July 10, 2007 -
UTAH MAN CHARGED IN MULTI-MILLION DOLLAR FRAUD SCHEME
United States Attorney Patrick L. Meehan today announced the filing of an Indictment* charging JAMES PLANT with securities fraud in connection with a scheme to defraud investors of CyberKey Solutions Inc. (“CyberKey”) out of more than $3.5 million. The Indictment further charges PLANT with making false statements to the United States Securities and Exchange Commission.
According to the indictment, PLANT is the President, Chairman and Chief Executive Officer of Cyberkey, a company based in St. George, Utah that sells Universal Service Bus (“USB”) flash memory drives and other electronic devices. CyberKey is a public company that was traded under the symbol”CKYS,” on the “Pink Sheets,” a quotation service for over-the-counter stocks.
As the CEO of CyberKey, PLANT engaged in a scheme to defraud the investing public in connection with the purchase and sale of CyberKey stock by causing CyberKey to issue numerous materially false and misleading press releases claiming that CyberKey had received a $24.5 million purchase order from the United States Department of Homeland Security (“DHS”) for the purchase of USB flash memory drives.
“Plant knew those statements were false and misleading because CyberKey never had any business relationship, either directly or indirectly, with DHS, and thus had never received any such purchase order from DHS,” said Meehan. “Corporate officers who don’t play by the rules threaten to undermine the integrity of our financial markets. The system becomes corrupted when investors are making decisions based on inaccurate or worse, fabricated information.”
Indeed, PLANT failed to correct CyberKey’s false press releases even after DHS issued PLANT a cease and desist letter explaining that DHS had no record of doing business with CyberKey, and ordering PLANT to remove all references to DHS from CyberKey’s press releases. PLANT subsequently revised CyberKey’s press releases by replacing “Department of Homeland Security” with more general descriptions, such as “Federal Government Agency” or “the Federal Government.” The revised press releases continued to maintain, however, that CyberKey had received a $24.5 million purchase order, although they now stated that the purchase order was with an unnamed federal agency.
PLANT also caused CyberKey to issue materially false and misleading press releases concerning: (a) falsely inflated revenues and profits that CyberKey had supposedly realized from the fictitious DHS purchase order; (b) false representations that CyberKey’s financial statements were in the process of being audited and would be released in the near future; and (c) false representations that the misstatements regarding the DHS purchase order in CyberKey’s press releases were the result of improper accounting methods and reporting procedures.
These misstatements were designed artificially to inflate the price of CyberKey common stock. As a result of PLANT’s scheme to defraud, PLANT and CyberKey sold hundreds of millions of shares of common stock to members of the investing public at fraudulently inflated prices.
AGE [Date of Birth]
St. George, Utah
39 years old
If convicted the defendant faces a maximum possible sentence of 25 years imprisonment, a $2.25 million fine, 3 years of supervised release and a $200 special assessment.
The case was investigated by the United States Postal Inspection Service
and the Federal Bureau of Investigation. The United States Securities and
also provided valuable assistance. The case has been assigned to Assistant United States
Attorney Leo R. Tsao.
STATES ATTORNEY'S OFFICE
EASTERN DISTRICT, PENNSYLVANIA
Suite 1250, 615 Chestnut Street
Philadelphia, PA 19106
*An Indictment or Information is an accusation. A defendant is presumed innocent unless and until proven guilty.
Benjamin Franklin Photo by B. Krist for the Greater Philadelphia Tourism Marketing Corporation