Veteran microcap deal lawyer Gregg Jaclin was indicted May 18 on eight counts of criminal charges related to securities fraud and obstruction of justice, according to federal court records filed in Northern California by the Department of Justice.
The case is a parallel action to the civil enforcement action the Securities and Exchange Commission brought against Jaclin last May for his role working with Los Angeles stock promoter Imran Husain for nearly a decade to create public shell companies disguised as emerging growth start-ups. The DOJ expands on the SEC case by detailing Jaclin’s alleged role in coaching Husain and his co-conspirators on how to hide their identity, destroy records, and mislead the regulator’s investigation into two of the companies that were part of the shell company scheme.
The scheme detailed in the SEC and DOJ complaints alleges Jaclin, while a partner at the defunct Anslow+Jaclin law firm, conspired with Husain to create so-called “Footnote 32” shell companies with nominee officers, and merge them into private companies in exchange for stock and cash. The government accused the men of making false statements in SEC filings for at least nine companies, seven of which were shell companies sold by Husain and Jaclin to sponsors seeking to execute reverse mergers. Jaclin was responsible for finding buyers for six of the seven shells and around $2.25 million was earned by both men in the scheme, according to the government.
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A California tech start-up currently in the market with a $50 million Regulation A offering called YayYo has seen an exodus of senior leadership this month amid a storm of criticism over the company’s promotional campaign, which has included cable TV ads and online videos by rappers and TV character actors extolling investment in the company’s stock as an opportunity for retail investors to get in on the next Uber or Lyft.
On May 3 the Securities and Exchange Commission sent out letters to companies who had failed to file their 1-K annual reports this year, reminding them they were supposed to file.
The filing, an abbreviated version of the traditional 10-K filed by larger companies, requires audited financial statements and a management report discussing year-to-year performance along with a complete update of the company’s business, ownership and executive staff.
The Securities and Exchange Commission’s enforcement division delivered subpoenas last week to companies who have fallen victim to an alleged advance-fee scheme tied to Regulation A offerings. The scheme, which was first reported by Growth Capitalist in March, is believed to be led by a Southern California man, Steven J. Muehler, who was permanently banned by the SEC last year.