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Press Release

Former Scottsdale Resident Sentenced to 42 Months for Securities Fraud

For Immediate Release
U.S. Attorney's Office, District of Arizona

     PHOENIX – This week, U.S. District Judge Diane J. Humetewa sentenced William “Lance” Mullins, 50, formerly of Scottsdale, Ariz., to 42 months in prison and three years of supervised release. The Court also ordered Mullins to pay more than $2.8 million in restitution to 125 victim shareholders.  Mullins had previously pleaded guilty to engaging in fraudulent interstate securities transactions.

     Mullins was involved with a Tempe, Ariz.-based technology company called Xhibit Corporation, whose stock was publicly traded on the over-the-counter market and which merged with the airplane catalog SkyMall in May 2013.  In 2012 and 2013, before the SkyMall merger, Mullins and others made misrepresentations about the company when recruiting investors.  They also engaged in manipulative trading of Xhibit stock that is prohibited by U.S. securities laws and regulations.  Their prohibited trading activities artificially inflated Xhibit’s stock price and made it falsely appear that there was more demand for the stock.  Because of these actions and other events, Xhibit’s stock price rose sharply, from less than a dollar in early 2012 to a peak of more than seven dollars in May 2013, and then fell just as quickly.  Mullins made more than $1 million from selling much of his own stock before the stock price dramatically fell, while unknowing shareholders lost millions. 

     Two others pleaded guilty to conspiracy to commit securities fraud in related cases and were sentenced in June 2019.  Nicolas Russo, Jr., 72, of Fountain Hills, Arizona, and Larry Eiteljorg, 70, of Scottsdale, Arizona, were sentenced to probation and ordered to pay restitution after cooperating with the government’s investigation.

     “Mr. Mullins was the mastermind of this market manipulation scheme and the 42-month prison sentence Mullins received should send a strong message of deterrence to criminals committing securities fraud in Arizona,” said Sean Kaul, Special Agent in Charge of the FBI Phoenix Division. “We are pleased that all defendants have been ordered to pay restitution to the victims. The FBI will continue to work aggressively with our law enforcement partners to investigate those who commit complex financial crimes. We thank the Arizona U.S. Attorney’s office for their work in prosecuting this case.” 

     The investigation in this case was conducted by the Federal Bureau of Investigation. The prosecution was handled by Bridget Minder and Peter Sexton, Assistant United States Attorneys, District of Arizona, Phoenix.

Updated September 20, 2019

Financial Fraud
Securities, Commodities, & Investment Fraud
Press Release Number: 2019-111_Mullins/CR-18--1614_PHX-DJH