The Securities and Exchange Commission accused the chief executive of a tiny Georgia company of making up connections to the likes of ex-mayor Rudy Giuliani, Lehman Brothers and Deutsche Bank to convince investors to buy shares of the company’s near-worthless stock.
The SEC’s strongly worded complaint against Conversion Solutions’ CEO Rufus Paul Harris said he “issued a series of false and misleading press releases and [financial] filings” which at one point included promising that Conversion’s stock would be reset to over $15 from just over $2.
Trading in Conversion’s stock was halted Tuesday for two weeks by the SEC. Its last reported trade price was $1.99.
The SEC’s investigators concluded that Conversion, an erstwhile asset-based lender, had little of the financial strength or prospects that Harris said it did.
A declaration from the SEC’s Atlanta office offered a glimpse into Harris’ non-stop promotion.
When the SEC’s Michael Mashburn asked Harris about the billions of dollars worth of bonds Conversion would use to grow its asset-based lending operations, Harris said he was able to arrange financing with the help of Rudy Giuliani’s staff.
A spokeswoman for Giuliani Partners told The Post no members of Giuliani’s staff ever helped Conversion, and there was never any contact between employees of the former mayor’s firm and Conversion.
Conversion’s Harris name-dropped Lehman Brothers and Deutsche Bank as examples of financial instruments and relationships the company had. Lehman’s legal department said it sent a cease-and-desist letter to the company.
The SEC said Deutsche Bank denied having any investment-banking relationship with the company.
Also, Conversion likely did not have ownership of the billions of dollars worth of bonds, an SEC examiner concluded.
Harris at another point claimed the United Nations Educational, Scientific and Cultural organization – UNESCO – was deeply involved with Conversion and was helping it acquire subsidiaries.
A UNESCO spokeswoman denied any connection to the company and said her organization had never done business with Conversion.
What’s more, Stocklemon,com, a research Web site run by a short-seller, once quoted Harris as promising, “Our target range for three months’ trading was in excess of $100 a share.”
Also, he pledged “a billion dollars in profits over the next 10 years” – an astonishing claim given that Conversion Solutions lost $758,000 on $143,000 in revenue for the quarter ended last March, according to SEC filings.
On other occasions, Harris promised current Conversion shareholders stock in a dozen different companies. He promoted the company as a conglomerate, although a Post investigation found most of the companies were inactive or did not exist – after they were spun off.
Repeated calls to the company were not returned, although a message on its answering machine said it was cooperating with the investigation.
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Conversion Solutions – Close Oct . 24: $1.99