U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 23832 / May 11, 2017
Securities and Exchange Commission v. Douglas Roe and Donald Lindo, Case No. 8:17-cv-01293-TDC (D.Md., filed May 11, 2017)
The Securities and Exchange Commission today announced charges against two individuals involved in a fraudulent scheme to offer for sale a penny stock by filing false and misleading registration statements with the Commission.
According to the SEC’s complaint filed in U.S. District Court for the District of Maryland, Douglas Roe, a resident of Vancouver, British Columbia, teamed with Donald Lindo, a resident of Kingston, Jamaica, in an attempt to register for sale shares of Blue Mountain Eco Tours, Inc. The complaint alleges that Roe and Lindo engaged in a scheme to file the registration statements that they knew or were reckless in not knowing contained false statements.
The complaint alleges, among other things, that Blue Mountain’s registration statements:
- Falsely identify Lindo as Blue Mountain’s sole officer, director and employee, when, in fact, Lindo was a mere figurehead The complaint further alleges that Lindo blindly signed management representation letters and loan verification documents sent to Blue Mountain’s auditors.
- Fail to disclose that Roe was a control person of Blue Mountain. According to the complaint, Roe enlisted Blue Mountain’s attorney, auditors, and accountant and controlled the company’s communications with these professionals. Additionally, Roe used his own monies to pay professional fees for auditing services critical to facilitating Blue Mountain’s registration statements.
- Falsely state that Lindo loaned money to Blue Mountain for working capital purposes; and
- Falsely state that Blue Mountain had partially repaid the loan to Lindo.
The SEC’s complaint charges Roe and Lindo with violating Sections 17(a)(1) and (3) of the Securities Act of 1933. The SEC seeks financial penalties, permanent injunctions, officer-and-director bars and penny stock bars against both defendants.
In a related action, on February 26, 2016, the SEC instituted a stop order proceeding against Blue Mountain that led to the suspension of Blue Mountain’s registration statement on April 19, 2016.
The SEC’s investigation, which is continuing, is being conducted by Gary M. Miller in the Miami Regional Office as part of the Microcap Fraud Task Force. The case is being supervised by Elisha L. Frank, and the SEC’s litigation will be led by Christine Nestor. The SEC appreciates the assistance of the British Columbia Securities Commission.