The Securities and Exchange Commission obtained a court order halting an ongoing fraud perpetrated by a registered broker and several companies he controlled.
The SEC’s complaint alleges that Sean Kelly used his companies, Lion’s Share Financial of East Cobb, Inc., Lion’s Share & Associates Inc., and Lionsshare Tax Services LLC, to raise at least $1 million from 12 investors, including elderly retirees, promising that he would invest their funds in a variety of investment products including private placements and real estate funds.
Rather than investing the money, Kelly spent it on personal expenses including Super Bowl tickets, luxury vacations and cash withdrawals.
“Kelly treats Lion’s Share as his personal piggy bank, and he has transferred hundreds of thousands of dollars of investor money to bank accounts he controls to support his lifestyle,” the complaint states. “He has also withdrawn large quantities of investor money in cash throughout the course of the scheme, and the disposition of those funds is unknown.”
As alleged, Kelly continued to steal money from investors even after having received an SEC subpoena, and did not show up for his scheduled testimony after informing the SEC’s staff that he would show up and “come clean.”
Many of Kelly’s victims are elderly retirees, and his victims include widows, veterans and people with disabilities.
The SEC’s complaint charges Kelly’s companies with violating certain of those same statutes, or aiding and abetting certain of Kelly’s (or his other companies’) underlying violations.
On Oct. 26, the court granted the SEC’s request for an asset freeze, temporary restraining order, and an accounting.
The SEC seeks preliminary and permanent injunctions, disgorgement of allegedly ill-gotten gains plus interest, and civil penalties against Kelly.
In a parallel action, the U.S. Attorney’s Office for the Northern District of Georgia filed criminal charges against Kelly and arrested him.
Microcap Fraud Mastermind Gets Permanent Bars
A U.S. District Court for the Eastern District of New York entered a final judgment on consent against Philip Kueber, who was charged with orchestrating a fraudulent investment scheme using microcap issuer Cynk Technology Corp.
The final consent judgment against Kueber imposes a permanent officer and director bar and a permanent bar from participating in an offering of penny stock.
The SEC’s complaint, filed in 2015, alleged that Kueber concealed his control of Cynk and its purportedly non-restricted shares through nominees and straw shareholders. Although Cynk’s stock surged on July 10, 2014, to a high of more than $21 per share (despite having no assets or operations), Kueber was thwarted from profiting from his scheme when SEC’s July 11, 2014 order suspended trading in the securities of Cynk.
Kueber was also charged criminally for related misconduct. In the criminal case, Kueber pleaded guilty, forfeited $1.2 million, and was sentenced to three years of supervised release.