Terminus Energy, Inc., et al.
U.S. Securities and Exchange Commission
Litigation Release No. 23749 / February 14, 2017
Securities and Exchange Commission v. Terminus Energy, Inc., et al., Civil Action No. 1:17-cv-01117 (S.D.N.Y., filed February 14, 2017)
SEC Charges Fuel Cell Company and Officers with Defrauding Investors
The Securities and Exchange Commission today charged a California-based penny stock company and four corporate officers with misleading investors about the research, development, and profitability of their purported business to manufacture power generation products such as fuel cells.
The SEC alleges that while raising approximately $7.9 million from investors in Terminus Energy Inc., the company and its officers claimed to have a viable prototype capable of being sold and earning revenue. According to the SEC's complaint, Terminus did not have the fuel cell technology or the funding to match their claims, and the officers were instead converting substantial amounts of investor funds to their own use.
According to the SEC's complaint, the company failed to disclose to investors that Terminus's operations manager George Doumanis is a convicted felon who went to prison for securities fraud and was secretly acting as an officer of the company despite being barred from participating in penny stock offerings. Emanuel Pantelakis served on the Terminus board of directors despite having been permanently barred by the Financial Industry Regulatory Authority. Also charged in the SEC's complaint are Terminus's CEO Danny B. Pratte and its former president, director, and legal counsel Joseph L. Pittera.
Terminus also allegedly used unregistered brokers to sell its securities and paid them more than twice as much in commissions than was disclosed to investors in offering documents. Joseph Alborano is charged in the SEC's complaint with soliciting and selling investments for which he received more than $1 million in commissions.
In a parallel action, the U.S. Attorney's Office for the Southern District of New York today announced criminal charges against Pratte, Doumanis, and Pantelakis.
The SEC's complaint charges Terminus, Pratte, and Pittera with violating Section 17(a) of the Securities Act of 1933 as well as Section 10(b) of the Securities Exchange Act of 1934 along with Rule 10b-5. The SEC's complaint charges Doumanis and Pantelakis with violating Section 17(a)(2) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5(a) and 10b-5(c) thereunder. The SEC also charged Doumanis with violating Section 15(b)(6)(B)(i) of the Exchange Act by virtue of having violated the penny stock bar previously issued against him in 2005. Finally, the SEC charged Alborano with violating Section 15(a) of the Exchange Act. The SEC seeks injunctive relief, disgorgement of ill-gotten gains, prejudgment interest, and financial penalties against all the defendants. The SEC also seeks officer and director bars and penny stock bars against Pratte, Pittera, Doumanis, and Pantelakis, and a penny stock bar against Alborano. Maria Pantelakis, Emanuel Pantelakis's wife, is named as a relief defendant in the SEC's complaint for the purposes of recovering investor proceeds diverted to her for personal use.
The SEC's investigation, which is continuing, is being conducted by Robert H. Murphy and Mark Dee in the Miami Regional Office. The case is being supervised by Jessica M. Weissman, and the SEC's litigation is being led by Alejandro Soto. The SEC appreciates the assistance of the United States Attorney's Office for the Southern District of New York and the Federal Bureau of Investigation.
