Shell Company Packagers|Fined $314,000

MANHATTAN (CN) - Shell company "packagers" and a penny stock promoter will pay more than $314,000 for a reverse merger fraud, the SEC said.

Virginia-based Belmont Partners and its CEO Joseph Meuse identify and sell public companies for use in reverse mergers, the SEC said in a statement.

In a reverse merger, a company buys an empty corporate shell to set up its business, so that a putative oil company, for instance, may actually sell candy, or nothing at all. It can be a way of avoiding some SEC registration requirements.

The SEC sued Belmont and Meuse in 2011, claiming they aided and abetted a New York company that fraudulently issued and sold unregistered shares of its stock.

Thomas Russo was a relief defendant in that case.

On Tuesday, a federal judge fined Belmont and Meuse $224,500 and barred Meuse from the penny stock business and from being an officer or director of a public company for 5 years.

Last week, Russo agreed to pay $70,075, the SEC said.

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