Debra Wong Yang
United States Attorney
Central District of California
United States Courthouse
312 North Spring Street
Los Angeles, California 90012
September 12, 2005
Thom Mrozek (213) 894-6947
Los Angeles, CA - The former president and chief executive officer of Costa Mesa-based Earthboard Sports USA, Inc. pleaded guilty this morning to federal fraud charges, admitting that he lied to investors about a potential merger.
Hubert Allen Jeffreys, 37, of Newport Beach, pleaded guilty to one count of securities fraud before United States District Judge David O. Carter in Santa Ana. By pleading guilty, Jeffreys acknowledged defrauding Earthboard investors by misleading them about the prospect of a potential merger with a nationally-recognized shoe company.
Jeffreys is the founder of Earthboard, which manufactures and sells all-terrain skateboards. From December 2001 through May 2003, Jeffreys made statements describing a prospective merger between Earthboard and a "publicly traded major footwear company." A December 14, 2001 press release stated that a "definitive agreement" had been reached in which Earthboard shares would be acquired "on a one for one basis" by a "publicly traded major footwear company." A press release issued by Jeffreys on May 6, 2002 stated "we still have a deal." And a press release issued on May 24, 2002 quoted Jeffreys as saying, "it's like being on the 98 yard line."
Jeffreys knew that Earthboard's investors and potential investors believed that the company referred to in these press releases, and in other statements made by Jeffreys and others, was Vans, Inc., a company whose stock was trading as high as $15 a share. In reality, Vans never had any intention to acquire Earthboard.
In his guilty plea this morning, Jeffreys admitted that he acted with the intent to deceive investors and potential investors. Nearly 20 victim-investors lost nearly $2 million as a result of Jeffreys's fraudulent conduct.
Jeffreys is scheduled to be sentenced by Judge Carter on December 12. At sentencing, Jeffreys faces a statutory maximum penalty of 20 years in federal prison and a potential fine of $5 million.
This case is the result of an investigation by the Federal Bureau of Investigation. The United States Securities and Exchange Commission, which earlier this year filed suit against Jeffreys, provided substantial assistance during the investigation.
Release No. 05-128
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