SEC Charges Individual to Thwart Microcap Promotion Scheme
Litigation Release No. 24705 / January 3, 2020
Securities and Exchange Commission v. Ulrik Debo, 1:20-cv-00006 (S.D.N.Y. filed January 2, 2020)
On January 2, 2020, the Securities and Exchange Commission charged Ulrik Debo, a Danish citizen and Monaco resident, with orchestrating a fraudulent scheme to secretly control a microcap shell company for the purpose of pumping and dumping its shares.
According to the SEC's complaint, beginning in late spring 2019, Debo and others purchased Herbatech Life, Inc. (EVTP) and planned to issue EVTP stock to nominee shareholders they controlled, without disclosing their actual control to investors. The complaint alleges that Debo planned to promote EVTP stock and pump and dump its shares for profit. Debo allegedly took the lead in coordinating the purchase and control of EVTP, including by contributing funds for its purchase, installing an acquaintance as the nominal CEO and nominal majority shareholder, retaining an attorney to assist in making the dormant shell "current," and hiring a marketer for a promotional campaign. The complaint alleges that, once under Debo's control, EVTP filed a quarterly report on November 25, 2019 that failed to disclose Debo's control, rendering it materially misleading. The SEC filed its complaint before Debo and others were able to engage in promotional activity to "pump" EVTP's stock.
The complaint, filed in federal district court in Manhattan, charges Debo with violating the antifraud provision of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and seeks a permanent injunction, disgorgement with interest, civil penalties, and a penny stock bar against Debo.
In a parallel action, the U.S. Attorney's Office for the Southern District of New York today announced criminal charges against Debo.
The SEC's investigation was conducted by Joseph Darragh, Kristine Zaleskas, Paul Gizzi, Michael Paley, and Judith Weinstock in the SEC's New York Regional Office. The litigation is being led by Mr. Gizzi, and the case is being supervised by Sanjay Wadhwa. The SEC appreciates the assistance of U.S. Attorney's Office for the Southern District of New York, the Federal Bureau of Investigation and the Financial Industry Regulatory Authority (FINRA).