A former microcap company president charged by the Securities and Exchange Commission with defrauding over 700 investors nationwide who were pressured to invest has agreed to lifetime officer-and-director and penny stock bars.
The SEC’s complaint alleges that from 2009 until 2015, Keith Houlihan of Boca Raton, Florida, while president of publicly-traded Sanomedics, Inc., hired and worked with an unregistered broker and his boiler room operation to illegally sell shares of Sanomedics by cold-calling the investing public using high-pressure sales tactics. In 2009 and 2010, Houlihan falsely told investors that for a limited time he was able to offer them Sanomedics shares at a steep discount to the stock’s market price. The complaint alleges further that Houlihan used investor monies to pay undisclosed sales commissions to boiler room sales agents and more than $110,000 to himself for personal expenses. In 2013 and 2014, Houlihan signed Sanomedics’ annual and quarterly filings with the SEC that contained false statements about Sanomedics’ financing and did not disclose the illegal boiler room activity.
In December 2017, the U.S. Attorney’s Office for the Southern District of Florida criminally charged Houlihan. He was subsequently sentenced to 111 months imprisonment and ordered to pay approximately $21 million in restitution.
The SEC’s complaint, filed in federal court in Miami, Florida on May 4, 2018, charges Houlihan with violating Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and Exchange Act Rule 13a-14, and with aiding and abetting the boiler room’s violations of Section 15(a) of the Exchange Act and Sanomedics’ violations of Section 13(a) of the Exchange Act and Rules 12b-20, 13a-1 and 13a-13 thereunder. In addition to the lifetime bars, Houlihan agreed to settle the SEC’s charges by consenting to a judgment that permanently enjoins him from violating the charged provisions of the federal securities laws. The settlement is subject to court approval.
The SEC charged the boiler room operator, Miguel “Michael” Mesa, and Sanomedics’ former CEO, Craig V. Sizer, with fraud in 2016. A federal court subsequently entered consented-to final judgments against Mesa and Sizer that imposed lifetime penny stock bars on each of them and a lifetime officer-and-director bar on Sizer. The SEC subsequently barred Mesa and Sizer from the securities industry.
The SEC’s investigation was conducted by Gary M. Miller of the Enforcement Division’s Microcap Fraud Task Force in the Miami office with assistance from Eric Morales and Senior Trial Counsel Alejandro O. Soto. The case was supervised by Elisha L. Frank and Jason R. Berkowitz of the Microcap Fraud Task Force. The SEC appreciates the assistance of the Federal Bureau of Investigation and the U.S. Attorney’s Office for the Southern District of Florida.
The SEC strongly encourages investors to check the backgrounds of people selling them investments by using the agency’s Investor.gov website to quickly identify whether they are registered professionals.