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Jun 29, 2007 (SECURITIES AND EXCHANGE COMMISSION RELEASE/ContentWorks via COMTEX) -- The Commission today announced that a Pennsylvania federal grand jury criminally indicted James E. Plant, the CEO of CyberKey Solutions, Inc. (CyberKey), on charges of securities fraud and lying to the SEC during its probe of a scheme Plant orchestrated to pump up the price of Cyberkey's shares. Plant is alleged to have given false testimony to the Commission about Cyberkey's purported business dealings with the U.S. Department of Homeland Security ("DHS"), the receipt of payments under a DHS contract, and a purported business relationship with an intermediary company.
The two-count indictment charges Plant with orchestrating a fraud scheme in which he personally made in excess of one million dollars selling Cyberkey shares at inflated prices while lying to the public about Cyberkey's business prospects and management.
According to the indictment, Plant was responsible for disseminating, in an effort artificially to inflate the price of Cyberkey's shares, numerous false and misleading press releases between December 8, 2005 and March 15, 2007. These press releases contained materially false and misleading statements concerning 1) a fictitious $24.5 million purchase order that CyberKey supposedly received from DHS, when as Plant knew, that DHS purchase order did not exist; 2) revenues and profits that CyberKey had supposedly realized from the fictitious DHS purchase order, when as Plant knew, CyberKey did not receive, and did not expect to receive, any revenues or profits from the fictitious DHS purchase order; 3) Plant's false representations that Cyberkey's financial statements were in the process of being audited and would be released in the near future, when as Plant knew, CyberKey did not expect to release audited financial statements in that time period; and/or 4) Plant's false representations that the failure of the company to realize revenues from the DHS contract was the result of both improper accounting practices used by a company officer, and a third-party's actions to circumvent CyberKey as the middleman of the DHS purchase order, when as Plant knew, the lack of revenues from the DHS purchase order resulted because there was no such purchase order with DHS.
The Commission's civil fraud complaint against Cyberkey and Plant covering the scheme, filed on March 20, 2007, further alleged that CyberKey had no business relationship at all, either directly or indirectly, with DHS, and generated no revenues whatsoever from any such relationship.
Today's criminal indictment charges Plant with securities fraud, in violation of 15 U.S.C. 78j(b), 78ff; and making a false statement to the Commission, in violation of 18 U.S.C. 1001.
Plant was arrested on March 13, 2007, in St. George, Utah, by agents of the FBI's Philadelphia Economic Crimes Squad and the United States Postal Inspection Service on charges of securities fraud and aiding and abetting securities fraud. One week later, the Commission filed its civil case against Cyberkey and Plant for engaging in an ongoing unregistered offering of Cyberkey shares while promoting the bogus DHS purchase order. [SEC v. Cyberkey Solutions, Inc. and James E. Plant, Civ. Action No. 07 1084 (CMR) (E.D. Pa, filed March 20, 2007); Crim no. 07-375] (LR-20171)
Copyright (C) 2007 Federal Information & News Dispatch, Inc.
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