A Maryland company which has been soliciting investors to infuse money into its bullet-proof fabric and technology has been banned by the state's Attorney General from selling what amounts to unregistered company stock.
Gargoyles, Inc., and its founder and COO John F. Curran are accused of holding sales meetings and telling potential investors that the company owned special patented technology, including a stab protection plate and a fabric body armor system. According to the attorney general's news release, it owned no such patent. But claiming that it did helped the company raise more than $2.3 million from at least 299 investors, state officials allege.
Curran, a former Morgan Stanley broker, padded the claims by promising that annual sales from the bullet-proof fabric would grow from $3.8 million $72 million even though his company had no sales contracts or purchase orders to justify such bold projections.
Gargoyles had received an earlier order to stop the sales of unregulated securities, and had responded that it would comply. However, as recently as April 14, the company sent an email to its existing shareholders seeking the names of more potential investors, the attorney general's office said.
A Cease and Desist Order accuses Curran and his company of engaging in securities fraud and acting as an unregistered broker-dealer and agent.
"The [Attorney General's] Securities Division took this action to stop the further victimization of Maryland investors," said Attorney General Douglas F. Gansler in a written statement.
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