SEC's complaint alleges that: (i) defendants Perkins, Yilaime NC, Perkins Hsu and AmericaTowne violated and/or aided and abetted violations of the antifraud provisions of Section 17(a) of the Securities Act of 1933 ("Securities Act") and Section 10(b) of the Securities Exchange Act of 1934 ("Exchange Act") and Rule 10b-5 thereunder, (ii) Perkins, Yilaime NC and Phuati violated the registration requirements under Section 5 of the Securities Act, (iii) Yilaime Corporation of Nevada aided and abetted Perkins's, Yilaime NC's and Perkins Hsu's violations of Section 17(a) of the Securities Act and Section 10(b) of the Exchange Act, and (iv) Perkins and AmericaTowne violated and/or aided and abetted reporting violations of Section 13(a) of the Securities Act and Rules 12b-20, 13a-1, 13a-11, and 13a-13. The Perkins Family Trust was named as a Relief Defendant based on its ownership of assets purchased with investors' funds.
The investigation was conducted by Edward Saunders and supervised by Justin Jeffries of the SEC's Atlanta Regional Office. The litigation will be led by Paul Kim and Graham Loomis.