Below is a securities fraud case I was a shareholder witness for and a good example of what is possibly coming for the fabulous five. A federal grand jury will look at the evidence and proceed as necessary. First the indictments and then their trials if all is as it appears:
Former Plasticon CEO James Turek indicted on fraud charges
By Mike Verespej | PLASTICS NEWS STAFF
Posted March 9, 2011
plasticsnews.com/headlines2.html?id=21371
LEXINGTON, KY. (March 9, 11:45 a.m. ET) -- A federal grand jury in Kentucky has indicted James Norman Turek, the former owner, president and CEO of now-defunct recycled plastics products manufacturer Plasticon International Inc., on charges of securities fraud and filing false income tax returns.
The 13-count indictment, issued March 3 by the U.S. District Court in Lexington comes less than 2½ years after the Securities and Exchange Commission filed charges against Turek in the same court, accusing him of misappropriating company funds for personal use.
The grand jury indictment said that Turek, now 65, engaged in a securities fraud scheme from 2004-06 by issuing more than 5 billion shares of Plasticon stock to himself and backdating promissory notes that claimed he had donated millions to the company.
It further accused him of filing false tax returns from 2003-07, and with releasing false and misleading information about the company as well as about its profitability, to create demand for Plasticon stock.
The eight charges of securities fraud carry a maximum fine of $5 million and 20 years in prison, while the charges of filing false income tax returns carry a maximum fine of $250,000, three years in prison and one year of supervised release.
Turek is scheduled to appear in court March 25.
In 2008 the SEC charged that Turek had taken, for personal use, at least $2.8 million of the $8.2 million to $11.2 million in funds that Plasticon had raised from at least 30 investors — capital the Lexington-based firm said would be used to buy equipment and acquire other companies.
Those funds were raised in an unregistered, multistate securities offering between January 2005 and April 2007, according to the SEC. The commission also had charged Turek and Plasticon with making false and misleading press releases relating to the firm’s financial condition, its ownership of patents, the value of those patents, and the number of Plasticon’s outstanding shares.
Those charges were settled Feb. 11 when Turek, without admitting or denying the allegations, agreed to a judgment by the court that found him liable for disgorgement of $2.6 million plus prejudgment interest in the amount of $557,836.41. However, the court waived payment of that total amount and did not order Turek to pay a civil penalty, based on a statement of financial condition Turek filed with the court.
That court judgment also bars Turek from acting as an officer or director of a public company for five years, and bars him from participating in any offering of penny stock.
The grand jury indictment said that Turek — as director of the Plasticon board — issued himself more than 5 billion shares of Plasticon stock between March 15, 2004, and Sept. 16, 2006, as repayment of false and backdated promissory notes.
The promissory notes — purported to be dated from 1989-2002 — falsely claimed that Plasticon owed Turek more than $5 million as a result of loans he had made to the company, according to the indictment. But the amount of money, if any, that Turek had loaned to Plasticon was substantially less than the amounts claimed on the notes, the indictment said.
According to the indictment, Turek was president and CEO and sole director of Plasticon from 1994- 2007, giving him complete control over the firm’s affairs until October 2007, when a bankruptcy court-appointed trustee took control. The indictment also charged that Turek — to circumvent SEC rules governing the sale of stock by a control person — had given Plasticon stock that he received because of false and backdated promissory notes to others, including his children and elderly aunt.
“But, in fact, he maintained control over the stock even though his name no longer appeared on the stock certificates,” the indictment said. “For example, he continued to engage in stock transactions in the name of his elderly aunt even after she had died.”
The indictment also said Turek entered into agreements to sell his stock to investor companies, and specified that payments for that stock be transferred to his private company, LexReal Co. LLC. He also allegedly ‘loaned’ some proceeds back to Plasticon with interest, and gave some of the proceeds to one or both of his sons.
In addition, “to create demand for Plasticon stock by the investing public, James Normam Turek caused Plasticon to issue press releases that contained false and misleading statements about, among other things, Plasticon’s profitability,” said the indictment. “On or about June 17, 2005, he caused Plasticon to issue a press release that falsely stated: “Plasticon International is profitable as of the second quarter of 2005,” it said.
But SEC filings for that quarter — filed nearly a year late on July 27, 2006 — showed net loss of $3 million on sales of $135,244.
Another Plasticon press release, on or about Oct. 4, 2005, falsely stated that Plasticon had “demonstrated profitability.” But actual reports the firm filed with SEC said it lost more than $5 million for the quarter ended Sept. 30, 2005.
Plasticon did not even have a bank account until February 2006, and SEC reports show the firm had no revenue in 2003 and 2004, and revenue of just $65,565 in 2005, according to the indictment.
It also said Turek issued false and misleading information about patent ownership and the value of patents. For example, the company issued press releases between May 2005 and September 2006 that claimed it held four patents, with a combined value of between $16 million and $20 million. But the indictment said Plasticon did not own the patents, some of which had already expired.
Plasticon filed for bankruptcy May 16, 2007, less than 18 months after it acquired injection molder and thermoformer Pro-Mold Inc. of St. Louis. The SEC suspended trading in the stock four months later and revoked the company’s securities registration two months after that.
Former Plasticon CEO James Turek indicted on fraud charges
By Mike Verespej | PLASTICS NEWS STAFF
Posted March 9, 2011
plasticsnews.com/headlines2.html?id=21371
LEXINGTON, KY. (March 9, 11:45 a.m. ET) -- A federal grand jury in Kentucky has indicted James Norman Turek, the former owner, president and CEO of now-defunct recycled plastics products manufacturer Plasticon International Inc., on charges of securities fraud and filing false income tax returns.
The 13-count indictment, issued March 3 by the U.S. District Court in Lexington comes less than 2½ years after the Securities and Exchange Commission filed charges against Turek in the same court, accusing him of misappropriating company funds for personal use.
The grand jury indictment said that Turek, now 65, engaged in a securities fraud scheme from 2004-06 by issuing more than 5 billion shares of Plasticon stock to himself and backdating promissory notes that claimed he had donated millions to the company.
It further accused him of filing false tax returns from 2003-07, and with releasing false and misleading information about the company as well as about its profitability, to create demand for Plasticon stock.
The eight charges of securities fraud carry a maximum fine of $5 million and 20 years in prison, while the charges of filing false income tax returns carry a maximum fine of $250,000, three years in prison and one year of supervised release.
Turek is scheduled to appear in court March 25.
In 2008 the SEC charged that Turek had taken, for personal use, at least $2.8 million of the $8.2 million to $11.2 million in funds that Plasticon had raised from at least 30 investors — capital the Lexington-based firm said would be used to buy equipment and acquire other companies.
Those funds were raised in an unregistered, multistate securities offering between January 2005 and April 2007, according to the SEC. The commission also had charged Turek and Plasticon with making false and misleading press releases relating to the firm’s financial condition, its ownership of patents, the value of those patents, and the number of Plasticon’s outstanding shares.
Those charges were settled Feb. 11 when Turek, without admitting or denying the allegations, agreed to a judgment by the court that found him liable for disgorgement of $2.6 million plus prejudgment interest in the amount of $557,836.41. However, the court waived payment of that total amount and did not order Turek to pay a civil penalty, based on a statement of financial condition Turek filed with the court.
That court judgment also bars Turek from acting as an officer or director of a public company for five years, and bars him from participating in any offering of penny stock.
The grand jury indictment said that Turek — as director of the Plasticon board — issued himself more than 5 billion shares of Plasticon stock between March 15, 2004, and Sept. 16, 2006, as repayment of false and backdated promissory notes.
The promissory notes — purported to be dated from 1989-2002 — falsely claimed that Plasticon owed Turek more than $5 million as a result of loans he had made to the company, according to the indictment. But the amount of money, if any, that Turek had loaned to Plasticon was substantially less than the amounts claimed on the notes, the indictment said.
According to the indictment, Turek was president and CEO and sole director of Plasticon from 1994- 2007, giving him complete control over the firm’s affairs until October 2007, when a bankruptcy court-appointed trustee took control. The indictment also charged that Turek — to circumvent SEC rules governing the sale of stock by a control person — had given Plasticon stock that he received because of false and backdated promissory notes to others, including his children and elderly aunt.
“But, in fact, he maintained control over the stock even though his name no longer appeared on the stock certificates,” the indictment said. “For example, he continued to engage in stock transactions in the name of his elderly aunt even after she had died.”
The indictment also said Turek entered into agreements to sell his stock to investor companies, and specified that payments for that stock be transferred to his private company, LexReal Co. LLC. He also allegedly ‘loaned’ some proceeds back to Plasticon with interest, and gave some of the proceeds to one or both of his sons.
In addition, “to create demand for Plasticon stock by the investing public, James Normam Turek caused Plasticon to issue press releases that contained false and misleading statements about, among other things, Plasticon’s profitability,” said the indictment. “On or about June 17, 2005, he caused Plasticon to issue a press release that falsely stated: “Plasticon International is profitable as of the second quarter of 2005,” it said.
But SEC filings for that quarter — filed nearly a year late on July 27, 2006 — showed net loss of $3 million on sales of $135,244.
Another Plasticon press release, on or about Oct. 4, 2005, falsely stated that Plasticon had “demonstrated profitability.” But actual reports the firm filed with SEC said it lost more than $5 million for the quarter ended Sept. 30, 2005.
Plasticon did not even have a bank account until February 2006, and SEC reports show the firm had no revenue in 2003 and 2004, and revenue of just $65,565 in 2005, according to the indictment.
It also said Turek issued false and misleading information about patent ownership and the value of patents. For example, the company issued press releases between May 2005 and September 2006 that claimed it held four patents, with a combined value of between $16 million and $20 million. But the indictment said Plasticon did not own the patents, some of which had already expired.
Plasticon filed for bankruptcy May 16, 2007, less than 18 months after it acquired injection molder and thermoformer Pro-Mold Inc. of St. Louis. The SEC suspended trading in the stock four months later and revoked the company’s securities registration two months after that.
