Final Judgment Entered Against Microcap CEO for Fraudulent Press Release and Kickback Scheme
Litigation Release No. 25039 / March 1, 2021
Securities and Exchange Commission v. Michael J. Starkweather and Andiamo Corporation, No. 19-civ-05528 (E.D.N.Y., filed September 30, 2019)
On January 14, 2021, the United States District Court for the Eastern District of New York entered a final consent judgment against Michael J. Starkweather, the former CEO of Andiamo Corporation, a publicly traded microcap company.
The SEC's complaint, filed on September 30, 2019, charged Starkweather for his role in issuing an allegedly false press release that drove up the volume and price of Andiamo's stock. Specifically, the complaint alleged that Starkweather, while serving as Andiamo's CEO, caused Andiamo to issue a false and misleading press release announcing the unveiling of a smartphone Andiamo had purportedly developed, touting the phone's technical features, and claiming that the phone was available for distribution. In reality, the complaint alleged, Starkweather knew that the purported smartphone did not exist. In addition, the complaint charged Starkweather with allegedly receiving kickbacks from a stock promoter during the months leading up to this false press release.
In a parallel criminal action, the U.S. Attorney's Office for the Eastern District of New York filed criminal charges against Starkweather in October 2019. Starkweather pleaded guilty to one count of conspiracy to commit securities fraud on February 24, 2020. On July 20, 2020, he was sentenced to three years of probation, ninety days at a community residential facility, and ordered to forfeit $15,900.
The final judgment entered against Starkweather permanently enjoins him from violating the antifraud provisions of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and imposes an officer and director bar and a penny stock bar against him.
The Commission's case remains pending against defendant Andiamo.