According to the SEC’s complaints filed in U.S. District Court for the Southern District of Florida, the schemes generally involved the payment of kickbacks to purportedly corrupt pension fund managers or stockbrokers, who would use their clients’ accounts to purchase the publicly traded stock of microcap issuers controlled or promoted by the individuals and companies charged.
The SEC announcement said Larry Wilcox, who played Officer Jonathan “Jon” Baker on “CHiPs,” perpetrated interrelated kickback schemes with two other penny stock company executives. Anthony Mellone, who was CEO of Tri-Star Holdings Inc., began the process by paying an illegal kickback to a purported employee pension fund trustee who was to purchase 40 million restricted shares of Tri-Star stock. Days later, Mellone paid another kickback for a purchase of 50 million restricted shares of stock.
Mellone informed Wilcox and Alex Parsinia about the purportedly corrupt trustee and both agreed to replicate the scheme for their own companies. Mellone demanded and received a $1,000 kickback for each completed restricted stock transaction he initiated. In each instance, the three attempted to conceal the kickback by entering into a consulting agreement with a phony company the trustee purportedly created to receive the kickback. Parsinia’s company is Zcom Networks Inc. and Wilcox’s company is The UC Hub Group.
According to the SEC the corrupt trustee and the trustee’s business associate were undercover FBI agents, and another middleman was an FBI cooperating witness.
The SEC alleges that the promoters in some of the schemes understood that they needed to disguise the kickbacks as payments to phony consulting companies, which they knew would perform no actual work. In other instances, they knew that the purported corrupt fund managers and brokers would be violating their fiduciary duties to their clients by taking part in the kickback schemes.
The SEC’s complaints allege the defendants violated Section 17(a) of the Securities Act of 1933, and Section 10(b) and Rule 10b-5 of the Securities Exchange Act of 1934. The agency is seeking permanent injunctions and financial penalties against all defendants; disgorgement plus prejudgment interest against defendants that received ill-gotten gains; officer-and-director bars against the individuals who served as officers or directors of the microcap companies involved; and penny stock bars against all individual defendants.Details of additional charges are here.