U.S. Securities & Exchange Commission
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U.S. Securities and Exchange Commission


Litigation Release No. 19571 / February 17, 2006

SEC v. iBIZ Technology Corp., Kenneth W. Schilling, H. Mark Perkins, Jeffrey Firestone, Jerrold B. McRoberts, and D. Scott Elliott, CV 2:06-CV-0502 (D. Arizona, filed February 16, 2006)

SEC Files Securities Fraud Charges Against Recidivists iBIZ Technology Corp. and its CEO Kenneth W. Schilling, and Related Charges Against iBIZ Technology Executive Vice President H. Mark Perkins and Three Purported Consultants

On February 16, 2006, the Securities and Exchange Commission filed an injunctive action in the United States District Court for the District of Arizona against iBIZ Technology Corp., its CEO Kenneth W. Schilling, its Executive Vice President H. Mark Perkins, and three purported company consultants, Jeffrey Firestone, Jerrold B. McRoberts, and D. Scott Elliott. iBIZ Technology and Schilling are securities law recidivists.

According to the SEC's complaint, iBIZ Technology, Schilling, and Perkins made false and misleading statements in press releases, online interviews, investor correspondence, proxy solicitations, and Commission filings regarding the company's involvement with a development-stage product called the "Virtual Keyboard." At the same time, Schilling and Perkins sold over $1 million worth of their own iBIZ Technology shares into a falsely inflated market. In addition, the SEC asserts that the inflated stock price allowed iBIZ Technology to eliminate approximately $2.8 million of convertible debt that it was otherwise powerless to repay.

The complaint further alleges that all of the defendants engaged in a scheme to raise money for themselves by using Form S-8 registrations statements. The SEC alleges that iBIZ Technology, Schilling and Perkins illegally distributed through Firestone, Elliott and McRoberts approximately $3 million worth of newly issued iBIZ Technology S-8 shares.

The SEC's complaint alleges that iBIZ Technology, Schilling, and Perkins violated the antifraud provisions of the securities laws contained in Section 10(b) of the Securities Exchange Act of 1934 ("Exchange Act") and Rule 10b-5 thereunder, and that all of the defendants violated the registration provisions contained in Sections 5(a) and 5(c) of the Securities Act of 1933 ("Securities Act"). The complaint also alleges that iBIZ Technology violated the periodic reporting provisions contained in Section 13(a) of the Exchange Act and Rules 12b-20, 13a-1, and 13a-13 thereunder, and the proxy disclosure rules contained in Sections 14(a) and 14(c) of the Exchange Act and Rules 14a-3, 14a-9, 14c-2, and 14c-6 thereunder. Finally, the complaint alleges that Schilling and Perkins aided and abetted certain violations by the company of these periodic reporting and proxy disclosure provisions. The SEC seeks officer and director bars against Schilling and Perkins, penny stock bars against Schilling, Perkins, Firestone, McRoberts, and Elliott, and disgorgement, plus prejudgment interest, and civil penalties against all of the defendants.

In a related action, on February 16, 2006, the SEC instituted public administrative proceedings pursuant to Section 12(j) of the Exchange Act against iBIZ Technology to determine whether the registration of its securities should be suspended or revoked for failure to file required periodic reports with the Commission in violation of Section 13(a) of the Exchange Act and Rules 13a-1 and 13a-13 thereunder.

SEC Complaint in this matter



Modified: 02/17/2006