Federal securities regulators have settled fraud charges with the former president of Orange County, CA-based Freedom Surf, Inc. and Cyrus Industries. Raece Richardson, an Australian citizen that ran both companies, agreed to pay $175,000 in penalties to settle two fraud complaints filed against him by the Securities and Exchange Commission. He also accepted a permanent ban on serving as an officer or director of any public company, but did not admit or deny the agencys allegations.
The SEC charged that Richardson had fraudulently inflated wetsuit-maker Freedom Surf's assets by a false $5 million appraisal value on “nearly worthless equipment” the company owned. The friend Richardson had conduct the appraisal allegedly never saw the equipment.
The local Orange County paper said that Richardson “sold the equipment in a bogus transaction” to apparel distributor Cyrus Industries and “included the fraudulent valuation and the proceeds of the sham sale in reports to the SEC”.
The SEC also alleged that Richardson was part of a scam that “fraudulently sold more than $8 million of stock in two companies to 1,400 investors nationwide using high-pressure, boiler-room sales tactics”, according to the OC Register account.
