Ingen Technologies Inc.’s (OTC:IGNT) former CEO, Scott Sand, is headed to the slammer for his role in a plot involving the illegal manipulation of his company’s stock price.
The Yucaipa, Calif.-based medical device manufacturer named Tom Neavitt interim CEO to replace Sand and said current COO Gary Tilden will take over its day-to-day operations.
Ingen said Sand was its "driving managerial force" for several years and revealed that his exit could be a detriment to the company’s performance in a prepared statement released through the Securities & Exchange Commission website.
"Although the company has complete faith in the abilities of Mr. Tom Neavitt, Interim CEO and Mr. Tilden moving forward, it is likely the operations of the company’s subsidiary will be adversely affected now that Mr. Sand is incarcerated…" the company said.
Sand was last October charged “with engaging in a scheme to pay kickbacks to a pension fund fiduciary to induce the fiduciary to misappropriate money from a pension fund in order to buy restricted common stock at inflated prices,” according to Ingen’s filing with the SEC.
He plead no contest to one of two counts the Justice Dept. levied against him and made full financial restitution in this matter, according to the filing.
On April 13, Judge William Dimitrioleas of the U.S. District Court for Southern Florida sentenced Sand to one year and a day in prison with a fine of $4000.
Sand’s takedown was part of a larger sting operation that resulted in more than a dozen individuals being charged for their rolls in the kickbacks scheme. SEC officials charged penny stock promoters and their companies with securities fraud for their efforts to cause the volume and price of microcap stocks artificially fluctuate and illegally encourage stock sales through the payment of kickbacks, the SEC said.
The SEC worked with the U.S. attorney’s office for the Southern District of Florida and the FBI. The individuals charged in the scheme thought they were paying-off corrupt pension fund managers, stockbrokers, or promoters, but they were actually undercover FBI agents or cooperating sources, according to the SEC.
Ingen in December halted its illegal actions, which resolved issues of liability against the company, but the company remains subject to the assessment of civil penalties and disgorgement by the court. Sand was, and still is, an affiliate stockholder of the company, according to the company’s filing with the SEC.
It is possible that portion of the court’s order on those civil penalties and disgorgements will involve payment of a amount sufficient to materially affect Ingen, the company said in the filing.
Sand is now barred from managing publicly reporting companies and involvement in the offer and sale of any penny stock. Disgorgement and civil penalty matters have not as yet been taken up by the court, because the SEC has not yet filed any motions regarding such actions.