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SEC v. Michael Saquella, a.k.a. Michael Paloma, and Lawrence Kaplan, Civil Action No. 1:07CV895 (BRP) (E.D.Va.)
SEC v. Michael Saquella, a.k.a. Michael Paloma, and Lawrence Kaplan, Civil Action No. 1:07CV895 (BRP) (E.D.Va.).
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[{"type":"text","content":"U.S. SECURITIES AND EXCHANGE COMMISSION\nLitigation Release No. 20269 / September 6, 2007\nSEC v. Michael Saquella, a.k.a. Michael Paloma, and Lawrence Kaplan, Civil Action No. 1:07CV895 (BRP) (E.D.Va.)\nSEC Charges Repeat Fraudster, Penny Stock Trader, for Roles in Spam-Fueled Pump-and-Dump Schemes\n\nThe Securities and Exchange Commission (\"Commission\") today announced a settled civil action against Mesa, Arizona-based recidivist Michael Saquella, a.k.a., Michael Paloma, 47, and Scottsdale, Arizona-based trader Lawrence Kaplan, 63 (collectively, the \"defendants\"), alleging an elaborate market manipulation scheme that involved unlawfully taking public seven microcap companies, inflating their share prices, and dumping millions of shares into the public market. The defendants' sales netted them nearly $3 million in ill-gotten gains.\n\nThe Commission's complaint, filed in U.S. District Court for the Eastern District of Virginia, alleges that, over the past four years, Paloma repeatedly passed himself off to principals of private, cash-strapped companies as a legitimate financier, persuading company principals to issue to Paloma-affiliated entities large controlling blocks of stock, which were then resold in unlawful public offerings.\n\nIn each case, according to the complaint, Paloma would surreptitiously gain control of a company's shares by convincing management to issue large blocks of stock to one or more entities he controlled. These issuances, purportedly made under federal registration exemptions to \"accredited investors,\" were part of a plan to circumvent the registration requirements of the federal securities laws. In furtherance of this plan, Paloma obtained bogus opinions of counsel that permitted transfer agents to issue share certificates to his entities free of legends restricting resale. In fact, the entities Paloma controlled were not bona fide accredited investors, but merely conduits through which he and Kaplan effected unregistered public distributions of stock.\n\nThe Commission further alleges that, once his entities acquired the \"free-trading\" shares, Paloma then coordinated manipulative public trading -- carried out, in part, by Kaplan -- which artificially inflated the value of each issuer's stock. With the appearance of an active trading market established, Paloma coordinated the dissemination o...