SEC v. Jonathan P. Flom, Eastern District of New York (Jan. 1, 2014) — Complaint

Andrew M. Calamari 
Amelia A. Cottrell 
Alexander Vasilescu 
Adam S. Grace 
Justin A. Alfano 
John Lehmann 
SECURITIES 
AND EXCHANGE COMMISSION 
New York Regional Office 
Brookfield Place 
200 Vesey Street, Room 400 
New York, NY 10281 
(212) 336-0178 (Vasilescu) 
UNITED STATES DISTRICT COURT 
EASTERN DISTRICT OF NEW YORK 
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SECURITIES AND EXCHANGE COMMISSION, 
Plaintiff, 
14
l v4---c 5)57 5'T 
v. 
COMPLAINT 
JONATHAN P. FLOM, 
Defendant. 
AZRACK, M.l 
.< 
Plaintiff Securities and Exchange Commission ("Commission"), for its Complaint against 
Defendant Jonathan 
P. Flom ("Defendant"), alleges: 
SUMMARY 
1. This is  an action against a  lawyer who used his status as an attorney to help insure 
the success 
of a  scheme to defraud investors. With aggressive boiler room tactics and a  network 
of fake investment firms that used cold callers (the "Cold Callers"), internet advertising and 
fraudulent websites promising high rates 
of return and discounted stock prices, Defendant's 
associates succeeded 
in luring investors into purchasing securities by sending their money to 
Defendant. 

2. Defendant was a key player in the  scheme, who used his status as a  lawyer to lend 
legitimacy to the underlying fraudulent scheme. Defendant's role was to receive wire transfers 
of investor funds and, unbeknownst to investors, re lay the money on to Speight and 1ST, after 
deducting a two percent fee for himself. The investors who sent their money to Defendant ended 
up receiving from Speight and 1ST counterfeit securities that were not worth the paper they were 
printed on. 
3. At least 
$580,000 of investor money flowed through Defendant's account, and he 
got to keep approx imate ly  $12,000 of that money as his fee for acting the part ofa  legitimate 
attorney purp01tedly faci litating securities transactions between the investors and the issuers. 
When Defendant transferred the balance 
of the investment funds to Speight or 1ST, he knew or 
reck lessly disregarded that they would split the funds with the Cold  Callers. In other words, 
Defendant knew 
or recklessly disregarded that he was facilitating a fraudulent scheme. 
VIOLATIONS 
4. By virtue of the conduct alleged herein Defendant, directly or indirectly, singly or 
in concert, has engaged and is engaging in acts, practices and courses of business that co nstitute 
violations of Section 17(a) of the Securities Act of 1933 ("Securities Act"), 15 U.S.C. § 77q(a), 
Section I O(b) of the Securities Exchange Act of 1934 (the "Exchange Act" ), 15 U.S.C. § 78j(b), 
and Exchange Act Rule 1 Ob-5, 17 C.F .R. § 240.1 Ob-5. 
5. By virtue of the conduct alleged herein Defendant, directly or indirectly, singly or 
in concert, has engaged and are engaging in acts, practices and courses of business that aided and 
abetted violations 
of Section 17(a) of the Securities Act, 15 U.S.C. § 77q(a), Section I O(b) of the 
Exchange Act, I 5 U.S.C. 
§ 78j(b), and Exchange Act Rule I Ob-5 , 17 C.F.R. § 240.10b-5. 
2 


NATURE OF THE PROCEEDINGS AND RELIEF SOUGHT 

6. The Commission brings this action pursuant to the authority conferred upon it by 
Section 20(b) ofthe Securities Act, 15 U.S.C. § 77t(b), and Section 2\(d) ofthe Exchange Act, 
15 U.S.C. § 78u(d), seeking to restrain and enjoin permanently Defendant from engaging in the 
acts, practices, and courses 
of business alleged herein. 
7. The Commission seeks a  Final Judgment ordering Defendant to disgorge his ill-
gotten gains and to pay prejudgment interest thereon, ordering Defendant to pay a civil monetary 
penalty pursuant to Section 20(d) 
of the Securities Act, I 5 U.S. C.§ 77t(d), and Section 21 (d) of 
the Exchange Act, 15 U.S.C. § 78u(d), prohibiting Defendant from participating in an offering of 
penny stock pursuant to Section 20(g) of the Securities Act, 15 U.S.C . § 77t(g), and ordering 
Defendant to repatriate assets. 
JURISDICTION AND VENUE 
8. This Court has jurisdiction over this action pursuant to Section 22(a) of the 
Securi ties Act, 
15 U.S.C. § 77v(a), and Section 27 ofthe Exchange Act, 15 U.S.C. § 78aa. 
9. Venue lies  in this District pursuant to Section 22(a) 
of the Securities Act, 15 
U.S.C. § 77v(a), and Section 27 of the Exchange Act, 15 U.S.C. § 78aa. The Defendant, directly 
and indirectly, has made use 
of the means and instrumentalities of interstate commerce, or of the 
mails, 
in connection with the transactions, acts, practices and courses of business alleged herein, 
including by the offer and sale and the mailing 
of securities to residents in this District, and 
communications with potential and actual investors or scheme participants in this District. 
DEFENDANT 
10. Jonathan P. Flom, age 57, is  a  resident of Jupiter, Florida. Defendant is an 
attorney licensed to practice and in good standing in Florida, New York, and Connecticut. 
3 


RELATED PERSONS AND ENTITIES 
II. International Stock Transfer, Inc. ("1ST") is a Florida corporation incorporated 
in 2004, with an office in Palm Beach ,  Florida. Cecil Franklin Speight is currently the sole 
owner, officer and director 
of I ST. Since March 22, 2004, 1ST has been registered with the 
Commission as a  transfer agent. On June 
14, 2013 , staff in the Commission's Office of 
Compliance Inspections and Examinations (the "Staff') conducted an examination of 1ST's 
business in which 1ST tailed to produce the majority 
of required records to the Staff. 1ST 
subsequently filed a  Form TA-W with the Commission , seeki ng to withdraw its registration as a 
Transfer Agent. The withdrawal was made effective by the Commission on August 3, 2013. 
12. Cecil Franklin Speight ("Speight"), age 53, is a resident of West Palm Beach, 
Florida. Speight 
is the sole owner, officer, and director of IST. On July 24, 2014, Speight 
consented 
to the entry ofjudgment against him and 1ST for securities law violations arising out 
of the conduct alleged in this Complaint in the action captioned SEC v. Speight, 14-CY-4435 
(ADS) (E.D.N.Y.). At that time, Speight also pleaded guilty to related charges 
in the parallel 
criminal action captioned 
United States v. Speight, 14-CR-379 (RRM) (E.D.N.Y.). 
FACTS 

The Fraudulent Scheme 

13. Beginning in April2012, Speight paid for the creation and maintenance of 
websites for certain bogus unregistered financia l advisors, including ACI Private Wealth (also 
known as ACI Private Client) (" ACI"). 
4 


14. Once Speight funded the creation of the unregistered purported financial advisory 
firm's websites, each of those business names was used to sell counterfeit securities to members 
of the investing public, including through internet advertising and through "cold calling." 
15. Speight, through 1ST, paid at least hundreds ofthousands of dollars of scheme 
proceeds to the Cold Callers that were responsible for speaking to and selling securities to 
investors. 
16. 
When the Cold Callers succeeded in making a sale, they would direct investors to 
wire their 
money to one of two attorneys, including Defendant, typically by providing investors 
with wire instructions identifying bank accounts held in the names 
of the attorneys. 
17. Defendant
's role in the scheme was to add the appearance of legitimacy to the 
underlying transactions and conceal from investors 
that the money they wired to Defendant's 
account was being misappropriated. Defendant thus knowingly or recklessly engaged in 
transactions 
that operated as a  fraud or deceit upon investors, and he substantially assisted 
Speight, 1ST and the 
Cold Callers in the fraudulent sale of counterfeit securities. 
18. Defendant controlled the bank 
account identified on the wire instructions 
provided to investors 
by the Cold Callers, and Defendant agreed with Speight that his bank 
account would be used as a pass-through for investor money solicited by the Cold Callers to 
accounts controlled by Speight. 
19. When investors sent their money to 
Defendant's account, Defendant did not 
transfer the investors' 
money to ACI as some investors understood they would. Nor was money 
sent to the supposed issuers 
of the securities, as would be expected had the securities been 
legitimate. 
20. Rather than providing any legitimate legal services, Defendant (doing the biddin g 
5 

of Speight) simply acted as a conduit for investor money, obscuring the fact that investor funds 
were being misappropriated. 
21. 
In exchange for these illicit services, Defendant retained approximately 2% of the 
investment funds, which he took as a cut directly from funds received from the investors. 
22. Defendant then transferred the remainder 
of the investor money, by either wire or 
check, into bank accounts held by 
1ST and controlled by Speight. 
23. Defendant typically only held investor funds in his account for a matter 
of days 
before transferring the balance less fees to bank accounts held by 
1ST and controlled by Speight. 
24. Once 
1ST and Speight received the money, they mailed counterfeit securities 
certificates to the investors. 
25. Through the efforts 
of the Cold Callers who claimed to be affiliated with the 
entities and websites Speight created and through other means, from at least May 2012 forward, 
IST received at least $3.3 million 
in investor monies from the offer and sale of fraudulent 
securities to over 70 investors. Many 
of these investors are foreign investors, including residents 
of the United Kingdom, Australia, Ireland, and New Zealand. At least II investors are residents 
of the United States, including at least two investors who reside within this District. 
26. 
At least $580,000 of scheme proceeds, contributed by at least 28 investors, flowed 
through Defendant's bank account from the sale 
of two different securities. 
The Offer and Sale of Sham "Aitmark" Bonds 
· 27. One of the securities that the Cold Callers sold to investors was a  bond that 
promised a  14% annual rate 
of return, supposedly issued by a company called Altmark Holdings 
Limited ("Altmark"). 
28. Altmark is a Turks 
& Caicos entity that, since 2007, has created a series of high­
6 


yield bonds that have been held, in electronic form , in various accounts of Depository Trust 
Company ("DTC" )  participants. During the relevant time period, Altmark made 
no interest 
payments throu gh  DTC or otherwise to any holders 
of the electronic Altmark bonds . 
29. From at lea st  May 2012 forward, 1ST and Speight created paper Altmark bond 
certificates and mailed them to investors who were solicited by the Cold Callers, including 
individuals who claimed to be affiliated with ACI. The Cold Callers promised the investors that 
the bonds were low risk and would pay a  high rate 
of return. 
30. 
The paper Altmark bond certificates Speight peddled to investors were 
counterfeits. 
31. 
1ST issued these phony paper certificates as Altmark' s transfer agent, and Speight 
signed the ceJtificate s as a  director 
of Altmark even though he was not an Altmark director. 
32. Having promised a  14% rate 
of return, Speight and 1ST used some limited 
investor monies to pay purported periodic interest payments. However, 
in April 2013, 1ST 
mailed a letter to investors informing them that Altmark was suspending all interest payments. 
IST made no further " interest" payments thereafter. 
33. Defendant 
knew or recklessly disregarded facts that would have led any 
reasonable attorney in his position to conclude that Speight was engaged 
in the sale of fraudulent 
securities. For instance, in September 2013, Defendant advised Speight that 
he would have 
difficulty selling Altmark bonds pursuant to federal securities law governing the unregistered 
sale 
of securities issued by entities that are not listed on a  U.S. securities exchange because, as 
Defendant stated 
in an email, "There is  no general market ... its [sic] a  highly specialized [sic] 
area in the 
US eve n for those [securities] that are real!" 
34. Emails between Defendant and Speight indicate that Defendant was aware that 
7 


the Altmark investor money that passed through his account to 1ST was going to be further 
distributed among Speight and the Cold Callers, not transferred to the issuer. For example, 
in 
February 2012, Speight requested a status update on certain investor monies that had been wired 
to Defendant, explaining, "[t]here are a  number 
of people in each ofthese transactions that need 
to be paid and they begin screaming for their money 
as soon as they know the funds were sent! 
Ahhh 
...the love of money!" Likewise, in March 2012 , Speight sent Defendant an email in 
which he stated "the natives are restless (problem with dealing with brokers is  they love to get 
paid fast.)." And in April 2012, Speight sent Defendant an email stating "Jonathon as I 
mentioned before I only net 
20% out on these transactions and [Cold Callers] get the lion share." 
35. Defendant was also aware 
of a complaint an investor lodged with Defendant's 
bank 
in August 2012, concerning funds that the investor wired to Defendant's account to 
purchase Altmark bonds.  The complaint put Defendant on notice that the entity that had sold the 
investor the bonds, and had given the investor instructions to wire the rtloney to Defendant, was 
the subject ofa fraud warning published by a foreign regulator. Emails confirm that, rather than 
questioning why he was receiving investor funds solicited by a firm that was the subject 
of a 
reputable fraud waming, Defendant simply requested that Speight "intervene as 
to what 
transpired" so that Defendant' s accounts could "remain 
in good standing"  with his bank for the 
purpose 
of accepting additional investor funds solicited by the Cold Callers. 
8 


The Offer and Sale of Sham .. Adfitech" Securities 
36 . Adfitech , Inc . is  a  Delaware incorporated entity whose com mon stock trades on 
the over the counter market under the symbo l ADFT. Adfitech has no relationship with Speight, 
IST, 
or any of the entities selling the securities that 1ST issues. Nor has Adtitech ever authorized 
any of them to sell Adfitech shares on its behalf. 
37. However,  Cold Callers who claimed to be affiliated with ACJ falsely told 
potential investors that ACJ was a  market maker authorized by Adfitech to sell its shares 
privately at a discount to the current market rate. 
38. Investors who believed those misrepresentations and purchased shares received 
share cet1ificates mailed to them by 1ST. 
39. The certificates falsely show that 1ST is Adfitech's authorized transfer agent when 
in fact, it  is not; Computers hare Trust Company, N .A. is Adfitech' s  real transfer agent. 
40. The Adfitech certificates that 1ST mailed to investors also misidentify Adfitech ' s 
state 
of incorporation as Florida but its real state of incorporation is Delaware. 
41. The Adtitech certificates that 1ST mailed to investors contain an illegible 
signature over the title " 
Company Officer," which does not represent the genuine signature of 
any authorized officer of Adfitech. Moreover, the counterfeit certificates look nothing like the 
genuine Adfitech certificates including with respect to the graphics, font, and boilerplate 
language contained 
in the certificates. 
42. Defendant knew or recklessly disregarded facts that would have led any 
reasonab le  attorney in his position to conclude that Speight was engaged in the sale of fraudulent 
securities. For instance , he knew that unregistered broket·s  affiliated with Speight were cold 
calling investors who would send money to him so that he could keep his 2% cut and pass the 
9 

balance to 1ST to be further split among Speight and the Cold Callers. And he knew that 
Speight's entity 1ST, the same transfer agent involved with the counterfeit Altmark bonds, was 
purporting to be the transfer 
agent for Adfitech. Any reasonable due diligence in the face of such 
red flags would have established that 
1ST was not the transfer agent for Adfitech, and that 
investor funds were being misappropriated. 
Speight and 1ST's Misuse of Investor Monies 
43. 1ST and Speight misappropriated and did not give issuers investor funds. 
44. 1ST Cold Callers provided investors with wire instructions that directed investors ' 
funds to the Defendant's account. 
45. In connection with the offer and sale 
of Altmark securities, 1ST and Speight 
arranged for investors 
to wire their funds to Defendant's and another attomey's bank accounts. 
46. All investor money that came into these two attorney accounts was transferred 
to 
lST, except for bank charges and amounts identified as attorney's fees. Monies did not come 
into 
1ST from any other source besides the two attorney accounts. 
4 7. 1ST's records show that 
1ST received over $2.7 million from at least 52 investors 
over approximately a one year time period 
in connection with the offer and sale of Altmark 
securities, including at least $180,000 wired to Defendant's bank account from at least I 0 
investors. Bank records corroborate that 
1ST received money in approximately the same amount 
from Defendant during such period. 
48. 
Of the over $180,000 in investor money that 1ST received from Defendant in 
connection with the offer and sale of Altmark securities, none was paid to the purported issuer of 
the securities that were supposedly purchased by investors. 
49. 1ST's records also show that investors wired funds to Defendant' s bank account 
in 
10 


connection with the offer and sale of the Adfitech securities. 
50. 1ST's records identify funds received from investors by transfer or 
"T" number. 
The transfer numbers, investor names , and investment amounts 
in 1ST' s records match the 
statements Defendant emailed 
to 1ST following receipt of investor funds. 
51. 1
ST's records reflect 1ST's receipt from Defendant of over $400,000 from at least 
18 investors over approximately a one year time period 
in connection with the offer and sale of 
counterfeit Adfitech securities. Bank records corroborate that 1ST received money in 
approximately the same amount from Defendant during such period. 
52. 
Of the $400,000 in investor money that 1ST received from Defendant in 
connection with the offer and sale 
of Adfitech securities, none was paid to the purported issuer of 
the securities that were supposedly purchased by investors. 
FIRST CLAIM FOR RELIEF 

(Violations of Sections 17(a) of the Securities Act) 

53. The Commission realleges and incorporates by reference herein each and every 
a lle gation contained 
in paragraphs 1 through 52 of this Complaint. 
54. Defendant, directly or indirectly, singly or 
in concert, knowingly or recklessly, by 
use of the means or instruments of transportation or communication in interstate commerce, or of 
the mai Is,  in the offer or sale of securities, acting with the requisite state of mind, (a) employed 
devices, schemes and atti fices to defraud; (b) obtained money or property by means 
of untrue 
statements 
of material fact or omissions to state a  material fact necessary to make the statements 
made, 
in light of the circumstances under which they were made, not misleading; and (c) 
engaged in transactions, practices, 
or a course of business which operated or would operate as a 
fraud 
or deceit upon purchasers. 
55. By engaging 
in the conduct described above ,  Defendant has violated, and unless 
I 1 


enjoined will again violate, Section 17(a) of the Securities Act, I 5 U.S.C . § 77q(a). 
SECOND CLAIM FOR RELIEF 

(Violations of Section 1 O(b) of the Exchange Act and Rule 1 Ob-5 thereunder) 

56. The Commission real leges and incorporates by reference herein each and every 
allegation contained 
in paragraphs I through 52 of this Complaint. 
57. Defendant, directly 
or indirectly, singly or in concert, by use of the means or 
instruments 
of transportation or communication in interstate commerce, or of the mails, in 
connection with the purchase or sale of securities, knowingly or recklessly, has :  (a) employed 
devices, schemes and artifices to defraud ; (b) made untrue statements 
of material fact, or omitted 
to state material facts necessary in order to make the statements made, 
in light of the 
circumstances under which they were made, not misleading; and (c) engaged 
in transactions, 
acts, practices and courses 
of business which operated or would have operated as a fraud or 
deceit upon any person. 
58. By reason 
ofthe foregoing,  Defendant has violated, and unless enjoined will 
again violate, Section IO(b) 
of the Exchange Act, I 5 U.S.C. § 78j(b), and Rule IOb-5, 17 C.F.R. 
§ 140.1 Ob-5, promulgated thereunder. 
THIRD CLAIM FOR RELIEF 

(Aiding and Abetting Speight and 1ST's Violations of Section 17(a) of the Securities Act 

and Section 
lO(b) of the Exchange Act and Rule lOb-S thereunder) 

59. The Commission realleges and incorporates by reference herein each and every 
allegation contained in paragraphs 
I through 52 ofthis Complaint. 
60. Speight and 1ST, directly or indirectly, singly or in concert, 
by use ofthe means or 
instruments 
oftranspottation or communication in interstate commerce, or of the mails, in 
connection with the offer, purchase, or sale 
of securities, knowingly or recklessly, have: (a) 
12 


employed devices, schemes and artifices to defraud; (b) made untrue statements of material fact, 
or omitted 
to state material facts necessary in order to make the statements made, in light of the 
circumstances under which they were made, 
not misleading; and (c) engaged in transactions, 
acts, practices and courses 
of business which operated or would have operated as a fraud or 
deceit upon any person. 
61. Defendant knowingly or recklessly substantially assisted Speight and 1ST's 
violations 
of Section 17(a) of the Securities Act and Section lO(b) of the Exchange Act and Rule 
1
Ob-5 thereunder . 
62. By reason 
of the foregoing, Defendant aided and abetted violations of and, unless 
enjoined, will continue 
to aid and abet violations of Section 17(a) of the Securities Act, 15 
U.S.C. §§ 77q(a), and Section IO(b) ofthe Exchange Act, 15 U.S.C. § 78j(b) and Rule IOb-5 
thereunder, 17 C.F.R. § 240.1 Ob-5. 
PRAYER FOR RELIEF 
WHEREFORE, 
the Commission respectfully requests that the Court enter final 
judgments against the Defendant granting the following relief: 
I. 
Permanently, restraining and enjoining Defendant, his agents,  servants, employees and 
attorneys and all persons in active concert or participation with him, who receive actual notice of 
the injunction by personal service or otherwise, and each of them, fi·om future violations of 
Section 17(a) ofthe Securities Act, 15 U.S.C. § 77q(a), Section IO(b) ofthe Exchange Act, 15 
U.S.C. § 78j(b), and Exchange Act Rule IOb-5, 17 C.F.R. § 240.1 Ob-5, and from future 
violations 
of and/or aiding and abetting violations of Section 17(a) of the Securities Act, 15 
U.S. C.§ 77q(a), Section I O(b) of the Exchange Act, 15 U.S.C. § 78j(b), and Exchange Act Rule 
13 


l Ob-5, 17 C.F .R. § 240.1 Ob-5. 
II. 
Ordering Defendant to disgorge his ill-gotten gains, plus prejudgment interest, and such 
other and further amount as the Court may find appropriate. 
Ill. 
Ordering Defendant to a  pay civil money penalty pursuant to Section 20(d) of the 
Securities Act, 15 U.S. C. § 77t(d), and Section 21 (d)(3) of the Exchange Act, 15 U.S.C. § 
78u(d)(3). 
IV. 
Permanently barring Defendant from participating in an offering of penny stock, pursuant 
to Section 20(g) 
of the Securities Act, 15 U .S.C. § 77t(g), and Section 21 ( d)(6) of the Exchange 
Act, 
15 U.S.C. § 78s(d)(6). 
v. 
Such other and further relief as to this Court deems just and proper. 
Dated: 
New York, New York 
September 23, 2014 
By:_~-~-~---
Amelia A. Cottrell 
Associate Regional Director 
Of Counsel: Attorney for Plaintiff 
Andrew M. Calamari 
SECURITIES AND EXCHANGE COMMISSION 
Alexander Vasilescu 
3  World Financial Center, Room 400 
Adam S. Grace 
New York, NY 10281 
Justin A. Alfano 
(212) 336-0178 (Vasilescu) 
John Lehmann 
14 

Andrew M. Calamari 
Amelia A. Cottrell 
Alexander Vasilescu 
Adam S. Grace 
Justin A. Alfano 
John Lehmann 
SECURITIES AND EXCHANGE COMMISSION 
New York Regional Office 
Brookfield Place 
200 Vesey Street, Room 400 
New York, NY 10281 
(212) 336-0178 (Vasilescu) 

UNITED STATES DISTRICT COURT 
EASTERN DISTRICT OF NEW YORK 

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SECURITIES AND EXCHANGE COMMISSION, 

Plaintiff, 
14l v4---c 5)57 5 ' T 

v. 
COMPLAINT 

JONATHAN P. FLOM, 

Defendant. 

AZRACK, M.l 
.< 

Plaintiff Securities and Exchange Commission ("Commission"), for its Complaint against 

Defendant Jonathan P. Flom ("Defendant"), alleges: 

SUMMARY 

1. This is an action against a lawyer who used his status as an attorney to help insure 

the success of a scheme to defraud investors. With aggressive boiler room tactics and a network 

of fake investment firms that used cold callers (the "Cold Callers"), internet advertising and 

fraudulent websites promising high rates of return and discounted stock prices, Defendant's 

associates succeeded in luring investors into purchasing securities by sending their money to 

Defendant. 



2. Defendant was a key player in the scheme, who used his status as a lawyer to lend 

legitimacy to the underlying fraudulent scheme. Defendant's role was to receive wire transfers 

of investor funds and, unbeknownst to investors, re lay the money on to Speight and 1ST, after 

deducting a two percent fee for himself. The investors who sent their money to Defendant ended 

up receiving from Speight and 1ST counterfeit securities that were not worth the paper they were 

printed on. 

3. At least $580,000 of investor money flowed through Defendant's account, and he 

got to keep approx imate ly $12,000 of that money as his fee for acting the part of a legitimate 

attorney purp01tedly faci litating securities transactions between the investors and the issuers. 

When Defendant transferred the balance of the investment funds to Speight or 1ST, he knew or 

reck lessly disregarded that they would split the funds with the Cold Callers. In other words, 

Defendant knew or recklessly disregarded that he was facilitating a fraudulent scheme. 

VIOLATIONS 

4. By virtue of the conduct alleged herein Defendant, directly or indirectly, singly or 

in concert, has engaged and is engaging in acts, practices and courses of business that co nstitute 

violations of Section 17(a) of the Securities Act of 1933 ("Securities Act"), 15 U.S.C. § 77q(a), 

Section I O(b) of the Securities Exchange Act of 1934 (the "Exchange Act" ), 15 U.S.C. § 78j(b), 

and Exchange Act Rule 1 Ob-5, 17 C.F .R. § 240.1 Ob-5. 

5. By virtue of the conduct alleged herein Defendant, directly or indirectly, singly or 

in concert, has engaged and are engaging in acts, practices and courses of business that aided and 

abetted violations of Section 17(a) of the Securities Act, 15 U.S.C. § 77q(a), Section I O(b) of the 

Exchange Act, I 5 U.S.C. § 78j(b), and Exchange Act Rule I Ob-5 , 17 C.F.R. § 240.10b-5. 

2 




NATURE OF THE PROCEEDINGS AND RELIEF SOUGHT 


6. The Commission brings this action pursuant to the authority conferred upon it by 

Section 20(b) ofthe Securities Act, 15 U.S.C. § 77t(b), and Section 2\(d) ofthe Exchange Act, 

15 U.S.C. § 78u(d), seeking to restrain and enjoin permanently Defendant from engaging in the 

acts, practices, and courses of business alleged herein. 

7. The Commission seeks a Final Judgment ordering Defendant to disgorge his ill-

gotten gains and to pay prejudgment interest thereon, ordering Defendant to pay a civil monetary 

penalty pursuant to Section 20(d) of the Securities Act, I 5 U.S. C.§ 77t(d), and Section 21 (d) of 

the Exchange Act, 15 U.S.C. § 78u(d), prohibiting Defendant from participating in an offering of 

penny stock pursuant to Section 20(g) of the Securities Act, 15 U.S.C . § 77t(g), and ordering 

Defendant to repatriate assets. 

JURISDICTION AND VENUE 

8. This Court has jurisdiction over this action pursuant to Section 22(a) of the 

Securi ties Act, 15 U.S.C. § 77v(a), and Section 27 ofthe Exchange Act, 15 U.S.C. § 78aa. 

9. Venue lies in this District pursuant to Section 22(a) of the Securities Act, 15 

U.S.C. § 77v(a), and Section 27 of the Exchange Act, 15 U.S.C. § 78aa. The Defendant, directly 

and indirectly, has made use of the means and instrumentalities of interstate commerce, or of the 

mails, in connection with the transactions, acts, practices and courses of business alleged herein, 

including by the offer and sale and the mailing of securities to residents in this District, and 

communications with potential and actual investors or scheme participants in this District. 

DEFENDANT 

10. Jonathan P. Flom, age 57, is a resident of Jupiter, Florida. Defendant is an 

attorney licensed to practice and in good standing in Florida, New York, and Connecticut. 

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RELATED PERSONS AND ENTITIES 

II. International Stock Transfer, Inc. ("1ST") is a Florida corporation incorporated 

in 2004, with an office in Palm Beach , Florida. Cecil Franklin Speight is currently the sole 

owner, officer and director of I ST. Since March 22, 2004, 1ST has been registered with the 

Commission as a transfer agent. On June 14, 2013 , staff in the Commission's Office of 

Compliance Inspections and Examinations (the "Staff') conducted an examination of 1ST's 

business in which 1ST tailed to produce the majority of required records to the Staff. 1ST 

subsequently filed a Form TA-W with the Commission , seeki ng to withdraw its registration as a 

Transfer Agent. The withdrawal was made effective by the Commission on August 3, 2013. 

12. Cecil Franklin Speight ("Speight"), age 53, is a resident of West Palm Beach, 

Florida. Speight is the sole owner, officer, and director of IST. On July 24, 2014, Speight 

consented to the entry ofjudgment against him and 1ST for securities law violations arising out 

of the conduct alleged in this Complaint in the action captioned SEC v. Speight, 14-CY-4435 

(ADS) (E.D.N.Y.). At that time, Speight also pleaded guilty to related charges in the parallel 

criminal action captioned United States v. Speight, 14-CR-379 (RRM) (E.D.N.Y.). 

FACTS 


The Fraudulent Scheme 


13. Beginning in April2012, Speight paid for the creation and maintenance of 

websites for certain bogus unregistered financia l advisors, including ACI Private Wealth (also 

known as ACI Private Client) (" ACI"). 

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14. Once Speight funded the creation of the unregistered purported financial advisory 

firm's websites, each of those business names was used to sell counterfeit securities to members 

of the investing public, including through internet advertising and through "cold calling." 

15. Speight, through 1ST, paid at least hundreds of thousands of dollars of scheme 

proceeds to the Cold Callers that were responsible for speaking to and selling securities to 

investors. 

16. When the Cold Callers succeeded in making a sale, they would direct investors to 

wire their money to one of two attorneys, including Defendant, typically by providing investors 

with wire instructions identifying bank accounts held in the names of the attorneys. 

17. Defendant's role in the scheme was to add the appearance of legitimacy to the 

underlying transactions and conceal from investors that the money they wired to Defendant's 

account was being misappropriated. Defendant thus knowingly or recklessly engaged in 

transactions that operated as a fraud or deceit upon investors, and he substantially assisted 

Speight, 1ST and the Cold Callers in the fraudulent sale of counterfeit securities. 

18. Defendant controlled the bank account identified on the wire instructions 

provided to investors by the Cold Callers, and Defendant agreed with Speight that his bank 

account would be used as a pass-through for investor money solicited by the Cold Callers to 

accounts controlled by Speight. 

19. When investors sent their money to Defendant's account, Defendant did not 

transfer the investors' money to ACI as some investors understood they would. Nor was money 

sent to the supposed issuers of the securities, as would be expected had the securities been 

legitimate. 

20. Rather than providing any legitimate legal services, Defendant (doing the biddin g 

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of Speight) simply acted as a conduit for investor money, obscuring the fact that investor funds 

were being misappropriated. 

21. In exchange for these illicit services, Defendant retained approximately 2% of the 

investment funds, which he took as a cut directly from funds received from the investors. 

22. Defendant then transferred the remainder of the investor money, by either wire or 

check, into bank accounts held by 1ST and controlled by Speight. 

23. Defendant typically only held investor funds in his account for a matter of days 

before transferring the balance less fees to bank accounts held by 1ST and controlled by Speight. 

24. Once 1ST and Speight received the money, they mailed counterfeit securities 

certificates to the investors. 

25. Through the efforts of the Cold Callers who claimed to be affiliated with the 

entities and websites Speight created and through other means, from at least May 2012 forward, 

IST received at least $3.3 million in investor monies from the offer and sale of fraudulent 

securities to over 70 investors. Many of these investors are foreign investors, including residents 

of the United Kingdom, Australia, Ireland, and New Zealand. At least II investors are residents 

of the United States, including at least two investors who reside within this District. 

26. At least $580,000 of scheme proceeds, contributed by at least 28 investors, flowed 

through Defendant's bank account from the sale of two different securities. 

The Offer and Sale of Sham "Aitmark" Bonds 

· 27. One of the securities that the Cold Callers sold to investors was a bond that 

promised a 14% annual rate of return, supposedly issued by a company called Altmark Holdings 

Limited ("Altmark"). 

28. Altmark is a Turks & Caicos entity that, since 2007, has created a series of high­

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yield bonds that have been held, in electronic form , in various accounts of Depository Trust 

Company ("DTC") participants. During the relevant time period, Altmark made no interest 

payments throu gh DTC or otherwise to any holders of the electronic Altmark bonds . 

29. From at lea st May 2012 forward, 1ST and Speight created paper Altmark bond 

certificates and mailed them to investors who were solicited by the Cold Callers, including 

individuals who claimed to be affiliated with ACI. The Cold Callers promised the investors that 

the bonds were low risk and would pay a high rate of return. 

30. The paper Altmark bond certificates Speight peddled to investors were 

counterfeits. 

31. 1ST issued these phony paper certificates as Altmark' s transfer agent, and Speight 

signed the ceJtificate s as a director of Altmark even though he was not an Altmark director. 

32. Having promised a 14% rate of return, Speight and 1ST used some limited 

investor monies to pay purported periodic interest payments. However, in April 2013, 1ST 

mailed a letter to investors informing them that Altmark was suspending all interest payments. 

IST made no further " interest" payments thereafter. 

33. Defendant knew or recklessly disregarded facts that would have led any 

reasonable attorney in his position to conclude that Speight was engaged in the sale of fraudulent 

securities. For instance, in September 2013, Defendant advised Speight that he would have 

difficulty selling Altmark bonds pursuant to federal securities law governing the unregistered 

sale of securities issued by entities that are not listed on a U.S. securities exchange because, as 

Defendant stated in an email, "There is no general market ... its [sic] a highly specialized [sic] 

area in the US eve n for those [securities] that are real!" 

34. Emails between Defendant and Speight indicate that Defendant was aware that 

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the Altmark investor money that passed through his account to 1ST was going to be further 

distributed among Speight and the Cold Callers, not transferred to the issuer. For example, in 

February 2012, Speight requested a status update on certain investor monies that had been wired 

to Defendant, explaining, "[t]here are a number of people in each of these transactions that need 

to be paid and they begin screaming for their money as soon as they know the funds were sent! 

Ahhh ... the love of money!" Likewise, in March 2012 , Speight sent Defendant an email in 

which he stated "the natives are restless (problem with dealing with brokers is they love to get 

paid fast.)." And in April 2012, Speight sent Defendant an email stating "Jonathon as I 

mentioned before I only net 20% out on these transactions and [Cold Callers] get the lion share." 

35. Defendant was also aware of a complaint an investor lodged with Defendant's 

bank in August 2012, concerning funds that the investor wired to Defendant's account to 

purchase Altmark bonds. The complaint put Defendant on notice that the entity that had sold the 

investor the bonds, and had given the investor instructions to wire the rtloney to Defendant, was 

the subject of a fraud warning published by a foreign regulator. Emails confirm that, rather than 

questioning why he was receiving investor funds solicited by a firm that was the subject of a 

reputable fraud waming, Defendant simply requested that Speight "intervene as to what 

transpired" so that Defendant' s accounts could "remain in good standing" with his bank for the 

purpose of accepting additional investor funds solicited by the Cold Callers. 

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The Offer and Sale of Sham .. Adfitech" Securities 

36 . Adfitech , Inc . is a Delaware incorporated entity whose com mon stock trades on 

the over the counter market under the symbo l ADFT. Adfitech has no relationship with Speight, 

IST, or any of the entities selling the securities that 1ST issues. Nor has Adtitech ever authorized 

any of them to sell Adfitech shares on its behalf. 

37. However, Cold Callers who claimed to be affiliated with ACJ falsely told 

potential investors that ACJ was a market maker authorized by Adfitech to sell its shares 

privately at a discount to the current market rate. 

38. Investors who believed those misrepresentations and purchased shares received 

share cet1ificates mailed to them by 1ST. 

39. The certificates falsely show that 1ST is Adfitech's authorized transfer agent when 

in fact, it is not; Computers hare Trust Company, N .A. is Adfitech' s real transfer agent. 

40. The Adfitech certificates that 1ST mailed to investors also misidentify Adfitech ' s 

state of incorporation as Florida but its real state of incorporation is Delaware. 

41. The Adtitech certificates that 1ST mailed to investors contain an illegible 

signature over the title " Company Officer," which does not represent the genuine signature of 

any authorized officer of Adfitech. Moreover, the counterfeit certificates look nothing like the 

genuine Adfitech certificates including with respect to the graphics, font, and boilerplate 

language contained in the certificates. 

42. Defendant knew or recklessly disregarded facts that would have led any 

reasonab le attorney in his position to conclude that Speight was engaged in the sale of fraudulent 

securities. For instance , he knew that unregistered broket·s affiliated with Speight were cold 

calling investors who would send money to him so that he could keep his 2% cut and pass the 

9 



balance to 1ST to be further split among Speight and the Cold Callers. And he knew that 

Speight's entity 1ST, the same transfer agent involved with the counterfeit Altmark bonds, was 

purporting to be the transfer agent for Adfitech. Any reasonable due diligence in the face of such 

red flags would have established that 1ST was not the transfer agent for Adfitech, and that 

investor funds were being misappropriated. 

Speight and 1ST's Misuse of Investor Monies 

43. 1ST and Speight misappropriated and did not give issuers investor funds. 

44. 1ST Cold Callers provided investors with wire instructions that directed investors ' 

funds to the Defendant's account. 

45. In connection with the offer and sale of Altmark securities, 1ST and Speight 

arranged for investors to wire their funds to Defendant's and another attomey's bank accounts. 

46. All investor money that came into these two attorney accounts was transferred to 

lST, except for bank charges and amounts identified as attorney's fees. Monies did not come 

into 1ST from any other source besides the two attorney accounts. 

4 7. 1ST's records show that 1ST received over $2.7 million from at least 52 investors 

over approximately a one year time period in connection with the offer and sale of Altmark 

securities, including at least $180,000 wired to Defendant's bank account from at least I 0 

investors. Bank records corroborate that 1ST received money in approximately the same amount 

from Defendant during such period. 

48. Of the over $180,000 in investor money that 1ST received from Defendant in 

connection with the offer and sale of Altmark securities, none was paid to the purported issuer of 

the securities that were supposedly purchased by investors. 

49. 1ST's records also show that investors wired funds to Defendant' s bank account in 

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connection with the offer and sale of the Adfitech securities. 

50. 1ST's records identify funds received from investors by transfer or "T" number. 

The transfer numbers, investor names , and investment amounts in 1ST' s records match the 

statements Defendant emailed to 1ST following receipt of investor funds. 

51. 1ST's records reflect 1ST's receipt from Defendant of over $400,000 from at least 

18 investors over approximately a one year time period in connection with the offer and sale of 

counterfeit Adfitech securities. Bank records corroborate that 1ST received money in 

approximately the same amount from Defendant during such period. 

52. Of the $400,000 in investor money that 1ST received from Defendant in 

connection with the offer and sale of Adfitech securities, none was paid to the purported issuer of 

the securities that were supposedly purchased by investors. 

FIRST CLAIM FOR RELIEF 

(Violations of Sections 17(a) of the Securities Act) 


53. The Commission realleges and incorporates by reference herein each and every 

alle gation contained in paragraphs 1 through 52 of this Complaint. 

54. Defendant, directly or indirectly, singly or in concert, knowingly or recklessly, by 

use of the means or instruments of transportation or communication in interstate commerce, or of 

the mai Is, in the offer or sale of securities, acting with the requisite state of mind, (a) employed 

devices, schemes and atti fices to defraud; (b) obtained money or property by means of untrue 

statements of material fact or omissions to state a material fact necessary to make the statements 

made, in light of the circumstances under which they were made, not misleading; and (c) 

engaged in transactions, practices, or a course of business which operated or would operate as a 

fraud or deceit upon purchasers. 

55. By engaging in the conduct described above , Defendant has violated, and unless 

I 1 




enjoined will again violate, Section 17(a) of the Securities Act, I 5 U.S.C . § 77q(a). 

SECOND CLAIM FOR RELIEF 

(Violations of Section 1 O(b) of the Exchange Act and Rule 1 Ob-5 thereunder) 


56. The Commission real leges and incorporates by reference herein each and every 

allegation contained in paragraphs I through 52 of this Complaint. 

57. Defendant, directly or indirectly, singly or in concert, by use of the means or 

instruments of transportation or communication in interstate commerce, or of the mails, in 

connection with the purchase or sale of securities, knowingly or recklessly, has : (a) employed 

devices, schemes and artifices to defraud ; (b) made untrue statements of material fact, or omitted 

to state material facts necessary in order to make the statements made, in light of the 

circumstances under which they were made, not misleading; and (c) engaged in transactions, 

acts, practices and courses of business which operated or would have operated as a fraud or 

deceit upon any person. 

58. By reason of the foregoing, Defendant has violated, and unless enjoined will 

again violate, Section IO(b) of the Exchange Act, I 5 U.S.C. § 78j(b), and Rule IOb-5, 17 C.F.R. 

§ 140.1 Ob-5, promulgated thereunder. 

THIRD CLAIM FOR RELIEF 

(Aiding and Abetting Speight and 1ST's Violations of Section 17(a) of the Securities Act 


and Section lO(b) of the Exchange Act and Rule lOb-S thereunder) 


59. The Commission realleges and incorporates by reference herein each and every 

allegation contained in paragraphs I through 52 ofthis Complaint. 

60. Speight and 1ST, directly or indirectly, singly or in concert, by use ofthe means or 

instruments oftranspottation or communication in interstate commerce, or of the mails, in 

connection with the offer, purchase, or sale of securities, knowingly or recklessly, have: (a) 

12 




employed devices, schemes and artifices to defraud; (b) made untrue statements of material fact, 

or omitted to state material facts necessary in order to make the statements made, in light of the 

circumstances under which they were made, not misleading; and (c) engaged in transactions, 

acts, practices and courses of business which operated or would have operated as a fraud or 

deceit upon any person. 

61. Defendant knowingly or recklessly substantially assisted Speight and 1ST's 

violations of Section 17(a) of the Securities Act and Section lO(b) of the Exchange Act and Rule 

1Ob-5 thereunder . 

62. By reason of the foregoing, Defendant aided and abetted violations of and, unless 

enjoined, will continue to aid and abet violations of Section 17(a) of the Securities Act, 15 

U.S.C. §§ 77q(a), and Section IO(b) ofthe Exchange Act, 15 U.S.C. § 78j(b) and Rule IOb-5 

thereunder, 17 C.F.R. § 240.1 Ob-5. 

PRAYER FOR RELIEF 

WHEREFORE, the Commission respectfully requests that the Court enter final 

judgments against the Defendant granting the following relief: 

I. 

Permanently, restraining and enjoining Defendant, his agents, servants, employees and 

attorneys and all persons in active concert or participation with him, who receive actual notice of 

the injunction by personal service or otherwise, and each of them, fi·om future violations of 

Section 17(a) ofthe Securities Act, 15 U.S.C. § 77q(a), Section IO(b) ofthe Exchange Act, 15 

U.S.C. § 78j(b), and Exchange Act Rule IOb-5, 17 C.F.R. § 240.1 Ob-5, and from future 

violations of and/or aiding and abetting violations of Section 17(a) of the Securities Act, 15 

U.S. C.§ 77q(a), Section I O(b) of the Exchange Act, 15 U.S.C. § 78j(b), and Exchange Act Rule 

13 




l Ob-5, 17 C.F .R. § 240.1 Ob-5. 

II. 

Ordering Defendant to disgorge his ill-gotten gains, plus prejudgment interest, and such 

other and further amount as the Court may find appropriate. 

Ill. 

Ordering Defendant to a pay civil money penalty pursuant to Section 20(d) of the 

Securities Act, 15 U.S. C. § 77t(d), and Section 21 (d)(3) of the Exchange Act, 15 U.S.C. § 

78u(d)(3). 

IV. 

Permanently barring Defendant from participating in an offering of penny stock, pursuant 

to Section 20(g) of the Securities Act, 15 U .S.C. § 77t(g), and Section 21 ( d)(6) of the Exchange 

Act, 15 U.S.C. § 78s(d)(6). 

v. 

Such other and further relief as to this Court deems just and proper. 

Dated: New York, New York 
September 23, 2014 

By:_~-~-~---
Amelia A. Cottrell 
Associate Regional Director 

Of Counsel: Attorney for Plaintiff 
Andrew M. Calamari SECURITIES AND EXCHANGE COMMISSION 
Alexander Vasilescu 3 World Financial Center, Room 400 
Adam S. Grace New York, NY 10281 
Justin A. Alfano (212) 336-0178 (Vasilescu) 
John Lehmann 

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