HOUSTON (CN) – The admitted architects of a pump-and-dump scheme involving oil services face a $3.2 million federal disgorgement action from the Securities and Exchange Commission.
Between December 2004 and December 2006, James Dial, Evan Jarvis and Alexander Ellerman caused Grifco International to issue 13.2 million shares, and sold them at prices artificially inflated by false statements they released about the company, the SEC says.
All three men pleaded guilty to federal conspiracy to commit wire fraud over the scheme in March.
Dial served as Grifco’ president, CEO and sole director from 2004 to 2008; Jarvis operated as the company’s de facto officer and stock promoter; and Ellerman pushed Grifco stock.
But the trio failed to register the issuance or resale of Grifco shares with the SEC, and the “transactions did not satisfy any exemption from registration,” according to the complaint.
“The defendants collectively received at least $3,280,961 in ill-gotten gains from the sale of newly-issued Grifco stock during the relevant time period,” the SEC says. “In addition, Dial misappropriated at least $600,000 by looting Grifco’s cash account from September 2005 through December 2006.”
The complaint alleges violations of the Securities Act and seeks disgorgement, as well as an order barring the men permanently from involvement in any penny-stock offering.
Dial, Jarvis and Ellerman were sentenced Friday for their admitted felonies this. Dial and Jarvis were sentenced to five years apiece, while Ellerman will serve 40 months because he cooperated with investigators. Jarvis and Ellerman owe restitution, which the court will determine at a hearing this summer. Jarvis has already admitted to making at least $2 million from the conspiracy and plans to sell a $1.8 million home, as well as a Chevrolet Corvette and a Porsche, to make restitution.