New York Securities Lawyer Blog
On September 30, 2015, the Securities and Exchange Commission (“SEC”) filed a Complaint in the United States District Court for the Central District of Illinois (the “Complaint”), charging the former CEO, President and Chairman of the Board, David P. Godwin, and the former CFO, Anthony G. Roth, of ContinuityX Solutions Inc. (“ContinuityX Solutions”) with fraud and other securities law violations. ContinuityX Solutions is based in Metamora, Illinois, and is a publicly traded company that provides computer and telecommunication services, including networked computer server space.
The Complaint alleges that David P. Godwin and Anthony G. Roth violated Sections 17(a)(1), (2) and (3) of the Securities Act, Sections 10(b) and 13(b)(5) of the Exchange Act, Rules 13a-14 and 13b2-1 of the Exchange Act, and sets forth other charges of aiding and abetting in the violation of the aforementioned rules. Specifically, the Complaint alleges that, from April 2011 to September 2012, David P. Godwin and Anthony G. Roth filed, on behalf of ContinuityX Solutions, “periodic reports with the SEC disclosing purported revenues of $27.2 million.” The Complaint further alleges that David P. Godwin and Anthony G. Roth used “straw buyers and forged contract documents” to effectuate the fraud and that “99% of that claimed revenue came from fraudulent and fictitious sales.” According to the Complaint, David P. Godwin and Anthony G. Roth were both enriched by using these falsified filings in connection with a private offering of ContinuityX Solutions bonds, with David P. Godwin receiving $1.3 million in compensation and Anthony G. Roth receiving $351,800 in compensation and $456,098 in profits from sales of the bond offering.
The Complaint, in its prayer for relief, requests that David P. Godwin and Anthony G. Roth be permanently restrained and enjoined from further violating the aforementioned rules, and “disgorge ill-gotten gains received as a result of the conduct alleged herein, plus pre-judgment interest thereon.” The Complaint further requests that David P. Godwin and Anthony G. Roth “reimburse ContinuityX for the bonuses, other incentive-based and equity based compensation, and profits from the sale of ContinuityX’s securities they realized or perceived.” Lastly, the Complaint requests that David P. Godwin and Anthony G. Roth be barred from serving as officers or directors of any public company.
Timothy L. Warren, Associate Director of SEC’s Chicago Regional Office, stated that “we allege that Godwin and Roth cheated investors out of millions of dollars, depicting ContinuityX as a successful Internet service sales company, when in reality it was a sham from beginning to end, complete with phony customers and fake contracts.”
ContinuityX Solutions is now in bankruptcy, and David P. Godwin was criminally charged with six (6) counts of wire fraud relating to the instant allegations. ContinuityX Solutions further consented to an order that revokes the registration of the bonds at issue.
The attorneys at Lax & Neville LLP have extensive experience in successfully prosecuting and defending claims on behalf of customers who have suffered losses or been defrauded. If you are a victim of fraud, please contact Lax & Neville LLP today at (212) 696-1999 to schedule a consultation.