September 25, 2018
According to the SEC Complaint filed on April 18th, 2018, Christopher K. Davies secretly controlled a penny stock company, American Transportation Holdings, Inc. (ATHI), and made false statements about its business plans and operations to fraudulently obtain millions of shares which he intended to resell into the market for profit. Between 2012 and 2016, Davies allegedly forged signatures, provided fake email addresses, provided false statements, and used other deceptive tactics on ATHI documents, press releases, and public disclosures.
One of Davies’ deceptive tactics, according to the SEC, was frequently changing the company’s name and business ventures. ATHI, which was purportedly headquartered in Littleton, Colorado, was formerly known as Home Health International, Inc., Atlas Capital Holdings, Inc., and Micro Mammoth Solutions, Inc., all of which were shell companies that never engaged in any of the claimed business ventures. Micro Mammoth Solutions, Inc. claimed to provide consulting services to mortgage companies. In January 2010, Micro Mammoth Solutions then merged with Atlas Capital Partners, LLC and changed its name to Atlas Capital Holdings, Inc., which purportedly assisted “small to medium-sized enterprises (“SMEs”) with overcoming their impediments to growth by providing SMEs high caliber business and financial expertise as well as capital to begin their path to growth.” The company then changed its name to Home Health International Inc. in March 2012 and purported to be in the business of home health care. The company also purportedly had gold mining claims and a “gold trade business in the African and Australian region” and provided “transportation services to the State of Florida.” In 2014, the company changed to its current name and claimed to “focus on game development in the peer-to-peer gambling market and the entertainment industry” and has also claimed to “specialize in the creation and production of cloud-based games and applications.”
The SEC claims that Davies falsely hired six strawmen (individuals set up to serve as a cover for questionable or illegal activities) as the company’s CEOs, stating that they held sole control over ATHI. The SEC asserts that these “nominal CEOs” did not exist and Davies, though he never identified himself as the sole control person of the company, was the sole CEO, control person, and primary, if not sole, point-of-contact with ATHI’s service providers, including its transfer agent, accountant, and attorney.
According to the Complaint, Davies directed the issuance of millions of ATHI shares, including issuances to other entities he controlled. In 2016, he orchestrated a pump-and-dump scheme with another company he controlled, Ambrose & Keith Fund Management, just before an ATHI stock promotion.
Shortly thereafter, Davies allegedly announced in five press releases that ATHI purchased a National Indoor Football League team that would have “national television contracts” with several media companies and that it had developed a gaming application. This false claim caused the share price to increase from $0.015 on June 27, 2016 to an intraday trading high of $12 on July 15, 2016. The dramatic increase resulted in ATHI holding an intraday market capitalization of nearly $3 billion on July 15, 2016.
In total, Davies allegedly caused ATHI to issue at least 271 million shares, potentially worth millions of dollars to entities he controlled.
Based on the foregoing, the SEC alleges that Davies violated Sections of the Securities Act of 1933 and the Securities Exchange Act of 1934. The SEC suspended trading securities of the issuer in July 2016, which prevented Davies from dumping many of these shares in the market.
By filing the Complaint, the SEC seeks a final judgement restraining and permanently enjoining Davies and ATHI from further engaging in courses or acts of business alleged in the Complaint that violate provisions of the federal securities laws. The SEC is also seeking disgorgement of ill-gotten gains, civil money penalties, a permanent bar from participating in an offering of penny stock in any capacity, a bar from acting as an officer or director of issuer that has a class of securities registered with the SEC, and prohibition from indirectly or directly participating through an entity owned or controlled by him in the purchase, offer, or sale of any security in an unregistered offering by an issuer.
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