U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 21206 / September 11, 2009
Securities and Exchange Commission v. Paul D. Poetter, et. al., Civil Action No. 6:09CV398 (U.S.D.C./E.D. Texas, Tyler Division)
SEC HALTS $5.2 MILLION OFFERING FRAUD
On September 8, 2009, the Commission filed a civil injunctive action against Paul D. Poetter and his affiliated entities in connection with an alleged fraudulent scheme in which Poetter raised $5.2 million from more than 2300 investors nationwide. The complaint alleges that Poetter, of Gilbert Arizona, offered and sold "trust certificates" that investors could purportedly exchange for "commons shares" of a publicly traded-company. Initially, investors were told they would receive shares of 4309, Inc., a public shell company controlled by Poetter. Later, Poetter allegedly told investors they would receive shares of AMs-TEC Acquisitions ("AMs-TEC"), a purported Arizona entity that Poetter claimed had a "projected value of $13.5 billion" and was qualified to trade on a European stock exchange. In fact, according to the complaint, investors never received their promised shares, and Poetter's claims regarding the projected value and tradability of AMs-TEC stock were bogus. The complaint also named as defendants three of Poetter's affliated entities, 4309 Inc., 4309 Acquistion Trust, and AMs-TEC Acquisition Trust, as well as four entities named as relief defendants, AMs-TEC Commodities, Inc., AMs-TEC Energy, Corp., Greener Cleaner Farms, Inc., and RoboCargo Corporation.
As alleged in the complaint, Poetter began his scheme in June 2007 by convincing a few members of a small Baptist church in East Texas to invest. Poetter used those investors to recruit new investors from their church, family members, and friends. In "shareholder newsletters" mailed to investors, Poetter encouraged investors to solicit investments from family members and friends. Poetter allegedly misrepresented to investors that AMs-TEC and its affiliated entities were in the process of acquiring, or had acquired, several valuable assets or companies. For example, Poetter touted AMs-TEC's acquisition of an African cocoa processing plant with negotiated contracts to process over $120 million worth of cocoa. However, Poetter never acquired the cocoa plant and there were no outstanding orders to process cocoa. It is also alleged that Poetter misappropriated and misapplied investor funds by transferring millions of dollars to various affiliated entities which were used to fund various administrative and employment-related expenses, including at least $300,000 paid to Poetter.
Simultaneously with the filing of the complaint, the defendants and relief defendants, consented, on a neither admit nor deny basis, to the entry of a final judgment that:
- permanently enjoins all defendants from violating Sections 5(a), 5(c) and 17(a) of the Securities Act of 1933, and Section 10(b) of the Securities Exchange Act of 1934 ("Exchange Act") and Rule 10b-5 thereunder;
- permanently enjoins defendant 4309 Inc. from violating Section 13(a) of the Exchange Act and Rules 12b-20, 13a-1, and 13a-13 thereunder, and defendant Poetter from aiding and abetting those provisions;
- bars Poetter from serving as an officer or director of a public company registered with the Commission and orders him to pay a $150,000 civil penalty; and
- orders all of the defendants and relief defendants to jointly and severally disgorge $5,205,209.35, plus prejudgment interest of $17,350.70.
Further, all defendants and relief defendants consented to the appointment of a receiver to recover and preserve assets for the benefit of investors. The agreed final judgment and receivership order are subject to the court's approval.