Children’s Book Publisher Accused by SEC

MIAMI (CN) - A children's book company defrauded investors of nearly $2 million by "baselessly project(ing) 300 percent annual returns" though it was not even trying to sell and distribute the books, the SEC says in Federal Court. The SEC sued Winning Kids, its founder and CEO Christian Hainsworth, and the three telemarketers he hired to push the unregistered, private securities.

Winning Kids already has been ordered to stop selling its so-called securities in South Dakota, the SEC says. Kansas ordered Hainsworth to stop selling his unregistered securities in that state in 1995.

Hainsworth, 47, of Palm Beach Gardens, formerly held securities licenses. He ran the show and hired defendants Robert Comiskey, Edward Tamili, and Victor Selenow, the SEC says. But Hainsworth did not tell investors that his creatures were taking up to 20 percent of their money in commissions, and he was spending more of it on himself, the SEC says.

Comiskey, 62, of Palm Beach Gardens, made $86,975 in "sales commissions," according to the complaint.

Tamimi, 33, of Palm Beach Gardens, made $194,250 in commissions, the SEC says. The National Futures Association fined him $5,000 in 2006 for "making misleading sales solicitations and using high-pressure sales tactics," the SEC says.

Selenow, 48, of Royal Palm Beach, made $41,500 in commissions. The SEC obtained a permanent injunction against him in 2002 and required him to disgorge $30,000 for securities violations.

All of the defendants formerly held securities licenses of one sort or another, the SEC says.

The only asset the company had was Hainsworth's idea for a series of children's books, which the defendants misrepresented as "already established, expanding nationally, and starting an acceleration phase of extraordinary growth," the SEC says.

"In reality, Winning Kid generated almost no revenue from the sale of its books or any other product from 2004 through 2008," though the defendants told their victims it would sell 115,000 books a year, and "could earn an annual profit of $15 million without stating when, and without disclosing it was earning next to nothing at the time."

The SEC seeks penalties, disgorgement and an injunction.

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