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by Mike Caswell
Imran Husain, a California man accused of running a seven-year shell factory scheme, has lost his effort to have the charges dismissed. A California judge has determined that there is sufficient evidence of fraud for the matter to proceed to trial. Mr. Husain's "deceitful activities" included using sham investors and producing misleading regulatory filings, the judge says.
The SEC claims that Mr. Husain and a New Jersey lawyer, Gregg Jaclin, fraudulently created nine public companies, including one with a Toronto address that purported to offer movie previews. The companies each had fake business plans, allowing them to bypass the normal requirements for shells, the SEC said. The companies also had straw shareholders and puppet officers, according to the SEC. Mr. Husain and Mr. Jaclin sold the shells for hundreds of thousands of dollars each, generating $2.25-million in proceeds, the SEC claimed. (All figures are in U.S. dollars.)
Until now, the case had been held up while Mr. Husain and Mr. Jaclin attempted to have the charges dropped. Mr. Husain denied that he defrauded anybody, claiming that he simply started some companies and took them public. There was nothing illegal about the subsequent sales of those companies, he claimed. Mr. Jaclin also denied any wrongdoing, saying that he was just doing what amounted to legal work. He said that he did not receive stock or any financial benefit from the scheme.
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