03/29/2009

News / Utah Man Sentenced to Eight Years for Multi-Million Dollar Fraud Scheme

PHILADELPHIA—James Plant, 40, of St. George, Utah, was sentenced yesterday to 97 months in prison for a securities scheme that defrauded investors of his company, CyberKey Solutions Inc., announced United States Attorney Laurie Magid. Plant bilked investors out of more than $3.5 million and he made false statements to the United States Securities and Exchange Commission (SEC).

Cyberkey, a company that sold Universal Service Bus (“USB”) flash memory drives and other electronic devices, was a public company that was traded under the symbol “CKYS,” on the “Pink Sheets,” a quotation service for over-the-counter stocks. As CEO, Plant engaged in a scheme to defraud the investing public in connection with the purchase and sale of CyberKey stock. Plant caused CyberKey to issue numerous materially false and misleading press releases claiming that the company 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 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. The misstatements were designed to artificially 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. During the SEC’s investigation of this matter Plant provided false documents and statements.

Plant pleaded guilty in June 2008 to securities fraud, obstruction of an agency proceeding, making false statements, and witness tampering. A hearing on restitution will be held on April 28, 2009.

The case was investigated by the United States Postal Inspection Service and the Federal Bureau of Investigation. The United States Securities and Exchange Commission also provided valuable assistance. The case was prosecuted by Assistant United States Attorney Leo R. Tsao.

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