The Securities and Exchange Commission (SEC) and the US Department of Justice have both charged a repeat offender accused of penny stock fraud.
Two charged with penny stock fraud
“The Securities and Exchange Commission today charged two individuals with defrauding investors in penny stock companies that claimed to have valuable patents,” the SEC stated. “One of those charged had been barred from the penny stock business based on his role in another securities scheme and neither he nor his companies had ever been issued any patents by the U.S. Patent and Trademark Office, the SEC alleged.
Accused named wife director
“The SEC’s complaint, filed in U.S. District Court for the Southern District of Florida, charged Rockey ‘Roc’ G. Hatfield, of Safety Harbor, Florida, Steve E. Lovern, of Atlanta, Belize-based N1 Technologies Inc., and Wyoming-based NanoSave Technologies Inc. Hatfield is a repeat offender whose prior securities schemes resulted in a criminal conviction, injunctions, a contempt of court finding, and broker-dealer, investment adviser, and penny-stock bars. The SEC’s complaint alleges Hatfield controlled the two companies but concealed his role in them by having his wife and Lovern named as corporate officers and directors.”
At the same time, the US Attorney’s Office for the Southern District of New York also filed criminal charges against Hatfield, Lovern, and others.
Trading in NanoSave Technologies (NNSV) was also suspended by the SEC; the stock last traded at 16 cents per share.
“According to the SEC’s complaint, the defendants hired unregistered brokers to cold call investors and pitch investments in ‘patent units,’ using scripts written by Hatfield, including one that falsely claimed N1 Technologies had patented a cure for staph infections,” the SEC stated. “Investors were told that purchasing an $80,000 unit could yield as much as $1 million based on sales of similar patents, the SEC alleged. The SEC alleged that although investors were told that their money would help fund further research and development, the defendants used most of it for personal expenditures and to pay sales commissions of up to 40 percent.”
Fake patents fooled investors
The SEC complaint noted further the nature of the alleged scam: “From at least January 2015 through May 2017, Defendants raised approximately $2.5 million from at least 77 investors located throughout the United States by offering and selling unregistered securities in the form of unit interests in several of N1 Belize and NanoSave’s purported patents (‘patent unit’). In reality, the U.S. Patent and Trademark Office (‘USPTO’) never issued to N1 Belize, NanoSave, or Hatfield any of the patents Defendants claimed they owned.”
Eric I. Bustillo Director of the SEC’s Miami Regional Office, which headed up the investigation, said: “As alleged in our complaint, Hatfield is a recidivist who fraudulently raised money by selling investors interests in non-existent patents. This action is part of the Miami Regional Office’s Recidivist Initiative and the Commission’s efforts to pursue recidivist violators and hold them accountable.”
“In February 1996, the Commission instituted an order barring Hatfield from participating in any offer of penny stock after a federal district court enjoined him from violations of the anti-fraud and registration provisions of the federal securities laws,” the SEC complaint noted of Hatfield’s repeat offender status. “Hatfield has gone on to violate these same provisions again – this time in connection with the sale of securities issued by N1 Belize and NanoSave.”
The complaint seeks return of the defendants’ allegedly ill-gotten gains, with interest, a civil monetary penalty, a court injunction, and other relief.