Company Was Just Smoke, SEC Says

ROCHESTER, N.Y. (CN) - The father and son who run ImageXpres Corp., a "purported" digital imager, made up financial statements out of whole cloth, reporting more than 300 percent growth despite having virtually no sales at all, the SEC claims in court.

The SEC sued ImageXpres Corp., its CEO John Zankowski and his son, CFO Kevin Zankowski, in Federal Court.

For years, the Zankowskis, ages 68 and 42, of Fairport, N.Y., fraudulently misrepresented the revenue of their microcap company near Rochester, the SEC says in the lawsuit.

"Beginning with the year ended December 31, 2008 and continuing through the second quarter of 2011, ImageXpres reported substantial sales revenue and dramatic revenue growth in numerous press releases and financial statements even though it lacked the financial resources to produce on a commercial scale the products that it touted and failed to secure the customer orders that it claimed to have received," the complaint states. "The company reported revenue growth rates in excess of 300 percent during this period for some products in spite of the absence of virtually any bona fide sales."

The Depository Trust Corp. suspended sales of ImageXpres stock in August 2012, a year in which its stock price "hovered around $0.0001 per share," the SEC says. It then cites a string of allegedly false press releases touting the company's imaginary successes.

The SEC wants the Zankowskis barred from running penny stock companies or offering penny stock, and civil penalties.

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