SEC charges California penny stock company, officers with defrauding investors

Linus Unah – Fourth Estate Contributor

Washington, DC, United States (4E) – The U.S. Securities and Exchange Commission (SEC) Tuesday charged a California-based penny stock company Terminus Energy Inc. and four corporate officers with misleading investors.

The SEC said investors were misled about the research, development, and profitability of their purported business to manufacture power generation products such as fuel cells.

The SEC alleged that after raising about $7.9 million from investors, Terminus Energy and its officers claimed to have a viable prototype capable of being sold and earning revenue.

According to the SEC’s complaint, Terminus neither had fuel cell technology nor the funding to match their claims.

The U.S. regulator said the officers were instead converting substantial amounts of investor funds to their own use.

According to the SEC’s complaint, the company failed to disclose to investors that Terminus’s operations manager George Doumanis is a convicted felon who went to prison for securities fraud.

Doumanis was secretly acting as an officer of the company despite being barred from participating in penny stock offerings, the SEC added.

Emanuel Pantelakis served on the Terminus board of directors despite having been permanently barred by the Financial Industry Regulatory Authority.

Also charged in the SEC’s complaint are Terminus’s chief executive officer Danny B. Pratte and its former president and legal counsel Joseph L. Pittera .

Terminus also allegedly used unregistered brokers to sell its securities and paid them more than twice commissions than was disclosed to investors in offering documents.

The SEC’s complaint charged Joseph Alborano with soliciting and selling investments for which he received more than $1 million in commissions.

“As alleged in our complaint, these company insiders spent massive, undisclosed amounts of investor funds and left the company with no realistic chance of developing a fuel cell product,” Eric I. Bustillo , director of the SEC’s Miami office, said in a statement.

The SEC’s complaint seeks disgorgement of ill-gotten gains plus interest and penalties.

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