SEC Charges Six Individuals in $6m ‘Shell-Factory’ Scheme
The US Securities and Exchange Commission has sued six individuals for allegedly funneling ill-gotten gains from the sale of at least 15 public shell companies.
SEC filed suit in the United States District Court for the Eastern District of Texas against Thomas D. Coldicutt, Jr., Elizabeth L. Coldicutt, Robert C. Weaver, Jr., Christopher C. Greenwood, Linda S. Farrell, and Susana Gomez.
The SEC alleges that the husband and wife team of Thomas and Elizabeth Coldicutt installed nominee officers and directors in corporations that they secretly funded and controlled, and that they directed and helped the corporate nominees, including Farrell, Weaver, Greenwood, and Gomez, manipulate statements and reports to the SEC.
The companies appeared to be legitimate by virtue of these false documents, which permitted their securities to be quoted on the OTC Bulletin Board.
In the present case, the SEC alleges that the shell companies filed registration statements and reports with the SEC that misrepresented that the companies were formed to pursue mining activities, when in fact they neither conducted nor were intended to conduct any real mining activities.
The SEC further contends that these companies’ SEC filings failed to disclose that the Coldicutts controlled and funded the companies. In addition, the SEC alleges that the Coldicutts obtained nominees to purchase stock in the companies, and then provided these nominees with all or most of the funds to purchase the stock.
Farrell, Weaver, Greenwood, and Gomez each substantially assisted the scheme by, among other things, acting as corporate nominees, recruiting other nominees to hold stock in the shells, and signing materially false and misleading SEC filings. In addition, Weaver, Greenwood, and Farrell each formed, registered, marketed, and ultimately sold at least one shell, together with the Coldicutts.