SEC Wins Pump-And-Dump Suit In Florida

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SEC Wins Pump-And-Dump Suit In Florida

Last Friday, a federal jury from the Middle District of Florida found that Edward Hayter, the CEO and president of BIH Corp., ran a pump-and-dump scheme, selling unregistered shares of stock in the restaurant equipment company. After a four-day trial, Hayter was found to have defrauded investors by selling the unregistered stock from 2008 to 2009 and giving false information about the company in violation of securities laws, providing a substantial win for the SEC.

The SEC’s complaint, filed in 2010, alleged that Hayter and a partner sold the company’s stock to North Bay South Corp., Bimini Reef Real Estate Inc., and Riverview Capital Inc., all companies controlled by co-defendants in the case. Hayter and his partner then dumped over $1 million of BIH’s stock on unknowing investors and split the illicit profits between themselves and others.

The SEC further alleges that Hayter and his partner pumped up the price of BIH’s stock by spreading false and misleading press releases and posting untrue information on the company’s website about BIH’s directors, its operations and business relationships, and its stock and dividend payments. Additionally, Hayter was accused of hiding his control of the company by inventing an alter ego, Cris Galo, who was supposedly BIH’s CEO and president with an entrepreneurial background and interests in a number of businesses in several states.

The SEC claimed that Hayter violated several sections of the Securities Act and the Exchange Act. The jury on Friday delivered its verdict in the SEC’s favor on all counts, and the jury noted that Hayter acted knowingly or with severe recklessness. The SEC is seeking an injunction, disgorgement with prejudgment interest, civil money penalties, and a penny stock bar against Hayter.

If you or someone you know has lost money as a result of an investment or Ponzi scheme, please contact Richard Frankowski at 888-741-7503 to discuss your potential legal remedies.

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