LadyCare Owner Fined |for Securities Violations

     (CN) – A California appeals court upheld a $326,000 judgment against the co-owner of LadyCare, who promised 100 percent returns on their investment in magnetic devices worn in the underwear to reduce menstrual cramps.




     The 2nd District Court of Appeal said LadyCare co-founder Anthony O’Neal can be held liable for securities fraud even if he didn’t sign the principal investment agreements (PIAs), because investors made the checks out to him.
     “[H]e received (the checks) because he was the individual responsible for the finances of the LadyCare business, the PIAs were investments in that business, and the investors were told defendant was the person to whom their investments should be given under the PIAs,” Justice Walter Croskey wrote.
     The appeals court upheld a lower court’s ruling that O’Neal sold unregistered securities in violation of the Corporate Securities Law of 1968.
     O’Neal and co-founder Otha Cole expected the company to rake in more than $10 million in the United States and Canada, but sold only 127 devices the first year, losing more than $200,000 of investor funds, according to the ruling.
     The court found O’Neal directly responsible for the sale of securities to all investors except one. It ordered O’Neal to pay $126,000 in restitution and $200,000 in civil penalties.
     Because the trial court found securities violations on only the direct liability claims, the appellate panel remanded to determine indirect liability.

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