Microcap CEO Charged with Fraud, Unregistered Offerings, and Disclosure Violations in Share Sale Scheme
Litigation Release No. 24614 / September 24, 2019
Securities and Exchange Commission v. Robert Hillis Miller, No. 19-cv-02810-TDC (D. Md. filed Sep. 24, 2019)
The Securities and Exchange Commission has charged Robert Hillis Miller, a resident of Coral Gables, Florida, with securities law violations for his operation of a fraudulent scheme to hold, publicly offer, and sell millions of shares of penny stock issuer Abakan, Inc. (ticker: ABKI) by means of false statements and omissions, and without the registrations and disclosures required by law.
The SEC's complaint, filed September 24, 2019 in the U.S. District Court for the District of Maryland, alleges that from at least August 2013 through October 2015, Miller publicly disclosed ownership of 24.1 million Abakan shares and, according to these disclosures, Miller never traded a single Abakan share. Miller failed to disclose, however, that he also beneficially owned at least an additional 7 million Abakan shares (an approximately 11% interest) nominally held by several Uruguayan entities, and that, during this period, Miller orchestrated fraudulent and unregistered public offerings of more than 1.7 million of those shares, generating approximately $1.39 million in proceeds. These offerings required the use of fraudulent misrepresentations and deceptive conduct to conceal Miller's beneficial ownership of the offered shares. The funds were used to prop up Abakan's struggling business, which never generated significant revenue, including paying Abakan's vendors and employees such as Miller himself. Miller signed SEC filings on behalf of both himself and Abakan that failed to disclose Miller's beneficial ownership of the shares held by the Uruguayan entities, and that he was engaging in unregistered public offerings of such shares to fund Abakan.
The complaint alleges that by engaging in this conduct, Miller violated the registration and antifraud provisions of Sections 5(a), 5(c), and 17(a) of the Securities Act of 1933, and the antifraud and beneficial ownership reporting provisions of Sections 10(b), 13(d) and 16(a) of the Securities Exchange Act of 1934 (Exchange Act) and Rules 10b-5, 13a-14, 13d-1, 13d-2, 16a-2, and 16a-3 thereunder, and aided and abetted Abakan's violations of the issuer reporting provisions of Section 13(a) of the Exchange Act and Rules 12b-20 and 13a-1 thereunder.
The SEC's investigation was conducted by John P. Lucas and supervised by J. Lee Buck II. The litigation is being led by Gregory R. Bockin. The SEC appreciates the assistance of the Banco Central del Uruguay, British Columbia Securities Commission, Cayman Islands Monetary Authority, Hong Kong Securities and Futures Commission, and the Liechtenstein Financial Market Authority.