U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 19593 / March 7, 2006
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 (Middle District of Florida, Complaint filed November 15, 2004)
ATTORNEY JOHN B. ZANKOWSKI AND STOCK PROMOTER STANLEY J. SICILIANO ARE ORDERED TO PAY MORE THAN $600,000 EACH IN DISGORGEMENT AND PENALTIES AND ARE BARRED FROM PARTICIPATING IN OFFERINGS OF PENNY STOCK FOR VIOLATIONS OF THE ANTI-FRAUD, REGISTRATION, AND AS TO SICILIANO, THE ANTI-TOUTING PROVISIONS OF THE FEDERAL SECURITIES LAWS
In June 2005 the U.S. District Court for the Middle District of Florida found John B. Zankowski, an attorney based in Atlanta, Georgia, and Stanley J. Siciliano, a stock promoter based in Buffalo, New York, in default and entered an Interlocutory Judgment 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 of 1933 ("Securities Act"), Section 10(b) of the Securities Exchange Act of 1934 ("Exchange Act") and Rule 10b-5 thereunder, and Section 17(b) of the Securities Act.
On February 23, 2006, upon motion by the Commission, the Court issued an Amended Final Judgment ordering Zankowski to pay $630,950.21, representing profits of $184,848.50 gained as a result of his violations, prejudgment interest in the amount of $46,101.71, and a civil penalty of $400,000. The Court's Final Judgment also ordered Siciliano to pay $628,736.77, representing profits of $178,458.05 gained as a result of his violations, prejudgment interest in the amount of $50,278.72, and a civil penalty of $400,000.
The Commission's complaint, filed on November 15, 2004, alleges Zankowski and Siciliano, along with their co-defendants, engaged in a months-long, multi-faceted pump-and-dump scheme involving the securities of St. Petersburg-based Nutraceutical Clinical Laboratories International, Inc. ("Nutraceutical" or the "Company") in violation of anti-fraud, registration, and, in the case of Siciliano, the anti-touting provisions of the Federal securities laws. Zankowski was acting in his capacity as an attorney when he helped defraud the Company's transfer agent in order to convert millions of restricted Nutraceutical shares into purportedly non-restricted shares as part of an unregistered stock distribution in violation of the registration provisions of the Federal securities laws. His deception of the transfer agent through false and misleading legal opinion letters was an essential first step in the overall pump-and-dump scheme. He then dumped a hundred thousand of his own purportedly non-restricted shares in dozens of separate transactions knowing his conduct contravened these registration provisions and knowing that the Company's CEO, co-defendant Paul Simmons, and those he hired were pumping up the stock price.
As for Siciliano, the complaint alleges that he worked with fellow promoter and defendant Kerry Kennedy and CEO Simmons to knowingly spread false information about the Company through multiple Internet postings on multiple days that were timed with Company fraudulent press releases. Further, through multiple wash and matched trades, he helped Kennedy raise and/or prop up Nutraceutical's stock price and deceive investors that there was a legitimate demand for Nutraceutical stock. Not only did Siciliano fail to disclose that Nutraceutical had paid him for such promotional efforts, he also dumped more than one hundred thousand shares, most purportedly non-restricted, in dozens of transactions into the market he helped to manipulate.
Litigation Release No. 19541 (January 24, 2006) (Miami attorney Eric P. Littman enjoined for unregistered sales of Nutraceutical stock and ordered to pay $164,000)
Litigation Release No. 18968 (Nov. 15, 2004) (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))
Release No. 34-52487 (Sep. 21, 2005) (In the Matter of John B. Zankowski, File No. 3-12053, 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.)