SEC Litigation Release No. 22742
July 3, 2013
Securities and Exchange Commission v. Magdalena
Tavella, et al.
Civil Action No. 13 CIV 4609 (S.D.N.Y.)
The Securities and Exchange
Commission filed a complaint against 8 Argentine citizens who are alleged to
have unlawfully sold millions of shares of Biozoom, Inc. in unregistered
transactions. The SEC also secured a TRO, freezing assets held in U.S. securities
firms in accounts of the eight defendants and two other Argentine citizens who
had Biozoom shares but had not yet sold them. Last week the SEC suspended
trading in Biozoom due to concerns that some shareholders may be unlawfully
distributing its securities.
The SEC alleges that from
March to June 2013, the defendants received more than 20 million shares of
Biozoom (formerly Entertainment Art, Inc.) or one-third of the company's total
outstanding shares. In a one-month period beginning in May, 8 of the Defendants
sold more than 14 million shares yielding almost $34 million. $17
million out of the sales proceeds was wired to overseas bank accounts.
According to the SEC's
complaint, the Defendants claimed to have acquired the bulk of the shares in
March 2013 from Biozoom’s former shareholders who purchased them in private
placements that began in 2007. Each of the defendants provided stock purchase
agreements between them and the former shareholders purportedly signed by the
defendants and those shareholders.
