SEC Charges New York Attorney with Participating in Illegal Penny Stock Scheme

On April 2, 2009, the SEC filed a civil complaint in United States District Court for the Southern District of Florida against south Florida residents Frank C. Calmes, Lynn D. Rowntree, and Manny J. Shulman, New York attorney James E. Pratt, and Younger America, Inc., formerly known as Infinity Acquisition Corp. and Infinity Music Corp., alleging that the defendants conducted an illegal penny stock distribution scheme that generated ill-gotten gains of approximately $3.9 million between 2004 and 2008.

The complaint alleges that Calmes, Rowntree, and Shulman devised a scheme to illegally sell large amounts of stock of small companies after they had arranged for the companies’ shares to be publicly quoted. According to the complaint, these illegal stock distributions were often facilitated by baseless legal opinion letters written by Pratt and in some cases by fraudulent wash trades by Rowntree. The complaint further alleges that Calmes and Shulman took control of Younger America, one of the companies they had helped become publicly quoted, and disseminated false information to facilitate illegal sales of its stock by themselves and others. According to the complaint, many of Shulman’s illegal sales were made through accounts held by his wife, Krystal A. Becnel, who is named in the Commission’s complaint as a relief defendant.

The Commission seeks officer and director bars against Calmes and Shulman, penny stock bars against Calmes, Rowntree, Shulman, and Pratt, and disgorgement, plus prejudgment interest, and civil penalties against all of the defendants.

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Tags: Penny Stock News
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NY judge finds hedge-fund swindler competent

A federal judge in New York says a hedge-fund cheat is well enough to stand trial - or plead guilty - for skipping out on prison.

Judge Kenneth Karas, relying on a medical report from the Bureau of Prisons, said Friday there’s no reason to think that 49-year-old Samuel Israel “is suffering from mental disease.”

Israel’s NY Securities lawyer, Barry Bohrer, says Israel may plead guilty, but no commitment has been made.

Israel, of Armonk, went on the lam in June instead of surrendering for a 20-year prison sentence for bilking investors in the Stamford, Conn.-based Bayou funds. Israel faked his suicide and absconded for nearly a month before surrendering in Massachusetts.

Israel tried to plead guilty last year, but Karas ordered a medical evaluation instead.

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Tags: New York Securities Law
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SEC charges N.Y. lawyer Mark Dreier with securities fraud

The Securities and Exchange Commission on Monday charged New York attorney Marc Dreier, founder and managing partner of law firm Dreier LLP, with selling millions of dollars in bogus promissory notes. The SEC said Dreier sold at least $113 million in fake promissory notes. The commission is seeking an emergency court order to freeze Dreier’s assets and appoint a temporary receiver.

Contact Jacob Zamansky for New York Securities Law

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