April 5, 12

NEWS / Father and Daughter Sentenced for Lying to SEC

Defendants Convicted of Obstructing SEC Investigation into Misuse of Investor Monies and False Filings in Connection with IPO

OAKLAND, CA—For conspiring to obstruct an investigation of the Securities and Exchange Commission, Nasser V. Hamedani and Sholeh A. Hamedani were sentenced yesterday to 25 months and 20 months, respectively, in prison, United States Attorney Melinda Haag announced. They were also ordered to perform a total of 1,750 hours of community service as part of their two-year terms of supervised release.

The defendants, father and daughter, pled guilty on November 9, 2011 to violating 18 U.S.C. § 371-conspiracy to obstruct justice. According to the plea agreement, the Hamedanis admitted to making false statements while under oath and producing fraudulent documents in order to impede and obstruct the SEC’s investigation into the registration and sales of securities issued by the company known as The Children’s Internet Inc. (TCI). TCI was an Internet start-up company based in San Ramon, California that was in the process of developing and marketing software to protect and secure children’s access to the Internet.

Nasser Hamedani, 74, and Sholeh Hamedani, 44, both residents of Antioch, California, were indicted by a federal grand jury on May 12, 2009. A superseding indictment was returned on July 21, 2009. The two defendants were charged with conspiracy, securities fraud, false statements to accountants, false books and records, and obstruction of justice.

“Obstructing the SEC from carrying out its mission to protect investors and the integrity of the financial markets is a serious offense with serious consequences,” U.S. Attorney Haag said. “This investigation demonstrates the U.S. Attorney’s office’s commitment to prosecuting individuals who make false statements and fabricate documents in response to investigations by our enforcement partners at the SEC.”

In addition to their criminal convictions, the Hamedanis remain subject to final judgments entered by U.S. District Judge Claudia Wilken on October 23, 2008 in the SEC’s civil action. According to those judgments, the Hamedanis were held jointly and severally liable for disgorgement and prejudgment interest of approximately $4.0 million and were each fined $100,000 in civil penalties. The final judgments also impose permanent injunctions against the Hamedanis from violating certain provisions of the federal securities laws, prohibit them from serving as an officer or director of a publicly reporting company, and prohibit them from engaging in penny stock transactions.

Both sentences were handed down by Judge Wilken following guilty pleas on count 10 of the superseding indictment in violation of 18 U.S.C. §§ 371 and 1505. Judge Wilken also sentenced the defendants to a two-year period of supervised release with conditions including 90 days in a halfway house, community service, and restrictions on their financial activities. The judge also set a restitution hearing for May 22, 2011 at 2:30 p.m. in order to accommodate the large number of victims with potential claims against the defendants and coordinate any restitution with the existing final judgments.

Timothy J. Lucey is the Assistant U.S. Attorney who is prosecuting the case with the assistance of Elise Etter. The prosecution is the result of a two-year investigation by the FBI with the substantial assistance of the SEC’s San Francisco Regional Office.

http://www.fbi.gov/sanfrancisco/press-releases/2012/father-and-daughter-sentenced-for-lying-to-sec

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