Thursday, July 20, 2017 06.57 AM / Mondo
Securities and Exchange Commission today barred a New York-based attorney from
appearing or practicing before it and acting as an officer or director of a
public company after finding that he made false and misleading statements in
SEC’s order finds that David Lubin committed fraud while serving as a director
and corporate counsel of Entertainment Art, a public company in which Lubin
also was a large shareholder. Lubin negotiated the sale of all of the
outstanding stock of Entertainment Art, including both restricted and
previously registered shares that were purportedly “free trading,” to an
acquaintance interested in purchasing shell companies. Absent a valid
exemption, common ownership of all of the shares of a public company would
require the owner to register the shares for resale to the public.
to the SEC’s order, Lubin fraudulently misrepresented in Entertainment Art’s
corporate filings that the purportedly free-trading shares had not been
purchased by the acquaintance. This left the false impression that those
shares remained immediately available for public resale. During the next
two years and until he left the company, Lubin drafted and signed SEC filings
that continued to lie about the true ownership of the company’s stock.
to the SEC’s order, soon after the company was renamed Biozoom, more than 14
million shares were resold to the public in an illegal unregistered distribution
for illicit proceeds of $34 million. The SEC froze assets
from the unregistered sales in 2013.
the SEC's order notes, Lubin drafted and signed misleading public filings and masked
the true ownership and restricted nature of a significant portion of the
company’s stock,” said Antonia Chion, Associate Director in the SEC’s
Enforcement Division. “Lubin’s deception led to many of these same shares
being illegally resold to the general public by others a few years later.”
U.S. Attorney’s Office for the Southern District of Florida today announced
criminal charges against Lubin.
SEC’s order finds that Lubin willfully violated Section 10(b) of the Securities
Exchange Act and Rule 10b-5, imposes a cease-and-desist order and an
officer-and-director bar. The SEC’s order also prohibits Lubin from
representing clients in SEC matters, including investigations, litigation, or
examinations, and from advising clients about SEC filing obligations or
SEC ordered a public hearing before an administrative law judge to prepare an
initial decision determining what, if any, disgorgement or monetary penalties
are in the public interest.
SEC’s investigation, which is continuing, is being conducted by Marc E.
Johnson, Jennie B. Krasner, and Deborah A. Tarasevich, and the case is
being supervised by Ms. Chion. The SEC appreciates the assistance of the
Federal Bureau of Investigation and the U.S. Attorney’s Office for the Southern
District of Florida.