SEC Files Microcap Fraud Cases Alleging Fake IPO-Related Penny Stock Sales

The U.S. Securities and Exchange Commission is barring a number of market participants from the penny stock industry for their involvement in a number of purportedly fake initial public offerings of microcap stocks. The regulator says that investors were bilked because of these schemes.

Among those barred is Newport Beach, CA securities attorney Michael J. Muellerleile. He is accused of authorizing misleading and bogus registration statements that were employed in fake IPOs for several microcap issuers. The statements were generated to purportedly move unrestricted penny stock shares to offshore market participants. Muellerleile’s firm, M2 Law Professional Corp, attorney Lan Phuong Nguyen, and American Energy Development Corp. CFO Joel Felix are also charged in this microcap fraud case.

Nguyen allegedly signed misleading and false legal opinion letters. Felix is accused of making misleading and false statements. Earlier this month, the regulator suspended trading in American Energy Development.

Meantime, the SEC is accusing Empire Stock Transfer and operations supervisor Matthew J. Blevins of moving big blocks of penny stock securities sans restrictions. Blevins purportedly transferred the securities to offshore nominees even though there were red flags cautioning that the shares could very well be part of a scam. It was just last year that the Commission charged a number of offshore entities with selling and offering unregistered penny stocks into public markets. These sales were purportedly able to happen because of the Empire Stock Transfer and Blevins.

As part of the bar, said the SEC, these market participants, along with Muellerleile, Nguyen, and Blevins, will not be allowed to engage in any more penny stock activity. The regulator claims that they “betrayed” investors’ trust. Also, Muellerleile will pay $154,267, Nguyen will pay $13,039, Felix will pay $63,695, Empire Stock Transfer will pay over $154K, and Blevins will pay $20K.

SEC Order Against Muellerleile and M2 (PDF)
SEC Order Against Nguyen (PDF)
SEC Order Against Felix (PDF)
SEC Order Against Blevins and Empire Stock Transfer (PDF)