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Dec 20, 2016

SEC Litigation Release on December 7, 2016

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U.S. SECURITIES AND EXCHANGE COMMISSION

Litigation Release No. 23703 / December 20, 2016

Securities and Exchange Commission v. Edward F. Panos, et al., No. 16-cv-2473 (D.D.C.)

SEC Charges Career Microcap Shell Promoter

The Securities and Exchange Commission announced today that on December 19, 2016, it charged Edward F. Panos, 46, of Park City, Utah, with defrauding investors by orchestrating a shell factory and promotional scheme in various microcap issuers, including E-Waste Systems, Inc.
According to the SEC's complaint, filed in federal court in the District of Columbia, Panos, then residing near Columbus, Ohio, illegally concealed his control and ownership of shell companies that he created, took public, and sold for hundreds of thousands of dollars by acting through figurehead CEOs and failing to disclose his significant beneficial ownership, which he hid in accounts not bearing his name. After selling a controlling interest in the public shells, Panos, who continued to hold shares in the companies, generated interest in the companies through paid promotional campaigns and, after the stock rose, he sold his remaining shares. The SEC's complaint also alleges that, on at least one occasion, Panos exploited inexperienced college students to execute a sham private offering to further his scheme. Panos worked with a network of professionals, including attorneys, accountants, brokers, and promoters, and other business associates to carry out this scheme across various microcap issuers.
The SEC's complaint charges Panos with violating Sections 5(a), 5(c), and 17(a) of the Securities Act of 1933, and Sections 10(b), 13(g), and 20(b) of the Securities Exchange Act of 1934 and Rules 10b-5 and 13d-1. The SEC's complaint also names Allison Panos, Panos' wife, as a relief defendant for the purpose of recovering ill-gotten gains in her possession. Without admitting or denying the SEC's allegations, Panos consented to entry of a final judgment imposing permanent injunctions and agreed to pay disgorgement of $1,437,503, plus prejudgment interest of $345,000, and a civil penalty of $1,437,503. Panos also agreed to be barred from serving as an officer and director of a public company and a penny stock bar, and a prohibition on causing or deriving any compensation from the promotion, advertising, endorsing, or marketing of any issuer of any penny stock. Allison Panos consented to entry of a judgment ordering her to pay the ordered disgorgement and prejudgment interest together with her husband. The settlement is pending approval by the court.
The SEC's investigation was conducted by Virginia Rosado Desilets, Sonia Torrico, Jennifer Clark, and Jessica Medina, with assistance from trial counsel Suzanne J. Romajas, and supervised by Jeffrey Finnell. The SEC's investigation is ongoing.
The SEC appreciates the assistance of the Financial Industry Regulatory Authority (FINRA) in this matter.

https://www.sec.gov/litigation/litreleases/2016/lr23703.htm