U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 19541 / January 24, 2006
Paul Simmons, Rodney Gilbert, John Zankowski, Esq., Kerry Kennedy, Stanley Siciliano and Eric Littman, Esq., 8:04-CV-2477-T-17MAP (Middle District of Florida, Complaint filed November 15, 2004)
MIAMI ATTORNEY ERIC P. LITTMAN ENJOINED IN SEC CIVIL ACTION FOR UNREGISTERED SALES OF STOCK IN ST. PETERSBURG, FLORIDA-BASED COMPANY AND ORDERED TO PAY $164,000
ATTORNEY ZANKOWSKI, PROMOTER SICILIANO AND FORMER COMPANY CHIEF EXECUTIVE OFFICER ENJOINED FOR FRAUD AND UNREGISTERED STOCK SALES; SICILIANO ALSO ENJOINED FOR ILLEGAL STOCK TOUTING
On December 6, 2005, the U.S. District Court for the Middle District of Florida issued a Final Judgment in the Commission's civil action against Eric P. Littman, a securities attorney based in Miami, Florida. The Court enjoined Littman from violating the registration provisions of the Securities Act of 1933 ("Securities Act") and ordered him to disgorge $120,000 in profits from unregistered sales of restricted securities, pay $38,400 in prejudgment interest, and pay a civil money penalty of $5,600. Littman consented to the entry of the judgment against him, without admitting or denying the allegations of the Commission's complaint.
The Commission's complaint, filed on November 15, 2004, alleges that Littman made unregistered sales of the securities of St. Petersburg-based Nutraceutical Clinical Laboratories International, Inc. ("Nutraceutical" or the "Company") in violation of Sections 5(a) and (c) of the Securities Act. According to the complaint, in June 2000, Nutraceutical, then a private company, reverse-merged into a publicly-traded shell company named October Project II Corp. (which then was renamed Nutraceutical). Littman controlled the shell company as its majority stockholder and its sole officer and director. As part of the merger, Littman arranged to secretly sell nearly 95% of the shell company's outstanding shares of common stock for approximately $150,000 to nominee entities controlled by Nutraceutical insiders, including its executive officers, attorney and promoter. Based on his ownership of the shell company's shares, Littman earned $120,000 of this $150,000 sale price. According to the complaint, Littman's stock sales were not registered with the Commission, as required under Section 5 of the Securities Act.
The Commission's complaint also charged five different individuals with securities fraud and registration violations for their participation in an alleged "pump and dump" stock manipulation scheme involving the Company. The five individuals are Paul Simmons, former Chief Executive Officer ("CEO") of Nutraceutical, Rodney Gilbert, former Chief Financial Officer of Nutraceutical, John Zankowski, former outside securities counsel for Nutraceutical, and two stock promoters, Kerry Kennedy and Stanley Siciliano.
In June 2005 the Court found CEO Simmons, attorney Zankowski, and promoter Siciliano in default and entered an order permanently enjoining each from future violations of the registration, anti-fraud and, in the case of Siciliano, anti-touting provisions of the Federal securities laws. These provisions, respectively, are Section 5(a) and (c) of the Securities Act, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and Section 17(b) of the Securities Act. The order also provided the Commission the opportunity to seek monetary remedies against these three default defendants at a later date.
Based on this June injunctive order, the Commission in September 2005 issued an Order Instituting Administrative Proceedings and Imposing Temporary Suspension Pursuant to Rule 102(e)(3) of the Commission's Rules of Practice against John B. Zankowski, Esq. The suspension has become permanent pursuant to Rule 102(e)(3)(ii) because the Commission received no petition from Zankowski to lift the temporary suspension within thirty days after service of the Order.
Litigation Release No. 18968 (Nov. 15, 2004) (In the Matter of John B. Zankowski, File No. 3-12053, (Sept. 21, 2005).
Release No. 34-52487 (Sept. 21, 2005) (Securities and Exchange Commission v. Paul Simmons, Rodney Gilbert, John Zankowski, Esq., Kerry Kennedy, Stanley Siciliano and Eric Littman, Esq., 8:04-CV-2477-T-17MAP (USDC, SDNY)).