BULLETIN: Miami penny-stock scammer Kevin Sepe — along with two attorneys in Florida and one in Utah — engaged in illegal stock-selling schemes, the SEC said.
One of the schemes “sought to capitalize on circumstances in Haiti following the earthquake that destroyed much of the country’s infrastructure in January 2010,” the SEC said.
Sepe, 51, and 10 “cohorts,” including the attorneys, have been charged in the schemes, which allegedly featured pump-and-dump components. The attorneys include Ronny Halperin, 63, of Aventura, Fla.; Melissa Rice, 51, of Miami; and David Rees, 44, of Salt Lake City.
As part of its probe, the SEC has suspended trading in the securities of entities known as Recycle Tech and HydroGenetics.
“The Recycle Tech scheme involved a promotional campaign to pump the price and volume of the purported home container building company’s stock in the wake of the Haiti earthquake,” the SEC said. “The HydroGenetics scheme took millions of unregistered shares of the company — purportedly in the business of acquiring emerging alternative energy companies — and improperly converted its debt into free-trading shares that were dumped on the investing public.”
Halperin did legal work for both firms, and Rice did legal work for HydroGenetics. Rees did legal work for Recycle Tech, the SEC said.
All three attorneys and Sepe have agreed to settle the charges without admitting or denying the allegations, the agency said.
From the SEC:
- Sepe agreed to disgorgement of $1,416,466.16, prejudgment interest of $126,761.86, and penalties of $185,000 as well as a permanent bar from participating in an offer or sale of penny stocks.
- Halperin agreed to disgorgement of $427,609.95, prejudgment interest of $33,595.33, and a penalty of $100,000 as well as a permanent penny stock bar and a five-year officer and director bar. He also agreed to surrender 1.97 million shares of HydroGenetics stock.
- Rees agreed to disgorgement of $5,982, prejudgment interest of $406.25, and a penalty of $7,500 as well as a one-year prohibition from providing professional legal services connected to the offer or sale of securities.
- Rice agreed to disgorgement of $422,445, prejudgment interest of $39,239.18, and a penalty of $60,000 as well as a five-year penny stock bar and three-year prohibition from providing professional legal services connected to the offer or sale of securities.
The schemes netted more than $3.5 million in illegal profits, the SEC said.
From one of the Sepe (et al.) complaints (emphasis added by PP Blog):
HydroGenetics is a Florida corporation with its principal place of business in Fort Lauderdale, Florida. Hydro Genetics, company name was originally Pop Starz, an entity that operated dance studios. On April 23, 2008, after Sepe and others had contracted to purchase Pop Starz, the company changed its name to Global Entertainment Acquisition, Inc. and was purportedly in the film-making business. On August 1, 2008 the company changed its name to HydroGenetics and stated it was in the business of acquiring emerging alternative energy companies.
From the other Sepe (et al.) complaint:
Recycle Tech is a Colorado company. From February 16, 2010 through June 2010 its principal place of business was Miami, Florida. Its common stock is quoted on the OTC Link (formerly, “Pink Sheets”) operated by OTC Markets Group Inc. under the symbol “RCYT.” From no later than February 2010 to June 2010, Recycle Tech purported to be a development and engineering firm specializing in “green building.”
Read the SEC news release for the full list of the alleged cohorts and links to the complaints.
