UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Litigation Release No.17097 / August 9, 2001
Securities and Exchange Commission v. Harris Dempsey Ballow, Christopher Harless, Murry Shepherd and Diane L. Johnson, Civil Action No. H-01-2579 (Southern District of Texas)
The Securities and Exchange Commission filed a complaint in the Southern District of Texas seeking an Order of Permanent Injunction and other ancillary relief against Harris Dempsey Ballow, Christopher Harless, Murry Shepherd and Diane L. Johnson in Securities and Exchange Commission v. Harris Dempsey Ballow, Christopher Harless, Murry Shepherd and Diane L. Johnson, Civil Action No. H-01-2579 (S.D. Texas). The complaint alleges that Ballow, Harless, Shepherd and Johnson manipulated the market for the common stock of Evans Systems, Inc., a Texas corporation, and thereby violated Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934, and Rule 10b-5 thereunder. The complaint seeks civil penalties and disgorgement against Ballow, and civil penalties against Harless, Shepherd and Johnson.
Specifically, the complaint alleges that the defendants established numerous nominee brokerage accounts in the United States and Canada using the names of shell corporations controlled by the defendants. After acquiring large positions in Evans Systems stock in the nominee accounts, the complaint alleges, the defendants conducted numerous fraudulent "wash sales" and "matched orders" in the stock between the accounts. The complaint further alleges that Ballow personally profited from the scheme by transferring approximately $1.4 million out of the nominee accounts during the course of the manipulation.