In re SCOTT M. DITTMAN

UNITED STATES OF AMERICA 
Before the 
SECURITIES AND EXCHANGE COMMISSION 
SECURITIES ACT OF 1933 
Release No. 10211 / September 16, 2016 
SECURITIES EXCHANGE ACT OF 1934 
Release No. 78864 / September 16, 2016 
ACCOUNTING AND AUDITING ENFORCEMENT 
Release No. 3801 / September 16, 2016 
ADMINISTRATIVE PROCEEDING 
File No. 3-17546 
In the Matter of 
SCOTT M. DITTMAN, CPA, 
Respondent. 
 
 
 
ORDER INSTITUTING 
ADMINISTRATIVE AND CEASE-AND-
DESIST PROCEEDINGS, PURSUANT TO 
SECTION 8A OF THE SECURITIES ACT 
OF 1933, SECTIONS 4C, 15(b) AND 21C OF 
THE SECURITIES EXCHANGE ACT OF 
1934, AND RULE 102(e) OF THE 
COMMISSION’S RULES OF PRACTICE, 
MAKING FINDINGS, AND IMPOSING 
REMEDIAL SANCTIONS AND A CEASE-
AND-DESIST ORDER AND NOTICE OF 
HEARING  
I. 
The Securities and Exchange Commission (“Commission”) deems it appropriate and in 
the public interest that public administrative and cease-and-desist proceedings be, and hereby 
are, instituted pursuant to Section 8A of the Securities Act of 1933 (“Securities Act”), Sections 
4C,
1
 15(b) and 21C of the Securities Exchange Act of 1934 (“Exchange Act”) and Rule 
102(e)(1)(iii) of the Commission’s Rules of Practice
2
 against Scott M. Dittman (“Respondent”). 
                                                 
1
 Section 4C provides, in relevant part, that:  
The Commission may censure any person, or deny, temporarily or permanently, 
to any person the privilege of appearing or practicing before the Commission in 
any way, if that person is found...(1) not to possess the requisite qualifications to 
represent others...(2) to be lacking in character or integrity, or to have engaged in 

 
 
 
 
2 
 
II. 
In anticipation of the institution of these proceedings, Respondent has submitted an Offer 
of Settlement (the “Offer”) which the Commission has determined to accept.  Solely for the 
purpose of these proceedings and any other proceedings brought by or on behalf of the 
Commission, or to which the Commission is a party, Respondent admits the Commission’s 
jurisdiction over him and the subject matter of these proceedings, and consents to the entry of this 
Order Instituting Administrative and Cease-and-Desist Proceedings, Pursuant to Section 8A of the 
Securities Act of 1933, Sections 4C, 15(b) and 21C of the Securities Exchange Act of 1934, and 
Rule 102(e) of the Commission’s Rules of Practice, Making Findings, and Imposing Remedial 
Sanctions and a Cease-and-Desist Order and Notice of Hearing (“Order”), as set forth below. 
III. 
On the basis of this Order and Respondent’s Offer, the Commission finds
3
 that: 
Summary 
From approximately April 2011 to May 2014 (the “relevant period”), Fusion Pharm, Inc. 
(“FSPM”), through its chief executive officer (“CEO”), president and sole director Scott M. 
Dittman, and its undisclosed de facto officer and control person William J. Sears, engaged in an 
approximately $12.2 million fraudulent scheme in violation of the registration and antifraud 
provisions of the federal securities laws.  The scheme essentially involved four steps.  First, 
utilizing backdated convertible notes and preferred FSPM stock, FSPM issued common stock to 
Microcap, Bayside and Meadpoint, all entities controlled by Sears.  Second, Sears, through these 
entities, sold the FSPM stock into the market.  Third, Sears transferred over $1 million of the 
proceeds from the illegal stock sales back to FSPM, where the money was fraudulently recognized 
and reported as revenue.  Fourth, FSPM issued press releases and financial reports claiming the 
                                                                                                                                                             
unethical or improper professional conduct; or (3) to have willfully violated, or 
willfully aided and abetted the violation of, any provision of the securities laws or 
the rules and regulations thereunder. 
2
 Rule 102(e)(1)(iii) provides, in pertinent part, that: 
The Commission may...deny, temporarily or permanently, the privilege of 
appearing or practicing before it...to any person who is found...to have willfully 
violated, or willfully aided and abetted the violation of any provision of the 
Federal securities laws or the rules and regulations thereunder. 
3
 The findings herein are made pursuant to Respondent’s Offer of Settlement and are not binding 
on any other person or entity in this or any other proceeding.  

 
 
 
 
3 
 
false revenues, and failed to disclose Sears’ identity, role, and background in FSPM’s quarterly and 
annual reports posted on the OTC Markets Group, Inc.’s website.   
Respondent 
1. Scott M. Dittman, age 47, is a resident of Boyertown, Pennsylvania.  During the 
relevant period, Dittman was a founder, FSPM’s CEO, president, and sole director.  Dittman 
signed and certified FSPM’s unaudited quarterly and annual financial statements posted on the 
OTC website.  Dittman was licensed as a certified public accountant (“CPA”) in California in 
1995.  His CPA license was cancelled in April 2002, five years after it expired in 1997. 
Other Relevant Entities and Person 
2. Fusion Pharm, Inc. (“FSPM”) is a Nevada corporation with its principal offices in 
Denver, Colorado.  The company is focused on the development, production and sales of the 
“patent pending PharmPods cultivation container system,” which are refurbished shipping 
containers used primarily to grow cannabis.  FSPM has never registered an offering of securities 
under the Securities Act or a class of securities under the Exchange Act.  Beginning on April 4, 
2011, the company’s stock was quoted on OTC Link (previously “Pink Sheets”) operated by OTC 
Markets Group, Inc. (“OTC Link”) under the symbol FSPM.  Following the Commission’s 10-
business day trading suspension in May 2014, FSPM is currently listed as a Caveat Emptor/Grey 
Market OTC stock. 
 
3. William J. Sears, age 50, is a resident of Thornton, Colorado.  During the relevant 
period, Sears was a founder, de facto executive officer and undisclosed control person of FSPM.  
In 2007, Sears was convicted (via guilty plea) of one count of conspiracy to commit securities 
fraud and commercial bribery and one count of securities fraud.  United States v. Sears, Case No. 
04-cr-556-swk (S.D.N.Y.). 
 
4. Microcap Management LLC (“Microcap”) is a Nevada limited liability 
company, with its primary business address listed as Sears’ home address in Thornton, Colorado.  
Sears controls Microcap and is listed as the Manager with the Nevada Secretary of State.   
 
5. Bayside Realty Holdings LLC (“Bayside”) is a Nevada limited liability company, 
with its primary business address listed as the home address of Sears’ mother in New Bern, North 
Carolina.  During the relevant period, Sears controlled Bayside. 
 
6. Meadpoint Venture Partners, LLC (“Meadpoint”) is a Nevada limited liability 
company that shared a primary business address with FSPM’s prior warehouse in Denver, 
Colorado.  Meadpoint was purportedly FSPM’s exclusive distributor of PharmPods during the 
relevant period.  From 2011 through 2013, Sears represented himself as the “Managing Member” 
of Meadpoint.  Dittman was a shareholder and Internal Revenue Service Form 1099 employee of 
Meadpoint. 

 
 
 
 
4 
 
Facts  
Background 
7. In late 2010, Dittman and Sears took over an existing public company, changing its 
name to FSPM in March 2011.  Dittman was listed as the CEO of the company, but Sears acted as 
an undisclosed executive officer.  Among other things, Sears worked at FSPM from its inception, 
appeared on non-public company documents as an officer, drew a paycheck, and handled many 
day-to-day responsibilities usually reserved for a company officer.  Although FSPM was 
ostensibly in the business of selling PharmPods, it had almost no revenue to fund its operations.  
Instead, from 2011 through 2013, FSPM was funded almost entirely through illegal sales of FSPM 
stock.  
8. Initially, FSPM was funded through the sale of stock that Sears received in the 
name of Microcap, both from FSPM’s predecessor entity and as part of the transition to FSPM.  In 
order to make Sears’ sales of FSPM stock appear legitimate, and as part of the fraudulent scheme, 
Sears and Dittman made it falsely appear that Sears, through Bayside and Meadpoint, had loaned 
money to FSPM.  Once Sears and Dittman had exhausted these funds, however, Sears then 
converted the fake “debt” owed to Bayside and Meadpoint to unrestricted FSPM shares, which 
Bayside and Meadpoint then illegally sold into the market.     
9. As part of the fraudulent scheme, Sears and Dittman funneled approximately $1.3 
million from the illegal FSPM stock sales back into FSPM.  In turn, FSPM falsely claimed the 
stock sale proceeds as revenue from sales of PharmPods, thereby increasing FSPM’s stock price 
and volume and making the fraud even more profitable.  As part of the scheme, Sears and Dittman 
hid Sears’ role in FSPM so as to claim falsely that Sears’ entities were not affiliates of FSPM 
(which they were), thus facilitating Sears’ illegal sales of unrestricted FSPM stock.  They also 
failed to disclose FSPM’s purported transactions with Sears’ entities as related party transactions, 
which they were based on Sears’ role in FSPM.  
Dittman and Sears Funnel Shares Into Microcap, Bayside and Meadpoint 
10. In 2009, Microcap received common shares from FSPM’s predecessor company for 
stock promotion work.  In 2010, Microcap received preferred shares as part of the transfer of the 
predecessor company to Sears and Dittman.  In 2011, Microcap purchased FSPM common shares 
from an individual FSPM shareholder.   
11. In June 2012, Sears and Dittman prepared fraudulent non-convertible promissory 
notes and credit lines between FSPM and Bayside and between FSPM and Meadpoint.  The 
Bayside non-convertible note and credit line agreement, with a credit limit of $275,000, was 
backdated to May 2, 2011.  The Meadpoint non-convertible promissory note and credit line 
agreement, with a credit limit of $200,000 was backdated to June 15, 2011.   

 
 
 
 
5 
 
12. In November/December 2012, the Bayside and Meadpoint notes were re-drafted 
as fraudulent convertible notes.  The notes were changed from non-convertible to convertible in 
order to obtain more unrestricted FSPM stock to sell illegally into the market and to investors, 
and in turn to fund FSPM.  Without changing the notes to convertible notes, FSPM would not 
have been able to issue purportedly unrestricted shares to Sears’ entities.  The Bayside note, 
backdated to May 2, 2011, was a 10% Convertible Promissory Note and Line of Credit 
Agreement in the amount of $275,000, with a conversion rate of $0.01/share.  The Meadpoint 
convertible note, this time backdated to December 8, 2011, was a 10% Convertible Promissory 
Note in the amount of $88,000, with a conversion rate of $0.01/share. 
Microcap, Bayside and Meadpoint Illegally Sell Shares Into The Market 
13. From approximately April 28, 2011 through May 8, 2014, Sears, through his 
entities Microcap, Bayside, and Meadpoint, illegally sold over $12.2 million of restricted FSPM 
stock.   
14. Between approximately April 2011 and December 2012, Microcap sold 
approximately 735,000 shares of unregistered FSPM stock.  Microcap’s sale of these 
unregistered shares was based on false statements to brokers and to FSPM’s stock transfer agent 
that Sears had no role at or control of FSPM, and therefore that Microcap was not an affiliate of 
FSPM.  Almost all of the funds flowing into FSPM’s bank account in 2011 and 2012, either 
directly from Microcap or funneled first through Bayside, Meadpoint, or another Sears entity, 
are traced back to Microcap’s stock sales.   
15. Between approximately February 2013 and April 2013, pursuant to the Bayside 
convertible note, Bayside converted debt into 140,000 FSPM common shares and sold them 
into the market.  In order to facilitate the sales, Sears and Dittman made false statements to 
brokers and the transfer agent about Bayside’s purported non-affiliate status.  In addition to the 
consequences the fraudulent Bayside convertible promissory note had on Bayside’s ability to 
receive unrestricted shares, Bayside’s true affiliate status also meant that Bayside needed to 
abide by certain volume restrictions, which it failed to do.  Bayside sold the remainder of its 
note to an investment group for $250,000 and, based on more false statements from Dittman 
and Sears, the investors sold shares prior to the expiration of the one-year holding period 
required by Securities Act Rule 144 [17 C.F.R. § 230.144].  Bayside’s proceeds from its FSPM 
stock sales, as well as the payment from the investors, were ultimately funneled to FSPM using 
Meadpoint as an intermediary.  FSPM used proceeds from the Bayside sales of stock and debt 
to fund its 2013 operations.   
16. Between approximately March 2013 and April 2014, pursuant to the Meadpoint 
convertible note, Meadpoint converted $42,450 of debt into 4.245 million FSPM common 
shares, and then sold into the market approximately 3.2 million of those shares.  In order to 
facilitate the sales, Sears and Dittman made false statements to brokers and the transfer agent 
about Meadpoint’s purported non-affiliate status.  In August 2013, Meadpoint also converted 

 
 
 
 
6 
 
$15,000 of fake debt into 1.5 million shares and then sold them to three investors.  The investors 
received unrestricted shares on the basis of, again, Dittman’s and Sears’ false representations of 
Meadpoint’s non-affiliate status.  In 2013, Meadpoint’s stock sale proceeds and payments from 
the investors funded FSPM operations.  In 2014, Meadpoint’s proceeds from its note with 
FSPM were $9.9 million.  While some of this amount was transferred to FSPM, the majority, 
$8.7 million, was seized by criminal authorities in May 2014. 
FSPM Falsely Reports Proceeds From Stock Sales As Revenue and Issues  
Additional False and Misleading Statements  
17. While Dittman and Sears were facilitating the transfer of unrestricted FSPM 
shares to Sears through his entities, Sears illegally sold those shares into the market and round-
tripped some of the proceeds back to FSPM.  FSPM, through Dittman and Sears, reported false 
revenues and made false statements about sales of PharmPods in press releases, which in turn 
maintained and/or increased FSPM’s stock price and volume, and allowed Sears to sell his 
FSPM stock into the market.  The false financial statements and revenue reported by FSPM were 
included in: (1) FSPM’s 2011 annual report (including its financial statements and notes to the 
financial statements), signed by Dittman and posted on the OTC Markets Group Inc.’s website; 
(2) FSPM’s 2012 annual report, signed by Dittman and posted on the OTC website; and (3) 
FSPM’s 2013 annual report, signed by Dittman and posted on the OTC website.   
18. FSPM also claimed to have sold PharmPods to certain Sears’ entities, including to 
Meadpoint and another Sears entity, but failed to disclose these transactions, as well as the 
Bayside and Meadpoint notes, as related party transactions.  FSPM’s Information and Disclosure 
Statement for the period ended September 30, 2011, and its 2011 and 2012 annual reports, all 
signed by Dittman and posted on the OTC website, falsely stated there were no related party 
transactions.  Further, none of FSPM’s other quarterly reports or its 2013 annual report posted on 
the OTC website disclosed related party transactions.
.
  
 
Violations 
19. As a result of the conduct described above, Respondent willfully violated Sections 
5(a) and 5(c) of the Securities Act.  Section 5(a) of the Securities Act prohibits the direct or indirect 
sale of securities through the mail or interstate commerce unless a registration statement is in 
effect.  Section 5(c) prohibits the direct or indirect offer for sale of securities through the mail or 
interstate commerce unless a registration statement has been filed.   
20. As a result of the conduct described above, Respondent willfully violated Sections 
17(a) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder.  
Section 17(a) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5 
thereunder prohibit fraudulent conduct in the offer or sale of securities and in connection with the 
purchase or sale of securities. 

 
 
 
 
7 
 
21. As a result of the conduct described above, Respondent willfully aided and abetted 
and caused FSPM’s violations of Sections 5(a), 5(c) and 17(a) of the Securities Act and Section 
10(b) of the Exchange Act and Rule 10b-5 thereunder.  
22. Exchange Act Section 4C(a)(3) and Rule 102(e)(1)(iii) of the Commission’s 
Rules of Practice provide, in pertinent part, that “[t]he Commission may censure a person or 
deny, temporarily or permanently, the privilege of appearing or practicing before it in any way to 
any person who is found . . . [t]o have willfully violated, or willfully aided and abetted the 
violation of, any provision of the Federal securities laws or the rules and regulations 
thereunder.”  17 C.F.R. § 201.102(e)(1)(iii).  As a result of the conduct described above, 
Respondent willfully violated, and willfully aided and abetted the violation of, the 
aforementioned provisions of the Securities Act and Exchange Act within the meaning of 
Section 4C(a)(3) and Rule 102(e)(1)(iii). 
Plea Agreement 
23. Respondent has entered into a written agreement to plead guilty to criminal conduct 
relating to the findings in the Order.  Specifically, in United States v. William Sears and Scott 
Matthew Dittman, 16-CR-301-WJM (D.Colo.), Respondent agreed to plead guilty to conspiracy 
[18 U.S.C. § 371] to commit violations of Section 5(a) of the Securities Act [15 U.S.C. § 77e(a)], 
violations of Section 10(b) of the Exchange Act [15 U.S.C. § 78j(b)] and Rule 10b-5 thereunder 
[17 C.F.R. § 240.10b-5],wire fraud [18 U.S.C. § 1343], and mail fraud [18 U.S.C. § 1341].     
IV. 
Pursuant to this Order, Respondent agrees to additional proceedings in this proceeding to 
determine what, if any, disgorgement pursuant to Section 8A(e) of the Securities Act and Section 
21C(e) of the Exchange Act and/or civil penalties pursuant to Section 8A(g) of the Securities Act 
and Section 21B(a) of the Exchange Act against Respondent are in the public interest.  In 
connection with such additional proceedings: (a) Respondent agrees that he will be precluded from 
arguing that he did not violate the federal securities laws described in the Order; (b) Respondent 
agrees that he may not challenge the validity of the Order; (c) solely for the purposes of such 
additional proceedings, the findings of the Order shall be accepted as and deemed true by the 
hearing officer; and (d) the hearing officer may determine the issues raised in the additional 
proceedings on the basis of affidavits, declarations, excerpts of sworn deposition or investigative 
testimony, and documentary evidence.  It is further Ordered that, for purposes of exceptions to 
discharge set forth in Section 523 of the Bankruptcy Code, 11 U.S.C. §523, the findings in this 
Order are true and admitted by Respondent, and further, any debt for disgorgement, prejudgment 
interest, civil penalty or other amounts due by Respondent under this Order or any other 
judgment, order, consent order, decree or settlement agreement entered in connection with this 
proceeding, is a debt for the violation by Respondent of the federal securities laws or any 
regulation or order issued under such laws, as set forth in Section 523(a)(19) of the Bankruptcy 
Code, 11 U.S.C. §523(a)(19). 

 
 
 
 
8 
 
V. 
In view of the foregoing, the Commission deems it appropriate and in the public interest 
to impose the sanctions agreed to in Respondent’s Offer: 
Accordingly, pursuant to Section 8A of the Securities Act, Sections 4C, 15(b) and 21C of 
the Exchange Act, and Rule 102(e) of the Commission’s Rules of Practice it is hereby ORDERED, 
effective immediately, that: 
A. Respondent shall cease and desist from committing or causing any violations and 
any future violations of Sections 5(a), 5(c), and 17(a) of the Securities Act and Section 10(b) of the 
Exchange Act and Rule 10b-5 thereunder.   
 
B. Respondent be, and hereby is: 
barred from participating in any offering of a penny stock, including: 
acting as a promoter, finder, consultant, agent or other person who 
engages in activities with a broker, dealer or issuer for purposes of the 
issuance or trading in any penny stock, or inducing or attempting to induce 
the purchase or sale of any penny stock. 
C. Respondent is prohibited from acting as an officer or director of any issuer that 
has a class of securities registered pursuant to Section 12 of the Exchange Act or that is 
required to file reports pursuant to Section 15(d) of the Exchange Act.  
 
D. Respondent is denied the privilege of appearing or practicing before the 
Commission as an accountant.  
 
IT IS FURTHER ORDERED pursuant to Rule 100(c) of the Commission’s Rules of 
Practice, 17 C.F.R. § 201.100(c), in the interest of justice and without prejudice to any party, that 
a public hearing for the purpose of taking evidence on the questions set forth in Section IV 
hereof shall be convened at a time and place to be fixed, and before an Administrative Law 
Judge to be designated by further order as provided by Rule 110 of the Commission’s Rules of 
Practice, 17 C.F.R. § 201.110, following the entry of a final judgment against the last remaining 
defendant(s) in United States v. William Sears and Scott Matthew Dittman, 16-CR-301-WJM 
(D.Colo.) (the “Related Actions”). 
If Dittman fails to appear at a hearing after being duly notified, Dittman may be 
deemed in default and the proceedings may be determined against him upon consideration of 
this Order, the allegations of which may be deemed to be true as provided by Rules 155(a), 
221(f), and 310 of the Commission’s Rules of Practice, 17 C.F.R. §§ 201.155(a), 201.221(f), 
and 201.310. 

 
 
 
 
9 
 
This Order shall be served forthwith upon Dittman personally or by certified mail. 
IT IS FURTHER ORDERED pursuant to Rule 100(c) of the Commission’s Rules of 
Practice, 17 C.F.R. § 201.100(c), in the interest of justice and without prejudice to any party, that 
the Administrative Law Judge shall issue an initial decision no later than 120 days from the date 
of the entry of a final judgment in the Related Actions. 
In the absence of an appropriate waiver, no officer or employee of the Commission 
engaged in the performance of investigative or prosecuting functions in this or any factually 
related proceeding will be permitted to participate or advise in the decision of this matter, except 
as witness or counsel in proceedings held pursuant to notice.  Since this proceeding is not “rule 
making” within the meaning of Section 551 of the Administrative Procedure Act, it is not 
deemed subject to the provisions of Section 553 delaying the effective date of any final 
Commission action. 
By the Commission. 
 
 
       Brent J. Fields 
       Secretary 
 

UNITED STATES OF AMERICA 

Before the 

SECURITIES AND EXCHANGE COMMISSION 

SECURITIES ACT OF 1933 

Release No. 10211 / September 16, 2016 

SECURITIES EXCHANGE ACT OF 1934 

Release No. 78864 / September 16, 2016 

ACCOUNTING AND AUDITING ENFORCEMENT 

Release No. 3801 / September 16, 2016 

ADMINISTRATIVE PROCEEDING 

File No. 3-17546 

In the Matter of 

SCOTT M. DITTMAN, CPA, 

Respondent. 

 

 

 

ORDER INSTITUTING 

ADMINISTRATIVE AND CEASE-AND-

DESIST PROCEEDINGS, PURSUANT TO 

SECTION 8A OF THE SECURITIES ACT 

OF 1933, SECTIONS 4C, 15(b) AND 21C OF 

THE SECURITIES EXCHANGE ACT OF 

1934, AND RULE 102(e) OF THE 

COMMISSION’S RULES OF PRACTICE, 

MAKING FINDINGS, AND IMPOSING 

REMEDIAL SANCTIONS AND A CEASE-

AND-DESIST ORDER AND NOTICE OF 

HEARING  

I. 

The Securities and Exchange Commission (“Commission”) deems it appropriate and in 

the public interest that public administrative and cease-and-desist proceedings be, and hereby 

are, instituted pursuant to Section 8A of the Securities Act of 1933 (“Securities Act”), Sections 

4C,
1
 15(b) and 21C of the Securities Exchange Act of 1934 (“Exchange Act”) and Rule 

102(e)(1)(iii) of the Commission’s Rules of Practice
2
 against Scott M. Dittman (“Respondent”). 

                                                 
1
 Section 4C provides, in relevant part, that:  

The Commission may censure any person, or deny, temporarily or permanently, 

to any person the privilege of appearing or practicing before the Commission in 

any way, if that person is found…(1) not to possess the requisite qualifications to 

represent others…(2) to be lacking in character or integrity, or to have engaged in 



 
 

 

 

2 

 

II. 

In anticipation of the institution of these proceedings, Respondent has submitted an Offer 

of Settlement (the “Offer”) which the Commission has determined to accept.  Solely for the 

purpose of these proceedings and any other proceedings brought by or on behalf of the 

Commission, or to which the Commission is a party, Respondent admits the Commission’s 

jurisdiction over him and the subject matter of these proceedings, and consents to the entry of this 

Order Instituting Administrative and Cease-and-Desist Proceedings, Pursuant to Section 8A of the 

Securities Act of 1933, Sections 4C, 15(b) and 21C of the Securities Exchange Act of 1934, and 

Rule 102(e) of the Commission’s Rules of Practice, Making Findings, and Imposing Remedial 

Sanctions and a Cease-and-Desist Order and Notice of Hearing (“Order”), as set forth below. 

III. 

On the basis of this Order and Respondent’s Offer, the Commission finds3 that: 

Summary 

From approximately April 2011 to May 2014 (the “relevant period”), Fusion Pharm, Inc. 

(“FSPM”), through its chief executive officer (“CEO”), president and sole director Scott M. 

Dittman, and its undisclosed de facto officer and control person William J. Sears, engaged in an 

approximately $12.2 million fraudulent scheme in violation of the registration and antifraud 

provisions of the federal securities laws.  The scheme essentially involved four steps.  First, 

utilizing backdated convertible notes and preferred FSPM stock, FSPM issued common stock to 

Microcap, Bayside and Meadpoint, all entities controlled by Sears.  Second, Sears, through these 

entities, sold the FSPM stock into the market.  Third, Sears transferred over $1 million of the 

proceeds from the illegal stock sales back to FSPM, where the money was fraudulently recognized 

and reported as revenue.  Fourth, FSPM issued press releases and financial reports claiming the 

                                                                                                                                                             

unethical or improper professional conduct; or (3) to have willfully violated, or 

willfully aided and abetted the violation of, any provision of the securities laws or 

the rules and regulations thereunder. 

2 Rule 102(e)(1)(iii) provides, in pertinent part, that: 

The Commission may…deny, temporarily or permanently, the privilege of 

appearing or practicing before it…to any person who is found…to have willfully 

violated, or willfully aided and abetted the violation of any provision of the 

Federal securities laws or the rules and regulations thereunder. 

3 The findings herein are made pursuant to Respondent’s Offer of Settlement and are not binding 

on any other person or entity in this or any other proceeding.  



 
 

 

 

3 

 

false revenues, and failed to disclose Sears’ identity, role, and background in FSPM’s quarterly and 

annual reports posted on the OTC Markets Group, Inc.’s website.   

Respondent 

1. Scott M. Dittman, age 47, is a resident of Boyertown, Pennsylvania.  During the 

relevant period, Dittman was a founder, FSPM’s CEO, president, and sole director.  Dittman 

signed and certified FSPM’s unaudited quarterly and annual financial statements posted on the 

OTC website.  Dittman was licensed as a certified public accountant (“CPA”) in California in 

1995.  His CPA license was cancelled in April 2002, five years after it expired in 1997. 

Other Relevant Entities and Person 

2. Fusion Pharm, Inc. (“FSPM”) is a Nevada corporation with its principal offices in 

Denver, Colorado.  The company is focused on the development, production and sales of the 

“patent pending PharmPods cultivation container system,” which are refurbished shipping 

containers used primarily to grow cannabis.  FSPM has never registered an offering of securities 

under the Securities Act or a class of securities under the Exchange Act.  Beginning on April 4, 

2011, the company’s stock was quoted on OTC Link (previously “Pink Sheets”) operated by OTC 

Markets Group, Inc. (“OTC Link”) under the symbol FSPM.  Following the Commission’s 10-

business day trading suspension in May 2014, FSPM is currently listed as a Caveat Emptor/Grey 

Market OTC stock. 

 

3. William J. Sears, age 50, is a resident of Thornton, Colorado.  During the relevant 

period, Sears was a founder, de facto executive officer and undisclosed control person of FSPM.  

In 2007, Sears was convicted (via guilty plea) of one count of conspiracy to commit securities 

fraud and commercial bribery and one count of securities fraud.  United States v. Sears, Case No. 

04-cr-556-swk (S.D.N.Y.). 

 

4. Microcap Management LLC (“Microcap”) is a Nevada limited liability 

company, with its primary business address listed as Sears’ home address in Thornton, Colorado.  

Sears controls Microcap and is listed as the Manager with the Nevada Secretary of State.   

 

5. Bayside Realty Holdings LLC (“Bayside”) is a Nevada limited liability company, 

with its primary business address listed as the home address of Sears’ mother in New Bern, North 

Carolina.  During the relevant period, Sears controlled Bayside. 

 

6. Meadpoint Venture Partners, LLC (“Meadpoint”) is a Nevada limited liability 

company that shared a primary business address with FSPM’s prior warehouse in Denver, 

Colorado.  Meadpoint was purportedly FSPM’s exclusive distributor of PharmPods during the 

relevant period.  From 2011 through 2013, Sears represented himself as the “Managing Member” 

of Meadpoint.  Dittman was a shareholder and Internal Revenue Service Form 1099 employee of 

Meadpoint. 



 
 

 

 

4 

 

Facts  

Background 

7. In late 2010, Dittman and Sears took over an existing public company, changing its 

name to FSPM in March 2011.  Dittman was listed as the CEO of the company, but Sears acted as 

an undisclosed executive officer.  Among other things, Sears worked at FSPM from its inception, 

appeared on non-public company documents as an officer, drew a paycheck, and handled many 

day-to-day responsibilities usually reserved for a company officer.  Although FSPM was 

ostensibly in the business of selling PharmPods, it had almost no revenue to fund its operations.  

Instead, from 2011 through 2013, FSPM was funded almost entirely through illegal sales of FSPM 

stock.  

8. Initially, FSPM was funded through the sale of stock that Sears received in the 

name of Microcap, both from FSPM’s predecessor entity and as part of the transition to FSPM.  In 

order to make Sears’ sales of FSPM stock appear legitimate, and as part of the fraudulent scheme, 

Sears and Dittman made it falsely appear that Sears, through Bayside and Meadpoint, had loaned 

money to FSPM.  Once Sears and Dittman had exhausted these funds, however, Sears then 

converted the fake “debt” owed to Bayside and Meadpoint to unrestricted FSPM shares, which 

Bayside and Meadpoint then illegally sold into the market.     

9. As part of the fraudulent scheme, Sears and Dittman funneled approximately $1.3 

million from the illegal FSPM stock sales back into FSPM.  In turn, FSPM falsely claimed the 

stock sale proceeds as revenue from sales of PharmPods, thereby increasing FSPM’s stock price 

and volume and making the fraud even more profitable.  As part of the scheme, Sears and Dittman 

hid Sears’ role in FSPM so as to claim falsely that Sears’ entities were not affiliates of FSPM 

(which they were), thus facilitating Sears’ illegal sales of unrestricted FSPM stock.  They also 

failed to disclose FSPM’s purported transactions with Sears’ entities as related party transactions, 

which they were based on Sears’ role in FSPM.  

Dittman and Sears Funnel Shares Into Microcap, Bayside and Meadpoint 

10. In 2009, Microcap received common shares from FSPM’s predecessor company for 

stock promotion work.  In 2010, Microcap received preferred shares as part of the transfer of the 

predecessor company to Sears and Dittman.  In 2011, Microcap purchased FSPM common shares 

from an individual FSPM shareholder.   

11. In June 2012, Sears and Dittman prepared fraudulent non-convertible promissory 

notes and credit lines between FSPM and Bayside and between FSPM and Meadpoint.  The 

Bayside non-convertible note and credit line agreement, with a credit limit of $275,000, was 

backdated to May 2, 2011.  The Meadpoint non-convertible promissory note and credit line 

agreement, with a credit limit of $200,000 was backdated to June 15, 2011.   



 
 

 

 

5 

 

12. In November/December 2012, the Bayside and Meadpoint notes were re-drafted 

as fraudulent convertible notes.  The notes were changed from non-convertible to convertible in 

order to obtain more unrestricted FSPM stock to sell illegally into the market and to investors, 

and in turn to fund FSPM.  Without changing the notes to convertible notes, FSPM would not 

have been able to issue purportedly unrestricted shares to Sears’ entities.  The Bayside note, 

backdated to May 2, 2011, was a 10% Convertible Promissory Note and Line of Credit 

Agreement in the amount of $275,000, with a conversion rate of $0.01/share.  The Meadpoint 

convertible note, this time backdated to December 8, 2011, was a 10% Convertible Promissory 

Note in the amount of $88,000, with a conversion rate of $0.01/share. 

Microcap, Bayside and Meadpoint Illegally Sell Shares Into The Market 

13. From approximately April 28, 2011 through May 8, 2014, Sears, through his 

entities Microcap, Bayside, and Meadpoint, illegally sold over $12.2 million of restricted FSPM 

stock.   

14. Between approximately April 2011 and December 2012, Microcap sold 

approximately 735,000 shares of unregistered FSPM stock.  Microcap’s sale of these 

unregistered shares was based on false statements to brokers and to FSPM’s stock transfer agent 

that Sears had no role at or control of FSPM, and therefore that Microcap was not an affiliate of 

FSPM.  Almost all of the funds flowing into FSPM’s bank account in 2011 and 2012, either 

directly from Microcap or funneled first through Bayside, Meadpoint, or another Sears entity, 

are traced back to Microcap’s stock sales.   

15. Between approximately February 2013 and April 2013, pursuant to the Bayside 

convertible note, Bayside converted debt into 140,000 FSPM common shares and sold them 

into the market.  In order to facilitate the sales, Sears and Dittman made false statements to 

brokers and the transfer agent about Bayside’s purported non-affiliate status.  In addition to the 

consequences the fraudulent Bayside convertible promissory note had on Bayside’s ability to 

receive unrestricted shares, Bayside’s true affiliate status also meant that Bayside needed to 

abide by certain volume restrictions, which it failed to do.  Bayside sold the remainder of its 

note to an investment group for $250,000 and, based on more false statements from Dittman 

and Sears, the investors sold shares prior to the expiration of the one-year holding period 

required by Securities Act Rule 144 [17 C.F.R. § 230.144].  Bayside’s proceeds from its FSPM 

stock sales, as well as the payment from the investors, were ultimately funneled to FSPM using 

Meadpoint as an intermediary.  FSPM used proceeds from the Bayside sales of stock and debt 

to fund its 2013 operations.   

16. Between approximately March 2013 and April 2014, pursuant to the Meadpoint 

convertible note, Meadpoint converted $42,450 of debt into 4.245 million FSPM common 

shares, and then sold into the market approximately 3.2 million of those shares.  In order to 

facilitate the sales, Sears and Dittman made false statements to brokers and the transfer agent 

about Meadpoint’s purported non-affiliate status.  In August 2013, Meadpoint also converted 



 
 

 

 

6 

 

$15,000 of fake debt into 1.5 million shares and then sold them to three investors.  The investors 

received unrestricted shares on the basis of, again, Dittman’s and Sears’ false representations of 

Meadpoint’s non-affiliate status.  In 2013, Meadpoint’s stock sale proceeds and payments from 

the investors funded FSPM operations.  In 2014, Meadpoint’s proceeds from its note with 

FSPM were $9.9 million.  While some of this amount was transferred to FSPM, the majority, 

$8.7 million, was seized by criminal authorities in May 2014. 

FSPM Falsely Reports Proceeds From Stock Sales As Revenue and Issues  

Additional False and Misleading Statements  

17. While Dittman and Sears were facilitating the transfer of unrestricted FSPM 

shares to Sears through his entities, Sears illegally sold those shares into the market and round-

tripped some of the proceeds back to FSPM.  FSPM, through Dittman and Sears, reported false 

revenues and made false statements about sales of PharmPods in press releases, which in turn 

maintained and/or increased FSPM’s stock price and volume, and allowed Sears to sell his 

FSPM stock into the market.  The false financial statements and revenue reported by FSPM were 

included in: (1) FSPM’s 2011 annual report (including its financial statements and notes to the 

financial statements), signed by Dittman and posted on the OTC Markets Group Inc.’s website; 

(2) FSPM’s 2012 annual report, signed by Dittman and posted on the OTC website; and (3) 

FSPM’s 2013 annual report, signed by Dittman and posted on the OTC website.   

18. FSPM also claimed to have sold PharmPods to certain Sears’ entities, including to 

Meadpoint and another Sears entity, but failed to disclose these transactions, as well as the 

Bayside and Meadpoint notes, as related party transactions.  FSPM’s Information and Disclosure 

Statement for the period ended September 30, 2011, and its 2011 and 2012 annual reports, all 

signed by Dittman and posted on the OTC website, falsely stated there were no related party 

transactions.  Further, none of FSPM’s other quarterly reports or its 2013 annual report posted on 

the OTC website disclosed related party transactions.
.
  

 

Violations 

19. As a result of the conduct described above, Respondent willfully violated Sections 

5(a) and 5(c) of the Securities Act.  Section 5(a) of the Securities Act prohibits the direct or indirect 

sale of securities through the mail or interstate commerce unless a registration statement is in 

effect.  Section 5(c) prohibits the direct or indirect offer for sale of securities through the mail or 

interstate commerce unless a registration statement has been filed.   

20. As a result of the conduct described above, Respondent willfully violated Sections 

17(a) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder.  

Section 17(a) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5 

thereunder prohibit fraudulent conduct in the offer or sale of securities and in connection with the 

purchase or sale of securities. 



 
 

 

 

7 

 

21. As a result of the conduct described above, Respondent willfully aided and abetted 

and caused FSPM’s violations of Sections 5(a), 5(c) and 17(a) of the Securities Act and Section 

10(b) of the Exchange Act and Rule 10b-5 thereunder.  

22. Exchange Act Section 4C(a)(3) and Rule 102(e)(1)(iii) of the Commission’s 

Rules of Practice provide, in pertinent part, that “[t]he Commission may censure a person or 

deny, temporarily or permanently, the privilege of appearing or practicing before it in any way to 

any person who is found . . . [t]o have willfully violated, or willfully aided and abetted the 

violation of, any provision of the Federal securities laws or the rules and regulations 

thereunder.”  17 C.F.R. § 201.102(e)(1)(iii).  As a result of the conduct described above, 

Respondent willfully violated, and willfully aided and abetted the violation of, the 

aforementioned provisions of the Securities Act and Exchange Act within the meaning of 

Section 4C(a)(3) and Rule 102(e)(1)(iii). 

Plea Agreement 

23. Respondent has entered into a written agreement to plead guilty to criminal conduct 

relating to the findings in the Order.  Specifically, in United States v. William Sears and Scott 

Matthew Dittman, 16-CR-301-WJM (D.Colo.), Respondent agreed to plead guilty to conspiracy 

[18 U.S.C. § 371] to commit violations of Section 5(a) of the Securities Act [15 U.S.C. § 77e(a)], 

violations of Section 10(b) of the Exchange Act [15 U.S.C. § 78j(b)] and Rule 10b-5 thereunder 

[17 C.F.R. § 240.10b-5],wire fraud [18 U.S.C. § 1343], and mail fraud [18 U.S.C. § 1341].     

IV. 

Pursuant to this Order, Respondent agrees to additional proceedings in this proceeding to 

determine what, if any, disgorgement pursuant to Section 8A(e) of the Securities Act and Section 

21C(e) of the Exchange Act and/or civil penalties pursuant to Section 8A(g) of the Securities Act 

and Section 21B(a) of the Exchange Act against Respondent are in the public interest.  In 

connection with such additional proceedings: (a) Respondent agrees that he will be precluded from 

arguing that he did not violate the federal securities laws described in the Order; (b) Respondent 

agrees that he may not challenge the validity of the Order; (c) solely for the purposes of such 

additional proceedings, the findings of the Order shall be accepted as and deemed true by the 

hearing officer; and (d) the hearing officer may determine the issues raised in the additional 

proceedings on the basis of affidavits, declarations, excerpts of sworn deposition or investigative 

testimony, and documentary evidence.  It is further Ordered that, for purposes of exceptions to 

discharge set forth in Section 523 of the Bankruptcy Code, 11 U.S.C. §523, the findings in this 

Order are true and admitted by Respondent, and further, any debt for disgorgement, prejudgment 

interest, civil penalty or other amounts due by Respondent under this Order or any other 

judgment, order, consent order, decree or settlement agreement entered in connection with this 

proceeding, is a debt for the violation by Respondent of the federal securities laws or any 

regulation or order issued under such laws, as set forth in Section 523(a)(19) of the Bankruptcy 

Code, 11 U.S.C. §523(a)(19). 



 
 

 

 

8 

 

V. 

In view of the foregoing, the Commission deems it appropriate and in the public interest 

to impose the sanctions agreed to in Respondent’s Offer: 

Accordingly, pursuant to Section 8A of the Securities Act, Sections 4C, 15(b) and 21C of 

the Exchange Act, and Rule 102(e) of the Commission’s Rules of Practice it is hereby ORDERED, 

effective immediately, that: 

A. Respondent shall cease and desist from committing or causing any violations and 

any future violations of Sections 5(a), 5(c), and 17(a) of the Securities Act and Section 10(b) of the 

Exchange Act and Rule 10b-5 thereunder.   

 

B. Respondent be, and hereby is: 

barred from participating in any offering of a penny stock, including: 

acting as a promoter, finder, consultant, agent or other person who 

engages in activities with a broker, dealer or issuer for purposes of the 

issuance or trading in any penny stock, or inducing or attempting to induce 

the purchase or sale of any penny stock. 

C. Respondent is prohibited from acting as an officer or director of any issuer that 

has a class of securities registered pursuant to Section 12 of the Exchange Act or that is 

required to file reports pursuant to Section 15(d) of the Exchange Act.  

 

D. Respondent is denied the privilege of appearing or practicing before the 

Commission as an accountant.  

 

IT IS FURTHER ORDERED pursuant to Rule 100(c) of the Commission’s Rules of 

Practice, 17 C.F.R. § 201.100(c), in the interest of justice and without prejudice to any party, that 

a public hearing for the purpose of taking evidence on the questions set forth in Section IV 

hereof shall be convened at a time and place to be fixed, and before an Administrative Law 

Judge to be designated by further order as provided by Rule 110 of the Commission’s Rules of 

Practice, 17 C.F.R. § 201.110, following the entry of a final judgment against the last remaining 

defendant(s) in United States v. William Sears and Scott Matthew Dittman, 16-CR-301-WJM 

(D.Colo.) (the “Related Actions”). 

If Dittman fails to appear at a hearing after being duly notified, Dittman may be 

deemed in default and the proceedings may be determined against him upon consideration of 

this Order, the allegations of which may be deemed to be true as provided by Rules 155(a), 

221(f), and 310 of the Commission’s Rules of Practice, 17 C.F.R. §§ 201.155(a), 201.221(f), 

and 201.310. 



 
 

 

 

9 

 

This Order shall be served forthwith upon Dittman personally or by certified mail. 

IT IS FURTHER ORDERED pursuant to Rule 100(c) of the Commission’s Rules of 

Practice, 17 C.F.R. § 201.100(c), in the interest of justice and without prejudice to any party, that 

the Administrative Law Judge shall issue an initial decision no later than 120 days from the date 

of the entry of a final judgment in the Related Actions. 

In the absence of an appropriate waiver, no officer or employee of the Commission 

engaged in the performance of investigative or prosecuting functions in this or any factually 

related proceeding will be permitted to participate or advise in the decision of this matter, except 

as witness or counsel in proceedings held pursuant to notice.  Since this proceeding is not “rule 

making” within the meaning of Section 551 of the Administrative Procedure Act, it is not 

deemed subject to the provisions of Section 553 delaying the effective date of any final 

Commission action. 

By the Commission. 

 

 

       Brent J. Fields 

       Secretary