Penny Stock Fraud Info
Tuesday, March 24, 2009
Jack and Darrell Uselton SEC settlement
NO jail.
U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 20961 / March 18, 2009
Securities and Exchange Commission v. Darrel T. Uselton and Jack E. Uselton, Case No. 07-2211 (S.D. Tex. filed July 9, 2007)SEC Settles E-Mail Spam Campaign Case Against Two Texas Individuals
Two Texas men, who perpetrated a massive e-mail spam campaign to drive up the demand for low value stocks they owned, will pay nearly $4 million in penalties and fines and will no longer be able to trade penny stocks under an agreement reached with the Securities and Exchange Commission.
The agreement, which was entered today in the form of two final judgments by Judge Kenneth Hoyt of the U.S District Court in Houston, prohibits Darrel T. Uselton and his uncle, Jack E. Uselton, from violating antifraud provisions of the federal securities laws and trading in penny stock. Darrel Uselton also agreed to pay $2,838,866.72 in disgorgement and prejudgment interest and another $1 million in civil penalties.
According to the SEC initial complaint, the Useltons generated proceeds of more than $4 million by obtaining stock from at least 13 penny stock companies from May, 2005 through December, 2006. The duo would then, according to the SEC, sell those shares into an artificially active, and often-times rising, market that they created through manipulative trading, spam e-mails, direct mailers, and internet-based promotional activities.
The SEC determined that each of the market manipulations followed a similar pattern. Specifically, the Useltons and the companies they controlled received unrestricted shares from the penny stock companies for little or no money in return for purported financing or promotional activities. The Useltons then transferred those unrestricted shares into brokerage accounts they controlled. They then encouraged many of the penny stock companies to issue positive press releases. At the same time, the Useltons orchestrated spam e-mail campaigns using technology that would enable them to essentially instruct millions of computers to distribute their email so that it would appear as though the email was coming from a person whom the recipient might have known.
Darrel Uselton and Jack Uselton, without admitting or denying the allegations, settled the action by consenting to entry of a court order that: (i) permanently bars them from Section 10(b) of the Securities Exchange Act of 1934 ("Exchange Act") and Rule 10b-5 thereunder; and (ii) prohibits them from participating in an offering of penny stock pursuant to Section 21(d)(6) of the Exchange Act.
In addition, Darrel Uselton consented to entry of a court order that orders him to pay disgorgement and prejudgment interest in the amount of $2,838,866.72, which will be deemed satisfied upon entry of an order requiring him to pay that amount in restitution to the State of Texas. It also requires him to pay a civil monetary penalty of $1 million.
In a related enforcement action, the Useltons are in the process of settling criminal charges originally filed by the Attorney General’s Office for Texas and the Harris County District Attorney’s Office (Houston, Texas) in July 2007 and have agreed to forego any right to $2,838,866.72 that previously was seized by the Texas criminal authorities from bank and brokerage accounts controlled by Darrel Uselton.
The Commission acknowledges the assistance of the Attorney General’s Office for Texas and New York, The Harris County (Houston, Texas) District Attorney’s Office, the Federal Bureau of Investigation, the Texas State Securities Board, the United States Attorney’s Office District of Colorado, the Financial Industry Regulatory Authority, the State of Oklahoma Department of Securities, and the National Cyber-Forensics & Training Alliance.
For additional information regarding prior Commission action in this investigation, see Litigation Release No. 20187 (July 9, 2007)
“the Useltons are in the process of settling criminal charges”
It looks to me like once again, crime pays.
The WORST that can happen is that you have to give back SOME of the profits?
Tuesday, August 14, 2007
Gulf Ethanol Corp.—GFET—association with uAuthorize (Uselton)
Gulf Ethanol buys land in China
Gulf Ethanol Corp. announced today that it purchased 25 acres of land near China, Texas to develop its production plant, company spokesman Dino Price said.
The company will use non-food based, cellulosic feed-stocks for the production of ethanol at its plants. It expects the plant to operate using a new hybrid sorghum developed specifically as an ethanol feed-stock by Texas A&M University.
A reader wrote that Dino Price is currently employed at uAuthorize Corporation in the position of President and Chief Technical Officer, uAuthorize Corporation is a subsidiary of Ablaze Technologies Inc. and Dino is not employed by GFET, according to the latest financial records, they only have 3 employees.
Here’s my posting about Darrel Uselton and uAuthorize, see Darrel Uselton—UACP: Notice of publication and demand for $1,130 for SPAM
Of course he didn’t pay.
Tuesday, July 10, 2007
The Texas AG arrest video of penny stock pump and dumper Darrel Uselton
This is as cool as it gets!
Darrel Uselton’s 7/6/07 arrest video
Don’t I wish I saw more of those.
And here is the 7/9/07 TX AG press release:
Illegal “botnets” used to cheat investors out of more than $4.6 million
HOUSTON – Texas Attorney General Greg Abbott’s Special Investigations Unit charged two Texas residents with devising an illegal high-tech scheme to defraud investors out of more than $4.6 million. Both suspects, who were indicted July 3 by a Harris County grand jury, are the subjects of an ongoing investigation by several states and the Securities and Exchange Commission (SEC). In addition to the state’s charges, the suspects face securities fraud charges, which were filed today by the SEC.
Darrel Uselton, 40, of Katy, and his uncle, Jack Uselton, 69, of Houston, face organized criminal activity and money laundering charges. According to state and federal investigators, the Useltons reaped millions in illegal profits by promoting shares from at least 13 penny stock companies. The suspects then secretly sold those stocks into an artificially active market they created with manipulative trading schemes, spam e-mail campaigns, direct mailers, and Internet-based promotional activities.
The case is being prosecuted by the Texas Attorney General’s Office (OAG) and the Office of Harris County District Attorney Chuck Rosenthal with investigative assistance from the New York Attorney General’s Office. OAG investigators have seized more than $4.2 million from bank accounts associated with the defendants. Darrel Uselton was arrested by OAG investigators and is currently being held in Harris County Jail in lieu of $8 million bond. An arrest warrant has been issued for Jack Uselton.
“Investors will not tolerate scam artists who use the Internet to illegally manipulate stock prices,” Attorney General Abbott said. “Together with several states and the SEC, we have uncovered an elaborate scheme to defraud unwitting investors. The Office of the Attorney General will aggressively prosecute market manipulators, spammers and con artists whose illegal schemes defraud unsuspecting citizens.”
SEC Chairman Christopher Cox added: “This latest step in the Commission’s anti-spam initiative is intended to protect investors from fraud artists who would treat the investing public as their personal ATM machines. The use of bots to spread investment spam at exponentially higher rates is making this type of fraud an even more virulent threat to ordinary investors. Not only are victims getting hit with get-rich-quick spam, but by turning the victims’ computers into zombies, these fraudsters are sending out still more spam to others. Given estimates that up to one quarter of all personal computers connected to the Internet are part of a botnet, and the thriving market in selling lists of compromised computers to hackers and spammers, the SEC is taking this very seriously. We remain aggressively committed to tracking down anyone attempting to use bots to prey on investors with false or misleading spam about securities.”
The Commission’s complaint, which it filed with the U.S. District Court in Houston, charges the Useltons with orchestrating a series of spam e-mail campaigns. The scheme, which relied on an array of computer “botnets,” touted near-worthless penny stocks in millions of spam e-mails sent to potential investors. Those unsolicited electronic messages included baseless price projections and other unfounded claims. Each campaign, which featured a single company, lasted anywhere from several days to several weeks.
According to the SEC’s complaint, the Useltons earned more than $4.6 million from their fraudulent scheme between May 2005 and December 2006. The SEC’s complaint indicates the Useltons and companies they controlled received unrestricted penny stock shares despite little or no investment. Those shares were allegedly provided in return for their purported financing or promotional activities.
Darrel Uselton was disciplined by the National Association of Securities Dealers (NASD) in 2004 and 2005. In a 2002 action that has since settled, the SEC permanently enjoined Jack Uselton from violating anti-fraud regulations.
Darrel Uselton and Jack Uselton sued for organized crime - stock scams
A reader submitted a couple links about the Useltons, thank you! Notably, I’m still waiting for Darrel Uselton to sue me.
July 10, 2007, 8:15AM
Katy man charged in alleged online stock scamBy STEVE McVICKER
Copyright 2007 Houston ChronicleA Katy man faces organized crime charges in connection with an alleged scheme to sell worthless stocks over the Internet, according to the Texas Attorney General’s Office.
Investigators accuse Darrel Uselton, 40, of reaping “millions in illegal profits” by promoting shares in at least 13 worthless stock companies, then selling those stocks that had been artificially increased in value.
A statement from the attorney general’s office also accuses Uselton of orchestrating a series of spam e-mail campaigns to lure potential investors. The messages included “baseless price projections and other unfounded claims,” according to the statement.
Uselton is being held on $8 million bail at the Harris County Jail.
Uselton is also under investigation by the U.S. Securities and Exchange Commission and the Harris County District Attorney’s Office, according to the statement.
“This latest step in the Commission’s anti-spam initiative is intended to protect investors from fraud artists who would treat the investing public as their personal ATM machines,” SEC Chairman Christopher Cox said in the release.
Calls to Uselton’s home were not returned.
A second suspect is also being sought by authorities
The 12/29/06 Gulf Ethanol Corporation (Pink Sheets:GFET) press release announcing Uselton’s departure.
And here is the SEC complaint with the charges against JACK Uselton. Stock fraud seems to be the family business:
Thursday, January 13, 2005
Darrel Uselton—UACP: Notice of publication and demand for $1,130 for SPAM
From http://protrading.com/about.html
“… Mr. Uselton is currently the founder, Chairman and CEO of Land Investors of America, Inc., a publicly-held LAND investment company (OTCPK: “LIVA"). (See: LandInvestorsOfAmerica). In 1999, Mr. Uselton founded unHatched.com, Inc., a technology incubator, which ultimately became uAuthorize Corporation, a publicly-held internet holding company (OTCPK: “UACP") that currently operates in excess of 30 ecommerce websites, for which he also serves as Chairman & CEO. (See: uAuthorize).. Mr. Uselton has further owned, operated, funded, or advised hundreds of other businesses in a variety of industries throughout the past 15 years. ...”
My e-mail to Darrel Uselton:
1/13/05
Dear Mr. Uselton:
You caught my attention due to the many spams I received for UACP and I posted my observations at http://pennystock-fraud.info/news.php/stock/symbol/UACP/
As of right now, I have received 113 spams for UACP and I hereby request payment of my statutory damages of $1,130 for violations of the AZ Commercial Electronic Mail statues.
While the CAN Spam Act preempts state spam laws, it specifically does NOT preempt claims relating to false and deceptive spam.
The charts prove that the promises in the UACP spam were entirely false.
I believe that you are a crook. Please review my postings and should you disagree with my assessment of your operations, please notify me in writing.
To gain a better understanding of my motivation and lawsuits, please review my related press releases:
12/29/04: Mortgage Banker Dana Capital Group Named in Junk Fax Lawsuit
http://www.prweb.com/releases/2004/12/prweb192051.php
10/10/04: Consumer Sues Ameriquest Mortgage Company for Spamming, False Promises, Misrepresentation and Incompetence
http://www.prweb.com/releases/2004/9/prweb156653.php
To settle my claims or if you feel that you are not responsible for the illegal UACP promotions, please contact me by Monday, 1/17/05, as I will take legal action against you and/or your companies.
Sincerely,
Christine Baker
c: posted at http://pennystock-fraud.info/
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Mr. Uselton’s reply:
---------------------------------
Ms. Baker,
First of all, we do not succumb to extortion, and are furthermore NOT responsible for the emails being sent. We are working diligently to discover who in fact are sending these illegal emails as we do not, and never have condoned such activity. We have a large shareholder base, and it is our belief at this point, that a substantial shareholder hired an Investor Relations firm who has in turn utilized illegal spamming activities without our prior knowledge. We have, and have had for some time, a strict anti-spam policy at uAuthorize Corp. (see: http://www.uauthorize.com/spam.htm) and are actively conducting an investigation to cause an immediate cease and desist order against all such activity and parties conducting such activities
Our sincerest apologies for the inconvenience that whoever out there has caused, but please do not threaten us without the facts and demand money, as extortion is certainly more illegal than anything you have wrongly accused us of.
Sincerely,
Darrel Uselton
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And my response:
1/14/05
Dear Mr. Uselton:
1) Please explain which part of my e-mail constitutes extortion. I have a legal claim, I believe that you’re a crook, as detailed at my websites, and I have reason to believe that you or one of your companies sent out or ordered the spam.
2) Who are the shareholder and the “Investor Relations? firm who you belief to be responsible for the spam?
3) Please provide me with a copy of your complaint with the SEC about the illegal promotions.
It is intolerable that the SEC has done nothing to stop the illegal promotions, you must be outraged! I will forward a copy of your complaint to the SEC and inquire about the status of their investigation. Please fax to 571-222-1000 ASAP.
Sincerely,
Christine Baker
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1/15/05: I have not received a response from Mr. Uselton.
Could it be that he didn’t file a complaint with the SEC?
Could it be that there is no investigation by Uselton, that there is no *other shareholder* responsible for the SPAM?
Posted by Christine on 01/13 at 05:16 PM in SELL - scammers and spammers, UACP, Promoters, Darrel Uselton
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UACP - Uauthorize Inc. - SPAMMER gone public! ProTrading.com - WarrierCapital.com
They have no fear.
Mike contacted me because his domain planetmike.com was used as return address in the spam and he received thousands of bounced emails.
This happened to me once, my webhost shut down my e-mail and I had to move to a VPS because hundreds of thousands of returned mails were bringing down the server - never a good thing but really bad on a shared server. Unfortunately, I didn’t have the time and money to find out who the spammer was. Since I depend on email for my business, my life was hell for several months until they finally quit using my domain.
http://www.planetmike.com/spammers/uauthorize.com/ has some info with Mike’s research.
Uauthorize Corporation owns Protrading.com, interestingly, this domain was created in 1998. http://protrading.com/ advertises “Public Shells”.
Of course http://www.publicshellmerger.com/ is also a uAuthorize domain.
So is http://warriorcapital.com/
“Warrior Capital, LLC is private investment firm headquartered in Houston that is primarily engaged in a continuous investment program of acquiring private companies and/or taking companies public, and secondarily on providing trading management (see: http://www.protrading.com/) for small to mid-size public companies and companies seeking to go public. ...”
The domain registrations:
Posted by Christine on 01/13 at 01:36 PM in SELL - scammers and spammers, UACP, Promoters, Darrel Uselton, ProTrading.com, WarrierCapital.com
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