The SEC charged that Ronald Feldstein pretended to be the president of a private company, LED Capital, and entered into an investment agreement with penny stock issuer Interlink-US-Network.
In fact, Feldstein served in no such position at LED Capital and was appointed by Interlink’s management to act as a purported Interlink investor to help it in sprouting the news of a much-needed capital infusion.
SEC accused in a filing that Feldstein was well aware of the actual owner of LED Capital and assisted the firm to get the fund from the market by disseminating the false information.
SEC’s New York Regional Office Acting Regional Director Andrew Calamari said Feldstein was nothing more than a fake president for hire who schemed with a public company to tout news of a sham investment and deceive investors.
As per the SEC’s complaint filed in US District Court for the Southern District of New York, Feldstein allegedly committed LED Capital, which in reality had no operations or assets to pay $6m for a minority block of Interlink shares that had an actual market value of less than $1.2m.
Feldstein concealed the purported contract committing his company to pay more than a 500% premium for a minority block of shares in a penny stock company that had liabilities far exceeding its assets, claimed SEC.
During the course of investigation, the US watchdog found that Interlink awarded Feldstein shares of its common stock that had a market value of more than $400,000 for his performance as the phony president of LED Capital.
The regulatory body has sought injunctions from future violations of these provisions, disgorgement of ill-gotten gains, and a monetary penalty.
