SEC #Charges #Florida #Attorney with #Investment #Fraud

The Securities and Exchange Commission has filed a civil injunctive action against a Florida lawyer accused of investor fraud.

The federal agency alleged that attorney Diane J. Harrison and her husband, Michael J. Daniels, manipulated share prices to inflate the public market value of stock they controlled.

Harrison is a business lawyer licensed to practice in Florida and Nevada. She specializes in business planning, securities regulation, Sarbanes-Oxley Act compliance, public offerings and private placements, according to her website. Her firm, Harrison Law, is based in Parrish, in the Bradenton–Sarasota–Venice metropolitan area on Florida’s southwestern coast.

Harrison has a degree in chemical engineering from West Virginia Institute of Technology, and once held an engineering position with the U.S. Department of Energy, according to her online biography. Her business holdings include a plumbing company that tests and repairs residential backflow systems.

But the SEC claimed Harrison also had another line of work: alleged scams that ran for about four years and violated anti-fraud, registration and reporting provisions of federal securities laws.

“From no later than July 2010 through August 2014, Harrison participated in two separate fraudulent schemes to manufacture public companies for sale, fundamentally premised on a deceptive public float of purportedly ‘free-trading’ securities,” according to the complaint the SEC filed April 25 in the U.S. District Court for the Middle District of Florida. “The creation of that deceptive public float was dependent on false and misleading statement and omissions to the Commission, the Financial Industry Regulatory Authority, the Depository Trust Co. and others.”

The alleged fraud involved “microcap” companies — publicly traded companies with market capitalization or value of around $50-$300 million.

The SEC alleged Harrison and her husband launched at least five microcap companies to issue stock based on these firms’ ability to issue unrestricted shares on the over-the-counter market.

But the companies had no real value, according to the complaint. Instead, the SEC alleges Daniels and Harrison created the false appearance that the companies were viable businesses with independent management and shareholders. Instead, they used friends and relatives to pose as officers and investors.

One friend, Catherine A. Bradaick-Zolla of Sarasota, was named as a co-defendant in the SEC action.

“Harrison and Daniels’ scheme followed a consistent pattern,” according to the complaint. They “acquired a small local business, and gifted its privately held securities to approximately 30 friends and family by providing them with all the money to ‘purchase’ the shares.”

Once the “investors” completed the acquisition, Harrison then prepared and filed paperwork with federal agencies to take the company public and offer its shares for sale.

“Daniels and Harrison used the identity of a friend — sometimes without his or her knowledge — to be a fellow officer, to create a mirage of not just independent investors, but also independent management,” according to the SEC complaint. “Each registration statement made false and misleading statements concerning the officers, the company’s business purpose and the ‘selling’ shareholders.”

Harrison’s Florida Bar file shows admission in 2010 and no disciplinary history over the last 10 years. Her Nevada file shows no disciplinary actions, and membership since 2004.

Harrison did not immediately respond to requests for comment Tuesday on the federal charges, and no appearance was immediately entered on her behalf.

 

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