SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 16423 / February 3, 2000
SEC v. KEVIN JAMES QUINN, GO IRISH, LTD., AND HMC LIMITED, LLC, Civil Action No. 99-09325 (C.D. Ca.) ABC (ANx)
SEC OBTAINS PERMANENT INJUNCTIONS, OFFICER AND DIRECTOR BAR, AND PENNY STOCK BAR IN SETTLEMENT OF FRAUD ACTION AGAINST DISBARRED ATTORNEY AND TWO ENTITIES HE CONTROLS
The Securities and Exchange Commission ("SEC") announced that on January 24, 2000, Judge Audrey B. Collins of the U.S. District Court for the Central District of California signed a final judgment barring Kevin James Quinn ("Quinn"), a disbarred attorney, and two entities he controls, Go Irish, Ltd. ("Go Irish") and HMC Limited, LLC ("HMC Limited"), from committing securities fraud.
The SEC alleged in its complaint, filed on September 14, 1999, that Quinn stole over 1.2 million shares of stock from two companies in which he served as an officer, director, and/or counsel. Quinn sold most of the stock in secondary market transactions. Quinn's scheme netted him more than $200,000 in profits. Quinn, Go Irish, and HMC Limited consented to the entry of the final judgment which, among other things, permanently enjoins Quinn, Go Irish, and HMC Limited from future violations of the registration and antifraud provisions of the federal securities laws, and permanently enjoins Quinn from serving as an officer or director of a public company.
The SEC's complaint alleges that in 1997 and 1998, Quinn stole 960,000 shares of common stock of Atlantic Central Enterprises Limited and 300,000 shares of common stock of Advanced Laser Products, Inc., companies in which Quinn was an officer, director, and/or counsel. The complaint alleges that Quinn accomplished this theft by misusing his corporate positions with these two companies. The complaint alleges that Quinn (a) falsified board of directors' resolutions purportedly authorizing the issuance of the shares; (b) provided the fraudulent resolutions to the transfer agent and induced the transfer agent to issue the shares in the name of Quinn, Go Irish, HMC Limited, or a Canadian brokerage firm in which Quinn deposited the shares; and (c) either (i) sold shares into the market, or (ii) transferred the shares into other accounts in the U.S. and Canada. The complaint alleges that no registration statement was filed or in effect with the SEC and no exemption from registration was available for the shares that Quinn, Go Irish, and HMC Limited sold to the public. The complaint also alleges that Quinn provided no consideration for the stock, and that the board of directors for the two companies did not authorize the issuance, offer, or sale of the stock.
Without admitting or denying the SEC's allegations, Quinn, Go Irish, and HMC Limited consented to the entry of the final judgment, which (1) permanently enjoins Quinn, Go Irish, and HMC Limited from violations of Sections 5(a) and (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; (2) permanently enjoins Quinn from serving as an officer or director of a public company; and (3) requires Quinn, Go Irish, and HMC Limited to pay disgorgement and prejudgment interest, but waives payment of these amounts, and does not impose a civil penalty based on demonstrated inability to pay.
As part of the settlement, Quinn also agreed to an administrative order barring him from participating in an offering of penny stock. The term penny stock generally refers to a speculative stock priced at under five dollars per share and traded mainly in the over-the-counter market.
The SEC previously issued an order of suspension pursuant to Rule 102(e)(2) of the SEC's Rules of Practice against Quinn. The order suspended Quinn from appearing or practicing before the SEC based on his disbarment by the Supreme Court of California on September 19, 1997. See In the Matter of Kevin James Quinn, Exchange Act Release No. 41876 (September 14, 1999).