(CN) – The SEC says five men – including two Houston-based attorneys -hijacked the identities of inactive, publicly traded companies and sold billions of bogus securities in their names. Irwin Boock – who had been enjoined from trading securities and ignored an order to pay a $50,000 fine – hijacked the identities of at least 55 companies with his cronies, and pocketed millions in illicit proceeds, the SEC claims in Manhattan Federal Court.
The SEC says Boock, 55, of Toronto, whose real name is Irwin Krakowsky, conceived of the scheme in late 2003, shortly after the earlier sanctions against him were handed down. That case was SEC v. Leah Industries Inc.
According to the SEC complaint:
Boock’s idea was to identify publicly traded companies that were void in their state of incorporation, usurp their ticker symbol, and issue purportedly publicly traded shares under that symbol. In the event they were found out by the company in question, the men simply incorporated under the name of another inactive company and continued their activities.
The SEC also sued Stanton DeFreitas, Jason Wong, an entity called 1621566 Ontario Inc., and attorneys Nicolette Loisel and Roger Shoss.
The attorneys handled the paper work for the corporate hijackings, and wrote scores of bogus opinion letters containing deliberately misleading statements explaining why the securities were exempt from federal registration laws, the SEC says.
This false documentation was sent to secretaries of state, Standard & Poors, NASDAQ, and others.
Shoss also acted as a middleman, arranging the sale of securities in the hijacked companies, keeping a portion of the loot and wiring or transferring the balance directly or indirectly to Boock, according to the complaint.
The SEC says Wong is a computer expert and DeFreitas is the founder of a business consultancy specializing in formation of offshore entities.
The SEC wants all the men permanently barred from trading securities, disgorgement and penalties.