SEC Charges 2 Operators of Home Maintenance Company with Conducting Fraudulent Securities Offering
The Securities and Exchange Commission has filed a civil action in the United States District Court for the Eastern District of Pennsylvania against Edward V. Ellis, Sr. and Jennifer L. Seidel of Pottstown, Pennsylvania.
The Commission’s complaint alleges that Ellis and Seidel orchestrated a fraudulent, unregistered offering of Sederon, Inc. (“Sederon”) stock. Sederon was a Collegeville, Pennsylvania, based company that provided home maintenance services to residential home owners. Ellis and Seidel have agreed to settle the matter. The settlements are pending final approval by the court.
The Commission’s complaint alleges that from at least August 2007 through October 2008, Ellis and Seidel raised approximately $519,500 from more than 50 investors by offering and selling Sederon stock through material misrepresentations and omissions.
According to the complaint, Ellis and Seidel made numerous misrepresentations to investors, including that Sederon was a highly profitable and rapidly expanding home maintenance company, and that Sederon would soon be launching an initial public offering that would allow investors to be able to sell their shares in the open market at a profit of 900 to 1,300 percent.
In reality, Sederon never pursued an IPO, was never profitable, and often failed to generate enough revenue to meet payroll and other expenses. The defendants also misled investors about the use of investor proceeds, and failed to disclose the fact that Ellis is a convicted felon and securities fraud recidivist.
The order will bar Ellis and Seidel from serving as an officer or director of a public reporting company. Ellis and Seidel will also be ordered, jointly and severally, to pay disgorgement and prejudgment interest of $569,575.
The defendants each pled guilty to criminal charges of mail fraud and wire fraud in connection with the same conduct alleged in the Commission’s complaint.