U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 19043 / January 21, 2005
SEC v. Ives Health Co. Inc., M. Keith Ives, Michael Harrison and James Kosta, Civil Action No. 01-CV-6999 (SDNY) (GEL)
SEC SETTLES MANIPUALTION CASE AGAINST PROMOTER OF IVES HEALTH COMPANY STOCK
The Securities and Exchange Commission today announced that on December 21, 2004, the United States District Court for the Southern District of New York entered a final judgment enjoining James Kosta, an "investor relations" and "financial consultant" of Ives Health Company, for his participation in a scheme to manipulate the common stock of Ives Health. The judgment also requires Kosta to pay $50,000 and bars him from participating in a penny stock offering.
The Commission's complaint, filed in July 2001, alleged that Kosta violated the registration and antifraud provisions of the securities laws, by, among other things, unlawfully obtaining unrestricted shares of Ives Health through an employee of a company he controlled, touting the stock on an Internet bulletin board without disclosing that he was otherwise compensated by the company, and then dumping his shares while recommending others to buy or hold their stock. Kosta profited by approximately $430,000 from his stock sales before the Commission suspended trading in Ives Health stock on March 5, 2001.
The final judgment in the Commission's action, to which Kosta consented, permanently enjoins him from violating the registration and antifraud provisions of the securities laws, orders him to pay disgorgement of $427,468, the proceeds from his sale of Ives Health stock, plus prejudgment interest in the amount of $91,750. The judgment waives payment of all but $50,000 based on Kosta's inability to pay. The judgment further bars Kosta from participating in any offering of a penny stock for three years.
Previously, Keith Ives, the founder and former president of Ives Health, consented to be enjoined from violating the registration, reporting, and antifraud provisions of the securities laws, and permanently barred from acting as an officer or director of a public company. In a parallel criminal action, Ives pled guilty and was sentenced to 51 months in prison and three years of supervised release. In addition, Ives was ordered to pay restitution of $1,253,455. United States v. M. Keith Ives, and Ives Health Co., 01 Cr. 691 (S.D.N.Y.) (RCC). Michael Harrison, an officer of Ives Health named in the action, also consented to be enjoined from violating the registration, reporting and antifraud provisions of the securities laws. Harrison also was ordered to pay disgorgement of $8,720, representing the proceeds from his sales of Ives Health securities, plus prejudgment interest of $727.96. In addition, a default judgment was entered against Ives Health enjoining the company from violating the registration, reporting and antifraud provisions of the securities laws.