SEC v. Revolutions Medical Corp. and Rondald L. Wheet, Civil Action No. 1:12-cv-03298-TCB (N.D. Ga.)
SEC CHARGES REVOLUTIONS MEDICAL CORP. AND ITS CEO FOR FRAUDULENTLY ISSUING FALSE AND MISLEADING PRESS RELEASES
On September 20, 2012, the Securities and Exchange Commission filed a civil injunctive action in U.S. District Court for the Northern District of Georgia, charging Revolutions Medical Corp. ("Revolutions Medical"), a medical device company based in Charleston, South Carolina, and the company's CEO, Rondald L. Wheet ("Wheet") with fraudulently issuing false and misleading press releases concerning the company's flagship product, a retractable, medical safety syringe ("safety syringe").
The Commission's Complaint alleges that, between approximately August 2010 and July 2011, Revolutions Medical and Wheet issued a series of misleading press releases that contained statements designed to convey the impression that, among other things, Revolutions Medical had finalized the development of a safe and effective syringe, the syringe was slated for imminent mass manufacturing and commercial distribution, and Revolutions Medical had entered into, or was on the cusp of entering into, binding mass sales and distribution agreements, including a sales agreement with the U.S. Department of Defense. However, contrary to the statements made in the company's press releases, Revolutions Medical had not developed a safe and effective syringe ready for mass manufacturing or commercial distribution, and had not entered into any binding agreements for the sale and distribution of such a final product. The Commission's Complaint further alleges that, through the press releases, Revolutions Medical and Wheet artificially inflated the price of Revolutions Medical's shares, and that Revolutions Medical sold shares to a third-party hedge fund at inflated prices.
In its Complaint, the Commission alleges that Revolutions Medical and Wheet violated Section 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. The Commission further alleges that Wheet aided and abetted certain of Revolutions Medical's violations of Section 10(b) of the Exchange Act and Rule 10b-5.
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