May 6, 2014

Local stock promoter Shawn A. Becker faces SEC complaints

Shawn A. Becker, an Overland Park stock promoter, has been charged by federal Securities and Exchange Commission in connection with an illegal reverse merger scheme involving two Chinese companies. Three others involved have agreed to pay penalties.

An Overland Park stock promoter is being accused by federal officials of participating in a conspiracy to pump up the stock value of two Chinese firms through a merger scheme.

Shawn A. Becker was charged this week in a complaint by the Securities and Exchange Commission with multiple fraud and securities violations. He is one of five people alleged to have been involved in a scheme to drive up the stock price of China Auto and Guanwei Recyling in 2008 and 2009.

S. Paul Kelley, a Toronto-based consultant, and three associates acquired controlling interests in two U.S. public shell companies to orchestrate so-called reverse mergers of the two Chinese companies, according to an SEC statement announcing the charges. They then hired Becker and others to tout the companies’ stock to investors, the SEC said.

Reverse mergers allow private companies to launch a stock sale and go public more quickly and cheaply than the usual method of implementing an initial public offering or IPO.

“Kelley and his associates engaged in various forms of manipulative trading in order to further drive up the price and volume of China Auto and Guanwei Recycling stock, and they profited when they dumped their shares into the inflated market they created,” the SEC said in its statement.

Kelley and two associates already have agreed to settle the SEC charges. Kelley will pay more than $6 million and will be barred from the securities industry, the SEC stated.

Becker and two others also are accused by the SEC of orchestrating manipulative trading in a third Chinese firm, Kandi Technologies, in 2009 and 2010.

Arthur Fillmore II, the attorney at Levy Craig representing Becker, said his client also wants to settle with the SEC. Fillmore believes the allegations against Becker are more minor than those leveled against the others, and that Becker was unaware of the scheme.

“They didn’t act in concert,” Fillmore said. “He was doing what he’s always done, being involved in investor relations. Because of that, he was drawn into the net.”

Fillmore also said Becker considered Kelley to be a mentor at one point in his career.

“I really do feel this is a case where Shawn Becker was caught in a net that caught one too many fish,” he said. “It’s our intent to settle this with the SEC. “We tried to settle before the complaint was filed.”

The SEC complaint was filed in U.S. District Court for the District of New Jersey and is being handled by the agency’s Denver Regional Office. The Ontario Securities Commission in Canada assisted in the investigation.

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