Friday, July 13, 2012

SEC Litigation Releases: Week in Review

Court Issues Final Judgment Enforcing Prior Order of the Commission Against Rodney R. Schoemann July 12, 2012, (Litigation Release No. 22414).

On July 11, 2012, the District Court ordered Rodney R. Schoemann to pay over $1.3 million in disgorgement and prejudgment interest. Rodney R. Schoemann had violated "the registration provisions of the federal securities laws in connection with his sales of stock in Stinger Systems, Inc. in November 2004" and had been ordered to pay disgorgement and prejudgment interest. At the time the action to enforce this order was filed, Rodney had not paid any of the amount. 

SEC Charges Five Physicians with Insider Trading in Stock of Medical Professional Liability Insurer July 10, 2012, (Litigation Release No. 22413).

According to the complaint (opens to PDF), in 2010 Apparao Mukkamala, resident of Grand Blanc, MI, shared confidential information about the upcoming acquisition of American Physicians Capital, Inc. (ACAP) by The Doctor's Company with fellow physicians Suresh Anne, Jitendra Prasad Katneni and Rao A.K. Yalamanchili, as well as his brother-in-law Mallikarjunarao Anne. At the time Mukkamala served as the chairman of ACAP's board. Based on the insider information, the physicians bought over $2 million in ACAP stock and made more than $600,000 in illegal profits. The physicians have agreed to pay nearly $2 million to settle the charges and Mukkamala has been "barred from acting as an officer or director of a public company."

SEC Charges Orthofix International with FCPA Violations,  July 10, 2012, (Litigation Release No. 22412).

According to the complaint (opens to PDF), from 2003 to 2010 Promeca S.A. de C.V., a subsidiary of Orthofix International N.V., violated the Foreign Corrupt Practices Act by paying routine bribes to Mexican officials to obtain contracts with government hospitals. Over the period of the bribes, the company gained nearly $5 million in illegal profits. Promeca recorded the largest bribes as promotional and training costs. Orthofix launched an investigation after Promeca's training and promotional expenses were well over budget. After discovering the bribe payments, Orthofix self-reported the matter to the SEC. Orthofix as agreed to pay $5.2 million to settle the charges and will also pay over $2 million in penalties as the result of a related U.S. Department of Justice investigation.

Final Judgment Entered Against Connecticut Man Who Misappropriated Over $1 Million From Vulnerable Investors,  July 9, 2012, (Litigation Release No. 22411).

A final judgment has been entered by the Court ordering Florin S. Ilovici and his wife, Diana Ilovici, to pay over $1 million in disgorgement plus prejudgment interest. Additionally, Florin S. Ilovici is required to pay a $900,000 civil penalty. From 2008 to 2011, Ilovici raised over $1 million in investment funds from "two elderly woman who lived alone, had little or no family, and had health problems." He then invested these funds in his personal accounts and either lost the funds to risky investments or used them for personal expenses.

SEC Charges Company, CEO, and Stock Promoter with Market Manipulation,  July 6, 2012, (Litigation Release No. 22410).

According to the complaint (opens to PDF), Axius, Inc., along with its President and CEO, Roland Kaufmann, and its stock promoter, Jean-Pierre Neuhaus, engaged "in a fraudulent broker bribery scheme designed to manipulate the market for Axius' common stock." In January 2012, Kaufmann and Neuhaus agreed to pay kickbacks between 26% and 28% to an individual claiming "to represent a group of registered representatives with trading discretion over the accounts of wealthy customers." The individual agreed to have the registered representatives use the customers' accounts to purchase up to $5 million in Axius stock for the kickbacks. Furthermore, Kaufmann instructed the individual to purchase around $49,000 of Axius shares from February 16 to 17 through matched trading. Kaufmann then paid the individual bribes of $13,700 following the purchases. The SEC seeks "permanent injunctive relief, disgorgement of ill-gotten gains, plus pre-judgment interest, and civil penalties from all defendants." The Commission also seeks to bar Kaufmann from serving as an officer or director of a public company.

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