Securities Industry Commentator by Bill Singer Esq
December 4, 2017
https://www.justice.gov/opa/pr/russian-cyber-criminal-sentenced-14-years-prison-role-organized-cybercrime-ring-responsible
George Doumanis and Emanuel Pantelakis, a/k/a "Manny," each pled guilty to conspiracy to commit securities fraud, which carries a maximum sentence of five years in prison and a maximum fine of $250,000 or twice the gross gain or loss from the offense. As set forth in part in the DOJ Press Release:
From at least February 2008 until at least 2014, DOUMANIS and PANTELAKIS, along with their co-conspirator Danny Pratte, engaged in a scheme to defraud investors in the publicly traded company Terminus Energy, Inc. ("Terminus"), by inducing victims to invest in Terminus stock through material misrepresentations and omissions and by misappropriating investor funds for their own purposes.
Terminus was purportedly producing and marketing a commercially viable "fuel cell" as an alternative energy source. DOUMANIS, PANTELAKIS, and Pratte sold shares of Terminus to investors through private offerings. In connection with such sales, DOUMANIS, PANTELAKIS, and Pratte provided investors with private placement memorandums ("PPMs") that contained materially false and misleading statements. For example, the PPMs falsely stated that (i) Terminus had completed its goal of developing a working fuel cell in mid-2008; (ii) Terminus would use specified investors' funds to make payment on third-party development contracts designed to manufacture a working fuel cell; and (iii) Terminus would pay no more than 10 percent in sales commissions. In truth, and as DOUMANIS, PANTELAKIS, and Pratte well knew, (i) there was no working fuel cell; (ii) the third party contracts had been cancelled after Terminus failed to make payment to the third parties; and (iii) unregistered salesmen were receiving commissions far in excess of 10 percent. The PPMs also failed to accurately disclose the involvement of either DOUMANIS, who was barred from involvement in penny stocks as a result of a 2003 conviction for conspiracy to commit securities fraud, wire fraud, and mail fraud, or PANTELAKIS, who had been permanently barred by the Financial Industry Regulatory Authority ("FINRA") following allegations that he had made fraudulent misrepresentations to customers in connection with the sale of securities. DOUMANIS, PANTELAKIS, and Pratte also caused similar misrepresentations to be made in business plans, executive summaries, and presentations shared with potential investors, as well as in publicly available press releases. Through these false and misleading statements, DOUMANIS, PANTELAKIS, and Pratte fraudulently induced investors to purchase nearly $8 million of Terminus stock.
Rather than use the investor money as promised, DOUMANIS, PANTELAKIS, and Pratte misappropriated the funds for their own use and for use by their co-conspirators. For example, DOUMANIS, entities affiliated with DOUMANIS, and certain of his family members received at least $570,000, including payments to personal credit cards and toward DOUMANIS's residential mortgage. PANTELAKIS and certain of his family members received at least $420,000, including payments to personal credit cards and to pay for PANTELAKIS's wife's Mercedes-Benz. Pratte personally received approximately $1 million. In addition, the unregistered salespeople collectively received undisclosed commissions of more than $1.5 million.
http://www.brokeandbroker.com/3703/marshall-finra-arbitration/