U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 25761 / June 30, 2023
Securities and Exchange Commission v. Thomas Collins, Patrick Thomas, Gary Kouletas, Scott Levine, and Brian Kingsfield, No. 4:23-cv-00676-O (N.D. Tex. filed June 30, 2023)
SEC Charges Five Individuals in Penny Stock Fraud Scheme
The Securities and Exchange Commission filed today a complaint in U.S. District Court for the Northern District of Texas charging five individuals with a fraudulent scheme to sell millions of shares of Global Resource Energy, Inc. (OTC: GBEN), a Fort Worth-based microcap company. The defendants collectively received approximately $1.7 million in proceeds from the fraudulent scheme.
The SEC’s complaint alleges that Thomas Collins and Patrick Thomas obtained undisclosed control over the vast majority of GBEN’s shares, and then coordinated with Brian Kingsfield, Scott Levine, and Gary Kouletas to fraudulently sell GBEN shares to the investing public. According to the complaint, Collins and Thomas used sham consulting agreements to transfer millions of restricted shares of GBEN stock to a third party to give the appearance that the shares were freely tradeable. Collins and Thomas, with the assistance of Kingsfield and a network of salespeople, induced investors to purchase the GBEN shares. To assist in the fraudulent scheme, Collins enlisted Levine, a market maker, to help match unsuspecting public investors with sellers of shares secretly controlled by Collins and Thomas. In addition, the SEC alleges that Collins and Thomas used another sham consulting agreement to transfer millions of restricted GBEN shares to an entity owned by Kouletas. The Kouletas entity then sold those shares, and split the proceeds with Collins and Thomas.
The SEC’s complaint charges all defendants with violating the antifraud provisions of Section 10(b) of the Securities Exchange Act of 1934 (Exchange Act) and Rules 10b-5(a) and (c) thereunder and Sections 17(a)(1) and (a)(3) of the Securities Act of 1933 (Securities Act), and Kingsfield with violating Section 15(a) of the Exchange Act for acting as an unregistered broker. The SEC seeks permanent injunctive relief, disgorgement of ill-gotten gains with prejudgment interest, civil penalties, and penny stock bars against all defendants, along with officer-and-director bars against Collins and Thomas. The defendants have agreed to consent to all the charges and relief, and their settlements are subject to court approval.
Each of the defendants has pleaded guilty in parallel criminal proceedings in the Northern District of Ohio. See United States v. Collins, et al., 1:20-cr-00842-BYP (N.D. Ohio); see also United States v. Levine, 1:23-cr-00262-SL (N.D. Ohio). Collins was sentenced to 41 months imprisonment, Thomas to 18 months imprisonment, Kouletas to 43 months imprisonment, Kingsfield to 37 months imprisonment, and Levine is awaiting sentencing.
In a separate proceeding, Damon Durante, another salesperson Collins and Thomas used to sell GBEN shares, consented to a cease-and-desist order finding that he willfully violated Section 15(a) of the Exchange Act for acting as an unregistered broker. Durante agreed to an order of disgorgement, civil penalty, penny stock bar, and an industry bar. Durante also pleaded guilty in the parallel criminal proceeding and was sentenced to six months imprisonment. See United States v. Collins, et al., 1:20-cr-00842-BYP (N.D. Ohio).
The SEC’s investigation was conducted by Derek Kleinmann and Ty Martinez, and supervised by Sarah S. Mallett and Eric R. Werner of the SEC’s Fort Worth Regional Office. The SEC’s litigation is being conducted by Matthew J. Gulde and supervised by B. David Fraser.