New York – Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced today that GEORGE DOUMANIS and EMANUEL PANTELAKIS were sentenced in Manhattan federal court to 53 months and one year and one day in prison, respectively, for defrauding investors in Terminus Energy, Inc., a publicly traded penny stock, of over $7 million. DOUMANIS and PANTELAKIS each pled guilty on December 1, 2017, to one count of conspiracy to commit securities fraud before U.S. District Judge Andrew L. Carter Jr., who also imposed today’s sentence.
U.S. Attorney Geoffrey S. Berman said: “George Doumanis and Emanuel Pantelakis lured investors for a supposed fuel cell technology they knew was a fiction. They duped victims into investing over $7 million with misleading documents, and they used more than $1 million of that to pay their own personal expenses. Today they learned the true price of that kind of criminal deceitfulness.”
According to the allegations contained in the Indictment filed against DOUMANIS, PANTELAKIS, and their co-conspirator, and statements made in related court filings and proceedings:
From at least February 2008 until at least 2014, DOUMANIS and PANTELAKIS, along with their co-conspirator Danny Pratte, who previously pled guilty, engaged in a scheme to defraud investors in the publicly traded company Terminus Energy, Inc. (“Terminus”), by inducing victims to invest in Terminus stock through material misrepresentations and omissions and by misappropriating investor funds for their own purposes.
Terminus was purportedly producing and marketing a commercially viable solid oxide “fuel cell” as an alternative energy source. DOUMANIS and PANTELAKIS sold shares of Terminus to investors through private offerings. In connection with such sales, DOUMANIS and PANTELAKIS provided investors with private placement memorandums (“PPMs”) that contained materially false and misleading statements. For example, the PPMs falsely stated that (i) Terminus had completed its goal of developing a working fuel cell in mid-2008; (ii) Terminus would use specified investor funds to make payment on third-party development contracts designed to manufacture a working fuel cell; and (iii) Terminus would pay no more than 10 percent in sales commissions. In truth, and as DOUMANIS and PANTELAKIS well knew, (i) there was no working fuel cell; (ii) the third-party contracts had been cancelled after Terminus failed to make payment to the third parties; and (iii) unregistered salespeople were receiving commissions far in excess of 10 percent.
The PPMs also failed to accurately disclose the involvement of either DOUMANIS, who was barred from involvement in penny stocks as a result of a 2003 conviction for conspiracy to commit securities fraud, wire fraud, and mail fraud, or PANTELAKIS, who had been permanently barred by the Financial Industry Regulatory Authority (“FINRA”) following allegations that he had made fraudulent misrepresentations to customers in connection with the sale of securities.
DOUMANIS and PANTELAKIS also caused similar misrepresentations to be made in business plans, executive summaries, and presentations shared with potential investors, as well as in publicly available press releases. Through these false and misleading statements, DOUMANIS and PANTELAKIS fraudulently induced investors to purchase over $7 million of Terminus stock.
Rather than use the investor money as promised, DOUMANIS and PANTELAKIS misappropriated the funds for their own use and for use by co-conspirators. DOUMANIS personally received at least $573,201 and PANTELAKIS personally received at least $428,997. In addition, the unregistered salespeople collectively received undisclosed commissions of more than $1.5 million.
In addition to their prison terms, DOUMANIS, 60, of Rocky Point, New York, and PANTELAKIS, 43, of Queens, New York, were sentenced to three years of supervised release, forfeiture money judgments in the amount of $573,201 and $428,997, respectively, and restitution in an amount to be determined by the Court at a later date.
Danny Pratte pled guilty to one count of conspiracy to commit securities fraud and was sentenced by Judge Carter on October 19, 2018.
Mr. Berman praised the work of the Federal Bureau of Investigation and thanked the U.S. Securities and Exchange Commission.
This case is being handled by the Office’s Securities and Commodities Fraud Task Force. Assistant U.S. Attorneys Christine Magdo and Samson Enzer are in charge of the prosecution.
SOURCE: news provided by JUSTICE.GOV on Thursday, November 8, 2018.