The SEC June 29 filed a complaint against Efoora, a manufacturer of rapid diagnostic tests, and its CEO, David Grosky -- along with an Efoora employee and a holding company controlled by Grosky -- for participating in an unregistered stock scheme worth nearly $50 million.
The complaint, filed in the U.S. District Court for the Northern District of Illinois, alleges that from January 2000 through April 2006, Efoora raised more than $48 million by selling more than 100 million shares of its stock using fake promotional materials to approximately 5,000 investors.
Efoora, directly and through a network of unregistered brokers or "finders," solicited investors by making a series of false and misleading statements about its business, including statements on:
The amount of offering proceeds paid to finders; Plans to conduct an initial public offering; When the FDA would approve its products for sale in the U.S.; and Its projectcd profits.
The complaint can be viewed at www.sec.gov/litigation/complaints/2006/comp19752.pdf (http://www.sec.gov/litigation/complaints/2006/comp19752.pdf).