U.S. Securities and Exchange Commission
Litigation Release No. 18172 / June 4, 2003
Securities and Exchange Commission v. Charles Bayne a/k/a Charles Taylor and Ira Posnansky a/k/a Ira Post, Civil Action No. CV 03-3922 RGK (SHSx), (C.D. Cal.)
The Securities and Exchange Commission announced today that it filed a complaint against two Los Angeles-area residents for violating the federal securities laws by selling stock through a company known as Pre-IPO Financial Group, LLC. Named in the complaint are Charles Bayne, age 47, of Glendale, and Ira Posnansky, age 56, of Los Angeles. The complaint alleges that Bayne and Posnansky acted as unlicensed broker-dealers and engaged in the unregistered offer and sale of the stock of two companies, raising more than $4.6 million. The complaint also alleges that Bayne made fraudulent statements in connection with the offer and sale of stock of one of the companies.
The Commission charges that Bayne and Posnansky, acting through Pre-IPO Financial Group, LLC, a now-defunct company that they jointly own, sold the stock of Intellect Exchange and Medical Online to almost 150 investors throughout the United States. The complaint alleges that, from February 2000 through July 2001, Bayne and Posnansky sold more than $4.6 million of stock in the two companies and made more than $2.4 million in profits. According to the complaint, Bayne misrepresented to potential investors the likelihood that Intellect Exchange would be acquired or would conduct an initial public offering, and greatly exaggerated the returns that an investor would obtain if an acquisition or public offering were to occur. The complaint alleges that Bayne was responsible for the following misrepresentations: that Oracle Corp. had offered to purchase Intellect Exchange, that Intellect Exchange had been offered a reverse initial public offering worth $30 to $100 million, and that Intellect Exchange stock would open at $10 per share after its initial public offering. The complaint further alleges that neither of the offerings was registered with the Commission, and that neither Bayne nor Posnansky was registered with the Commission as a broker-dealer, as required.
The Commission alleges that, as a result of the conduct described above, Bayne and Posnansky each violated the securities and broker-dealer registration provisions of the federal securities laws, Sections 5(a) and 5(c) of the Securities Act of 1933 and Section 15(a)(1) of the Securities Exchange Act of 1934. The Commission additionally alleges that Bayne violated the antifraud provisions, Section 17(a) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder. In its action, the Commission seeks a final judgment against Posnansky enjoining him from future violations of the above provisions and assessing a civil penalty against him. The Commission also seeks a final judgment against Bayne enjoining him from future violations of the above provisions and ordering him to disgorge all of his profits and to pay a civil penalty.