A West Hempstead attorney was charged with unlawfully selling unregistered securities in connection to fraudulently registering shell companies with the U.S. Securities and Exchange Commission, the U.S. Justice Department said yesterday.
David Lubin, 52, was charged with one count of conspiracy to unlawfully sell unregistered securities. He faces a maximum sentence of five years in prison and a fine up to $250,000 or double the proceeds of the offense.
To date, six other men have been convicted and sentenced to prison terms in connection to the scheme. They include Daniel McKelvey, 49, of Foster City, California, Jeffrey L. Lamson, 51, of El Dorado Hills, California, Steven Sanders, 73, of Lake Worth, Florida, Alvin S. Mirman, 78, of Sarasota, Florida, Sheldon Rose, 77, of Sarasota, and Ian Kass, 45, of Ft. Lauderdale.
According to the charging information, Lubin allegedly acted as a shell buyer, broker and attorney for various shell companies, and provided false and fraudulent opinion letters to make it appear that shares were unrestricted and available for sale to the investing public.
In early 2009, Lubin participated in the sale of a fraudulent shell entity, Entertainment Art, Inc. (EERT), and drafted and filed documents with the Securities and Exchange Commission that falsely represented the nature and control of that company’s shares and the terms of the sale.
In October 2012, EERT was sold to certain criminal actors and its name was changed to Biozoom, Inc. (BZIM). EERT purchasers and others used the fraudulently created “free trading” shares of BIZM to engage in a pump and dump stock manipulation scheme, using the EERT shares that had been falsely and fraudulently sold by Lubin.
Yesterday, the Securities and Exchange Commission announced that it had barred Lubin from appearing or practicing before it, and acting as an officer or director of a public company.
“Lubin drafted and signed misleading public filings and masked the true ownership and restricted nature of a significant portion of the company’s stock,” said Antonia Chion, associate director in the SEC’s Enforcement Division. “Lubin’s deception led to many of these same shares being illegally resold to the general public by others a few years later.”