SEC Whacks Florida Penny Stock Game

ORLANDO (CN) - Three men and their four companies defrauded investors of $7 million by selling billions of unregistered shares of penny stocks, the SEC claims in Federal Court. It sued Stephen Carnes, Lawrence Powalisz and Jared Hochstedler and their companies, K&L International Enterprises, Signature Leisure, Signature Worldwide Advisors, and Enzyme Environmental Solutions.

All four companies were "controlled primarily by one person, with limited operational histories and minimal revenue," the SEC said.

Carnes, 45, of Apopka, Fla., runs Signature Leisure and Signature Worldwide; Powalisz, 45, of Winter Park, Fla., runs K&L; and Hochstedler, 33, of Fort Wayne, Ind., runs Enzyme; the SEC calls them the "distributor defendants."

The scam involved alleged loans and promissory notes involving three supposed stock-issuing companies, Cross Atlantic Commodities, International Power Group, and Revenge Designs, according to the complaint.

To run the scheme, the defendants assigned a "debt" to the issuing companies, which issued the defendants shares which each "stock distributor defendant immediately dumps ... into the public market," the SEC says. The distributor defendants made more than "$7 million in illegal profits" in 2 years, according to the complaint. The SEC seeks disgorgement with interest, fines and injunctions.

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