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SEC wins $5.61-million (U.S.) order for Boock, Shoss

2015-01-26 11:38 ET - Street Wire

Also Street Wire (U-*SEC) U S Securities and Exchange Commission

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by Mike Caswell

The U.S. Securities and Exchange Commission has secured $5.61-million in penalties against Toronto's Irwin Boock and Texas lawyer Roger Shoss for a corporate hijacking scheme. (All figures are in U.S. dollars.) The regulator claimed that the men took over the identities of several inactive pink sheets companies over a four-year period. They then sold the stocks as shells, generating millions in illegal profits, according to the SEC.

The penalties are contained in a decision handed down by New York District Court Judge Denise Cote on Jan. 16, 2015. The men must each pay a $2.86-million civil penalty and are jointly liable for disgorgement of $2.75-million in gains from the scheme. In addition, the judge permanently banned Mr. Shoss from penny stocks. The sanctions are a decision by default, as neither man contested them.

In handing down the sanctions, the judge described the conduct of Mr. Shoss, a former lawyer, as "unmistakably willful." The SEC said that he wrote bogus opinion letters that allowed the issuance of millions of shares. He and others were able to gain control over trading shells without having to go through the long and costly process involved in legitimately creating such companies. The judge elected to impose the maximum civil penalty, finding that Mr. Shoss was a "crucial figure" who engaged in a pattern of illegal and deceptive behaviour. She described Mr. Boock's conduct as "equally egregious."

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