Securities and Exchange Commission
Litigation Release No. 17997 / February 25, 2003
SEC Charges Robert Magnan and His Company, Investment Recovery Network, Inc., With Fraud
Securities and Exchange Commission v. Robert A. Magnan, Investment Recovery Network, Inc., Old Dominion Securities, Inc., and John DelPrince, Case No. 03-CV-321-T-27MSS (M.D. Fla., filed February 25, 2003)
On February 25, 2003, the Securities and Exchange Commission ("Commission") filed a complaint alleging securities fraud against Robert A. Magnan ("Magnan"), a recidivist securities law violator and convicted felon barred by the Commission in 1995 from association with any broker or dealer. The complaint also named as defendants Investment Recovery Network, Inc. ("Investment Recovery"), a Florida corporation Magnan controlled, Old Dominion Securities, Inc. ("Old Dominion"), a Florida-based broker-dealer and John DelPrince ("DelPrince"), Old Dominion's founder and principal.
The Commission's complaint, filed in federal district court in Tampa, alleges that beginning in 1999, Magnan and Investment Recovery fraudulently raised more than $3 million in several unregistered offerings of Investment Recovery stock. In connection with the offering of Investment Recovery stock, Magnan and Investment Recovery failed to disclose Magnan's regulatory and criminal background, disseminated written offering materials that contained financial projections that lacked a reasonable basis, made baseless predictions about the future price of Investment Recovery's stock, and led investors to believe that Investment Recovery would sell its shares to the public through an IPO within a specified period of time at a certain price. Many of these misrepresentations were strikingly similar to the fraudulent conduct detailed in the Commission's 1995 Order that barred Magnan from associating with any broker or dealer.
The complaint also alleges that from June 2000 to at least December 2000, Magnan retained Old Dominion, and two of its associated persons, including DelPrince, to sell stock in Investment Recovery's offerings. Magnan's relationship with Old Dominion violated the terms of the Commission's 1995 Order because he essentially controlled the operations of Old Dominion's office in Tampa, Florida.
The Commission's complaint seeks a permanent injunction against Magnan and Investment Recovery based on their violations of Sections 5(a), 5(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, and Magnan's additional violation of Section 15(b)(6)(B)(i) of the Exchange Act (which prohibits an individual barred by the Commission from becoming associated with a broker or dealer absent the Commission's consent). The complaint also seeks to enjoin Old Dominion from future violations of Section 15(b)(6)(B)(ii) of the Exchange Act and DelPrince from aiding and abetting future violations of Section 15(b)(6)(B)(ii) of the Exchange Act. The complaint seeks civil money penalties, disgorgement, and an accounting from the defendants, and a penny stock bar against Magnan.