BULLETIN: SEC Goes To Federal Court In Dallas To Halt Alleged Ponzi Scheme Involving DOZENS Of Companies; China Voice Holding Corp. Implicated In Alleged Domestic And International Fraud

BULLETIN: UPDATED 3:07 P.M. EDT (U.S.A.) The SEC has gone to federal court in Dallas to halt the operations of what it described as a highly complex fraud and Ponzi scheme involving a purported VOIP/telecommunications firm and more than 40 individuals and companies.

A federal judge has frozen the assets of China Voice Holding Corp., and the SEC described the case as a “complicated web” of deceit engineered by David Ronald Allen and others associated with the firm, which is headquartered in Boca Raton, Fla.

Allen, 60, resides in Dallas. Also named defendants were former China Voice executive William F. Burbank IV, 52, of Delray Beach, Fla.; Alex Dowlatshahi, 36, of Dallas; Ilya Drapkin, 64, of Dallas; Christopher Mills, 34, of McKinney, Texas; Gerald Patera, 69, of Pinehurst, N.C.; and Robert Wilson, 42, of Dallas.

Dowlatshahi was described by the SEC as a recidivist securities offender who was part of a 2006 offering fraud in California.

Dozens of companies were part of the China Voice fraud, the SEC alleged.

Investors were told they’d earn returns of “at least” 25 percent, but an $8.6 million Ponzi scheme was under way, the SEC charged.

“These promoters falsely touted what they claimed to be a prudent investment with reliable returns through loans made to carefully selected businesses,” said Stephen L. Cohen, associate director of the SEC’s Division of Enforcement. “This fraud illustrates that when extraordinarily high returns are promised in a supposedly low-risk investment, that’s a tell-tale sign that something likely is amiss.”

China Voice, Allen and Burbank were accused of issuing a “series of fraudulent company statements about its financial condition and business prospects,” the SEC said.

Patera and Drapkin helped China Voice “finance stock promotion campaigns to pump up the company’s stock price,” the SEC charged,

Meanwhile, Wilson orchestrated a “a blast fax campaign,” the SEC charged.

“The spam faxes were sent to thousands of people at once and contained false and misleading statements about China Voice and who was paying for the faxes,” the SEC alleged. “At the same time they were spending more than a million dollars on stock promotion, Patera and Drapkin dumped millions of shares of the company into the market.”

So many individuals and companies were involved in the alleged fraud that the recitation of the names of the defendants and relief defendants in the 50-page complaint took up all or parts of seven pages.

The facts as outlined by the SEC did not begin until the tenth page of the complaint. Regulators at virtually all levels have been encountering increasingly complex financial capers that involve dozens of corporations and shell companies.

A case filed in Nevada by the FTC in December alleged that 10 corporations and 52 shell companies were part of a colossal fraud that had gathered hundreds of millions of dollars.

Read the SEC complaint.

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One Response to “BULLETIN: SEC Goes To Federal Court In Dallas To Halt Alleged Ponzi Scheme Involving DOZENS Of Companies; China Voice Holding Corp. Implicated In Alleged Domestic And International Fraud”

  1. China Voice Holding Corp. also discussed here (from early 2008):

    Looks like it may have been an attempt at a pump-&-dump or boiler-room scam – flogging shares at 70% discount to “brokers”, “brokers” cold-calling punters. The knowledgeable “JakNife” says:

    If I could short China Voice Holding Corporation then this would be my short of the year, if the share price were 1 cent I think that it would still be over-priced.

    Ledge Goodman was added to the FSA list of ‘Unauthorised overseas firms operating in the UK’ on 23 June 2008.