Securities News

SEC Charges Cyberkey for Promoting Stock Offering with Phony Homeland Security Deal

March 20, 2007 — The Securities and Exchange Commission today announced a civil injunctive action alleging that a Utah-based corporation and its Chief Executive Officer made at least $1.5 million selling shares to investors while disseminating false claims of a lucrative purchase order from the Department of Homeland Security (DHS).

In its complaint, filed today in the United States District Court for the Eastern District of Pennsylvania, the Commission alleged that Cyberkey Solutions, Inc. of St. George, Utah, and its CEO James E. Plant, between November 2005 and the present, have engaged in an ongoing unregistered offering of Cyberkey shares, promoted with a series of false press releases describing a putative purchase order worth in excess of $24 million from DHS to buy Cyberkey’s flash memory drives. In fact, the Commission’s complaint alleges, Cyberkey had no business relationship at all with DHS. Additionally, according to the complaint, Cyberkey and Plant made other false statements to unsuspecting investors, including statements claiming Cyberkey had shipped products to DHS and received payments pursuant to the phony purchase order, and that Cyberkey was in the process of preparing and releasing audited financials.

Linda Chatman Thomsen, the Director of the Commission’s Enforcement Division, said, "The perpetrators of this scheme carried out an extensive fraud and even went so far as to make false claims about the Department of Homeland Security – an Agency whose mission is critical to all Americans. Our response to this kind of conduct will always be swift and firm." Read more at sec.gov

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