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Man Stole Firm's Identity, Sold Shares, SEC Charges

September 18, 1997|JAMES S. GRANELLI | TIMES STAFF WRITER

SANTA ANA — The Securities and Exchange Commission has accused a Newport Beach man of usurping the identity of a Canadian company for a shell company and selling fraudulent securities in that phony firm.

The SEC asserts in a lawsuit that Nicholas Garcia and his company, Geneva Group in Costa Mesa, swindled an unknown number of investors by selling securities in a sham company called ForceTek Holding Inc.

"We don't know how much was raised because the company has refused to turn over records that were subpoenaed, and Garcia has disappeared from the offices," said Karen L. Matteson, an SEC staff attorney.

U.S. District Judge Alicemarie H. Stotler on Tuesday froze the assets of Garcia and Geneva pending a further hearing Sept. 26.

Garcia couldn't be reached Wednesday, and Geneva had no telephone listing. In fact, calls from clients often are referred to Geneva Cos. Inc. in Irvine, one of the country's biggest mergers-and-acquisitions firms for smaller companies.

"Their clients keep calling us, I guess because we're the only Geneva company in the book," said Cathy Adams, a spokeswoman for the Irvine firm, which has no affiliation with Geneva Group. "It's caused us all sorts of headaches."

According to the lawsuit, Garcia portrayed himself and his Geneva Group as an investment banker, management consultant and investor relations service for small public companies.

"In fact, however, the firm has operated as an unlicensed broker-dealer offering stock to investors nationwide."

Garcia and Geneva offered their services early this year to Force Technologies Inc., a Vancouver, Canada, firm that plans to market and distribute safety film and laminated products in California and Texas.

Soon after it began selling Force Technologies stock, however, Geneva acquired a shell company that traded on the Nasdaq bulletin board and changed that company's name to ForceTek Inc.

It also changed the shell company's trading symbol to FRCE--the same symbol used on the Toronto exchange by Force Technologies, the SEC said.

Garcia and Geneva Group then used the Vancouver firm's promotional materials to market shares of their new company, which the lawsuit called "nothing more than a publicly traded shell whose very identity was purloined from another company."

Garcia allegedly then manipulated the share price of the bogus firm from about 10 cents a share in June to more than $5 by the end of July. It has since dropped to 3 cents a share.

Dow Jones news service contributed to this report.

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