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Date of Issue: September 09, 2009

SEC sues Island man

The Securities and Exchange Commission on Sept. 1 accused an Island resident and businessman of selling unregistered securities.

The complaint, filed in federal court in New York state by SEC attorneys Robert Blackburn and Leslie Hughes, names six defendants: Doyle Scott Elliott of Holmes Beach, Scott Elliott Inc., Michael J. Xirinachs of Dix Hills, N.Y., Emerald Asset Advisors Inc., Robert L. Weidenbaum of Coral Gables and CLX & Associates Inc.

Elliott said, “I didn’t do it. I didn’t sell unregistered securities… I invest my money and only my money.”

“The stock that I bought was from a 2006 bankruptcy filing,” he said, adding that he has contacted his lawyer and plans to challenge the complaint.

The 22-page SEC complaint alleges that Elliott and others helped a company wrongfully issue more than 21 billion shares of stock.

The complaint reads, “This case involves unregistered distributions and offerings of the shares of Universal Express Inc. by the defendants in violation of the registration provisions of the federal securities laws. Defendants received more than 21 billion shares of Universal Express, which they promptly sold to public buyers on the over-the-counter market, generating proceeds of approximately $34 million.”

The complaint went on to state that the defendants violated multiple sections of federal securities law, that defendants should be barred “from participating in any offering of penny stock” and that defendants should be required to pay civil penalties and “disgorge all ill-gotten gains.”

Universal Express, according to the complaint, is a Nevada corporation headquartered in New York City. In 2007, the SEC won a judgment against Universal Express for making false statements and selling unregistered stock.

The new complaint states that from 2004 to 2007, common shares of Universal Express were traded in the over-the-counter market at prices ranging from .0001 to .06 per share.

The SEC alleges that Elliott entered into an agreement with Universal Express to buy shares at a discount on the market price in exchange for cash.

The complaint then states: “Between Feb. 5, 2004, and March 9, 2007, Universal Express sold to Elliott or SEI approximately 4,706,506,109 shares … that the company issued in approximately 203 certificates either directly in the names of Elliott or SEI, or indirectly to Elliott or SEI in the names of clearing firms or the various brokerage firms where Elliott or SEI owned brokerage accounts.

“Elliott and SEI acquired these 4.7 billion shares directly from Universal Express in transactions not involving any public offering by the company.”

Elliott and SEI sold into the public market more than 4 billion shares for proceeds of about $14 million, according to the SEC complaint.

Then, the complaint continues, “Elliott and SEI directed payments of approximately $8,072,155 to Universal Express to pay for the shares that they sold.”

Elliott said the filing of the complaint did not surprise him.

“I gave a deposition to them two years ago on this matter,” he said. “I always answer every question they have. I cooperate.”

In late February, Elliott went on trial in Phoenix in another SEC-related case that concluded in his favor.

“I won,” Elliott said at the time. “I was vindicated. We had a good feeling about it.… There was no stock fraud.”

The SEC had alleged that officers with iBIZ schemed to inflate the company stock price and that Elliott helped sell shares when they reached high levels — 182.4 million shares that generated $886,800 for the company and $383,467 for Elliott.

The other defendants in that case negotiated settlements and were ordered to give back their profits with interest owed.

Elliott, however, went to trial before Judge James A. Teilborg, claiming that the SEC’s complaint was unfounded.

“I didn’t do anything wrong so I didn’t settle,” Elliott has said.

On Feb. 27, an eight-member jury returned a decision favoring Elliott.

Last week, Elliott said he was facing a similar situation with the newly filed complaint.

“This is the same thing as Phoenix, which I won,” he said.

At the same time Elliott was appearing before a jury in Arizona, the FBI executed search warrants at Elliott’s home on Key Royale Drive and his business office on Gulf Drive.

FBI officials declined to say last week whether the execution of warrants was related to the SEC’s current case.

At the time of the searches, Bryan Travers, a spokesman for the FBI in Newark, N.J., said, “I’m not specific on the locations, but we did execute some search warrants in Florida. And that’s about all I can tell you.”

At that time, Elliott said the FBI was investigating 70 publicly traded companies, including four that Elliott had financed, and that he was “cooperating with the FBI as a witness.”

Elliott said he hasn’t “heard a peep” about the FBI’s work and didn’t think the warrants were related to the SEC case.

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