SEC Obtains Final Judgments Against Three Individuals Who Orchestrated a Fraudulent Public Shell Company Scheme
Litigation Release No. 24762 / March 6, 2020
Securities and Exchange Commission v. David G. Dreslin, et al., No. 18-CV-02934-EAK-TGW (M.D. Fla. Filed December 3, 2018)
On March 3, 2020, a federal district court in Florida entered final judgments against a Florida-based CPA, a former broker, and the former broker's spouse, in connection with a fraudulent scheme involving the creation and sale of a public shell company.
The SEC's complaint, filed on December 3, 2018, charged David Dreslin, CPA, and Michael Toups, who had been a registered representative, with allegedly creating a shell company. As alleged, Dreslin and Toups filed false and misleading registration statements and periodic reports with the SEC, created a phony business plan, and appointed nominee officers and directors to conceal their control over the company. The SEC also charged Toups's wife, Leslie Toups, who allegedly served as the shell's majority shareholder and director and signed false filings and other materially false and misleading documents.
The U.S. District Court for the Middle District of Florida entered final consent judgments against Dreslin and Michael Toups. The court had previously entered a final consent judgment against Leslie Toups. The three judgments permanently enjoined: (a) each of the defendants from violating the antifraud provisions of Sections 17(a)(1) and (3) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act and Rule 10b-5 thereunder, and Dreslin from violating Section 17(a)(2) of the Securities Act; (b) Dreslin from violating, and Michael and Leslie Toups from aiding and abetting any violation of, the reporting provisions of Section 13(a) of the Exchange Act and Rules 12b-20, 13a-1, and 13a-11 thereunder; and (c) Leslie Toups from violating the beneficial ownership reporting provisions of Section 16(a) of the Exchange Act and Rule 16a-3 thereunder. The judgments also ordered Dreslin and Michael Toups each to pay a $160,000 civil penalty, and Leslie Toups to pay a civil penalty of $25,000. The judgments permanently barred Dreslin and Michael Toups from participating in an offering of a penny stock and from serving as an officer or director of any public company, and barred Leslie Toups from the same conduct for a period of five years. In addition, the court ordered Dreslin to pay disgorgement of $183,438 and prejudgment interest of $30,197. The defendants neither admitted nor denied the SEC's allegations.
The SEC strongly encourages investors to use the agency's Investor.gov website to check the backgrounds of people selling them investments to quickly identify whether they are registered professionals.
The SEC's investigation was conducted by Jeffrey D. Felder and Daniel M. Konosky, and was supervised by Kimberly L. Frederick and Kurt L. Gottschall. The SEC's litigation against Dreslin and Michael Toups had been led by Christopher E. Martin and Mark L. Williams and supervised by Gregory Kasper and Jason Burt.