SEC - The United States Securities and Exchange Commission
09/23/2024 | Press release | Distributed by Public on 09/23/2024 22:31
Litigation Releases (Benjamin Ballout, Mohamed Zayed, and William Fielding)
U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 26122 / September 23, 2024
Securities and Exchange Commission v. Benjamin Ballout, Mohamed Zayed, and William Fielding, No. 9:24-cv-81170 (S.D. Fla. filed Sept. 23, 2024)
SEC Charges CEO and Two Others in Penny-Stock Fraud Scheme
The Securities and Exchange Commission today charged Michigan resident Benjamin Ballout, Egypt resident Mohamed Zayed, and Florida resident William Fielding for their roles in a fraudulent scheme to pump and dump the publicly traded stock of Enerkon Solar International, Inc. ("Enerkon").
The SEC's complaint alleges that in 2021, Ballout, who served as Enerkon's CEO, authored, approved, and issued at least three press releases that falsely claimed that Enerkon had acquired a company with distribution rights to a Covid-19 instant test; received a $28 million purchase order for the Covid-19 tests; and entered into an agreement to buy commercial property to build a large solar and hydrogen plant. Zayed allegedly participated in the scheme by fabricating a bogus purchase order to evidence the non-existent $28 million purchase order for the Covid-19 test. In June 2021, the Commission suspended trading in Enerkon's stock.
The SEC's complaint further alleges that, prior to the trading suspension, Fielding and Zayed coordinated with Ballout to profit from the artificially inflated price of Enerkon's stock using a phony convertible promissory note that Enerkon purportedly issued to Fielding in exchange for a $180,000 loan. According to the complaint, Fielding never loaned $180,000 to Enerkon, and the promissory note was backdated to 2017 and signed by Ballout, even though Ballout was not affiliated with Enerkon in 2017. In March 2021, Enerkon's transfer agent allegedly received an email from a Fielding email account, instructing the transfer agent to convert the bogus promissory note into free-trading shares of Enerkon stock. The complaint alleges that the email attached a fabricated statement from Fielding's bank account and other false records, purporting to evidence the non-existent loan. Relying on these false documents, the complaint alleges that the transfer agent issued Enerkon stock to Fielding as instructed. In transactions coordinated and negotiated on his behalf by Zayed and Ballout, Fielding allegedly sold 2.6 million Enerkon shares to a third-party investor for $407,000 in May 2021, paying $96,000 of his trading proceeds to Zayed for his role in the fraudulent scheme.
The SEC's complaint, filed in the U.S. District Court for the Southern District of Florida, charges the defendants with violating the antifraud provisions of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder and Section 17(a) of the Securities Act of 1933. Against each defendant, the SEC seeks permanent injunctions from future violations of these provisions, penny-stock bars, and civil penalties. The SEC also seeks an officer-and-director bar against Ballout and disgorgement of ill-gotten gains plus prejudgment interest from Zayed and Fielding. Without admitting or denying the SEC's allegations, Fielding has agreed to settle the matter by consenting to the entry of a final judgment that permanently enjoins him from future violations of these antifraud provisions; imposes a penny-stock bar; orders disgorgement of $311,000 plus prejudgment interest of $53,230.28; and imposes a civil penalty of $195,000. The settlement is subject to court approval.
The SEC's investigation was conducted by Derek B. Kleinmann, Kathleen V. Galloway, and Ty Martinez and supervised by Timothy S. McCole and B. David Fraser of the SEC's Fort Worth Regional Office. The litigation will be led by Patrick B. Disbennett and supervised by Keefe M. Bernstein.