Attorneys Ran ‘Opinion Mill,’ SEC Says

     ATLANTA (CN) – Two California-based lawyers issued at least 24 bogus legal opinions with the help of a California company and its president, in a pump-and-dump scheme to unload shares of unregistered stock, the SEC claims in Federal Court.




     The SEC says the defendants operated a legal “opinion mill” that drafted and executed opinions that lifted restrictive legends on unregistered shares of Alpharetta, Ga.-based Mobile Ready Entertainment Corp. As a result, more than 22 million shares were illegally sold to the public, according to the SEC.
     Attorneys Albert Rasch Jr. and Kathleen Novinger, along with Sandra Masino and her company, 144 Opinions, are accused of misrepresenting facts and citing nonexistent documents in fraudulent opinions that contained false statements about the company and the securities, among other things.
     144 Opinions provided “one-stop shopping” to people seeking a Rule 144 opinion, according to the compliant. Rule 144 governs the conversion of restricted stock that otherwise could not be sold to the public.
     The SEC says Masino would acquire basic information such as the shareholders’ names, issuer name and number of shares, certificate number and the date the shares were acquired. She entered the information into a database that processed it into legal letter template that she prepared with Rasch and Novinger. The opinions were then sent to Mobile Ready’s transfer agent, the complaint states.
     In 2006, Pink Sheets banned the defendants for using their opinions to “conduct a notorious fraud involving the sale of worthless securities to gullible investors,” according to the complaint.
     The SEC previously charged Mobile Ready, which markets software applications for mobile devices, and two of its officers in connection with the scheme.
     The SEC seeks disgorgement and an order barring the defendants from offering penny stock.

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