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by Mike Caswell
The U.S. Securities and Exchange Commission has won a $1.75-million decision against Imran Husain, a California man who ran a scheme that the judge has labelled a "how-to" guide for illegal shell factory operations. (All figures are in U.S. dollars.) He employed puppet officers and coached a witness to lie under oath, among other things. His actions "exude the very essence of an unlawful scheme," the judge has found.
The penalty for Mr. Husain comes as part of a case in which the SEC claimed that he fraudulently created nine public companies, including one with a Toronto address that purported to offer movie previews. The SEC said that the companies had fake business plans, allowing them to bypass the normal requirements for shells. Mr. Husain and a co-accused sold the shells for hundreds of thousands of dollars each, generating $2.25-million in proceeds, according to the SEC.
Mr. Husain's penalty is contained in an order handed down on Thursday, March 25, in federal court in California. In addition to the $1.75-million fine, the judge has imposed a seven-year officer and director ban and a permanent injunction barring future violations. The decision is not a complete victory for the SEC, however, as the judge denied the regulator's request for disgorgement of Mr. Husain's gains, finding that the ban and fine were sufficient punishment. (The SEC said that the total gains from the scheme amounted to $2.25-million, but at least some of that money went to a co-defendant.)
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