In re MICROCAP

UNITED STATES OF AMERICA 
Before the 
SECURITIES AND EXCHANGE COMMISSION 
SECURITIES ACT OF 1933 
Release No. 10213 / September 16, 2016 
SECURITIES EXCHANGE ACT OF 1934 
Release No. 78866 / September 16, 2016 
ADMINISTRATIVE PROCEEDING 
File No. 3-17548 
In the Matter of 
MICROCAP 
MANAGEMENT LLC, 
BAYSIDE REALTY 
HOLDINGS LLC, AND 
MEADPOINT VENTURE 
PARTNERS, LLC,  
Respondents. 
 
 
 
ORDER INSTITUTING 
ADMINISTRATIVE AND CEASE-AND-
DESIST PROCEEDINGS, PURSUANT TO 
SECTION 8A OF THE SECURITIES ACT 
OF 1933 AND SECTIONS 15(b) AND 21C 
OF THE SECURITIES EXCHANGE ACT 
OF 1934, 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”) and 
Sections 15(b) and 21C of the Securities Exchange Act of 1934 (“Exchange Act”) against 
Microcap Management LLC (“Microcap”), Bayside Realty Holdings LLC (“Bayside”) and 
Meadpoint Venture Partners, LLC (“Meadpoint”) (collectively, “Respondents”). 
II. 
In anticipation of the institution of these proceedings, Respondents have 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, Respondents admit the Commission’s 
jurisdiction over them and the subject matter of these proceedings, and consent to the entry of this 

 
 
 
 
2 
 
Order Instituting Administrative and Cease-and-Desist Proceedings, Pursuant to Section 8A of the 
Securities Act of 1933 and Sections 15(b) and 21C of the Securities Exchange Act of 1934, 
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 Respondents’ Offer, the Commission finds
1
 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 
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.   
Respondents 
1. 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.  
2. 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. 
3. 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” 
                                                 
1
 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 
 
of Meadpoint.  Dittman was a shareholder and Internal Revenue Service Form 1099 employee of 
Meadpoint. 
Other Relevant Persons and Entity 
4. 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.). 
5. 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. 
6. 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.   
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 

 
 
 
 
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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.   
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 

 
 
 
 
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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 
$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; 

 
 
 
 
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(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, Respondents willfully violated Sections 
17(a)(1) and 17(a)(3) of the Securities Act and Section 10(b) of the Exchange Act and Rules 10b-
5(a) and 10b-5(c) thereunder.  Section 17(a)(1) of the Securities Act makes it unlawful, in the 
offer or sale of securities, to employ any device, scheme, or artifice to defraud.  Section 17(a)(3) 
of the Securities Act makes it unlawful, in the offer or sale of securities, to engage in any 
transaction, practice or course of business that operates or would operate as a fraud or deceit 
upon the purchaser.  Section 10(b) of the Exchange Act and Rule 10b-5(a) thereunder make it 
unlawful, in the purchase or sale of securities, to employ any device, scheme or artifice to 
defraud.  Section 10(b) of the Exchange Act and Rule 10b-5(c) thereunder make it unlawful, in 
the purchase or sale of securities, to engage in any act, practice, or course of business that 
operates or would operate as a fraud or deceit upon any person.  
IV. 
Pursuant to this Order, Respondents agree 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 Respondents are in the public interest.  In 
connection with such additional proceedings: (a) Respondents agree that they will be precluded 
from arguing that they did not violate the federal securities laws described in the Order; (b) 
Respondents agree that they 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 

 
 
 
 
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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 Respondents, and further, any debt for disgorgement, 
prejudgment interest, civil penalty or other amounts due by Respondents 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 Respondents 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). 
V. 
In view of the foregoing, the Commission deems it appropriate and in the public interest 
to impose the sanctions agreed to in Respondents’ Offer: 
Accordingly, pursuant to Section 8A of the Securities Act and Sections 15(b) and 21C of 
the Exchange Act, it is hereby ORDERED, effective immediately, that: 
A. Respondents shall cease and desist from committing or causing any violations and 
any future violations of Sections 5(a), 5(c), and 17(a)(1) and 17(a)(3) of the Securities Act and 
Section 10(b) of the Exchange Act and Rule 10b-5(a) and 10b-5(c) thereunder.   
B. Respondents be, and hereby are: 
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. 
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 Microcap, Bayside, and Meadpoint fail to appear at a hearing after being duly 
notified, Microcap, Bayside, and Meadpoint may be deemed in default and the proceedings 
may be determined against them 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. 

 
 
 
 
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This Order shall be served forthwith upon Microcap, Bayside and Meadpoint 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. 10213 / September 16, 2016 

SECURITIES EXCHANGE ACT OF 1934 

Release No. 78866 / September 16, 2016 

ADMINISTRATIVE PROCEEDING 

File No. 3-17548 

In the Matter of 

MICROCAP 

MANAGEMENT LLC, 

BAYSIDE REALTY 

HOLDINGS LLC, AND 

MEADPOINT VENTURE 

PARTNERS, LLC,  

Respondents. 

 

 

 

ORDER INSTITUTING 

ADMINISTRATIVE AND CEASE-AND-

DESIST PROCEEDINGS, PURSUANT TO 

SECTION 8A OF THE SECURITIES ACT 

OF 1933 AND SECTIONS 15(b) AND 21C 

OF THE SECURITIES EXCHANGE ACT 

OF 1934, 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”) and 

Sections 15(b) and 21C of the Securities Exchange Act of 1934 (“Exchange Act”) against 

Microcap Management LLC (“Microcap”), Bayside Realty Holdings LLC (“Bayside”) and 

Meadpoint Venture Partners, LLC (“Meadpoint”) (collectively, “Respondents”). 

II. 

In anticipation of the institution of these proceedings, Respondents have 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, Respondents admit the Commission’s 

jurisdiction over them and the subject matter of these proceedings, and consent to the entry of this 



 
 

 

 

2 

 

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

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

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 Respondents’ Offer, the Commission finds1 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 

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.   

Respondents 

1. 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.  

2. 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. 

3. 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” 

                                                 

1 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 

 

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

Meadpoint. 

Other Relevant Persons and Entity 

4. 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.). 

5. 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. 

6. 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.   

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 



 
 

 

 

4 

 

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.   

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 



 
 

 

 

5 

 

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 

$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; 



 
 

 

 

6 

 

(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, Respondents willfully violated Sections 

17(a)(1) and 17(a)(3) of the Securities Act and Section 10(b) of the Exchange Act and Rules 10b-

5(a) and 10b-5(c) thereunder.  Section 17(a)(1) of the Securities Act makes it unlawful, in the 

offer or sale of securities, to employ any device, scheme, or artifice to defraud.  Section 17(a)(3) 

of the Securities Act makes it unlawful, in the offer or sale of securities, to engage in any 

transaction, practice or course of business that operates or would operate as a fraud or deceit 

upon the purchaser.  Section 10(b) of the Exchange Act and Rule 10b-5(a) thereunder make it 

unlawful, in the purchase or sale of securities, to employ any device, scheme or artifice to 

defraud.  Section 10(b) of the Exchange Act and Rule 10b-5(c) thereunder make it unlawful, in 

the purchase or sale of securities, to engage in any act, practice, or course of business that 

operates or would operate as a fraud or deceit upon any person.  

IV. 

Pursuant to this Order, Respondents agree 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 Respondents are in the public interest.  In 

connection with such additional proceedings: (a) Respondents agree that they will be precluded 

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

Respondents agree that they 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 



 
 

 

 

7 

 

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 Respondents, and further, any debt for disgorgement, 

prejudgment interest, civil penalty or other amounts due by Respondents 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 Respondents 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). 

V. 

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

to impose the sanctions agreed to in Respondents’ Offer: 

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

the Exchange Act, it is hereby ORDERED, effective immediately, that: 

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

any future violations of Sections 5(a), 5(c), and 17(a)(1) and 17(a)(3) of the Securities Act and 

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

B. Respondents be, and hereby are: 

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. 

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 Microcap, Bayside, and Meadpoint fail to appear at a hearing after being duly 

notified, Microcap, Bayside, and Meadpoint may be deemed in default and the proceedings 

may be determined against them 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. 



 
 

 

 

8 

 

This Order shall be served forthwith upon Microcap, Bayside and Meadpoint 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