SEC v. Charles J. Cole, Torben M. Welch, et al.

Charles J. Cole and Torben M. Welch, along with Beacon Heart, LLC, Heart of Humanity, LLC, and Avranoc, LLC, allegedly engaged in a fraudulent stock scheme in which Cole and Welch defrauded Infinite Reality, Inc. (now Napster Corp.) out of 239 million shares of its stock. According to the SEC’s complaint, Cole allegedly promised to invest $3.36 billion in Infinite Reality and, along with Welch, allegedly falsely informed Infinite Reality that Cole and/or Avranoc controlled at least $55 billion in assets. Based on these alleged false representations, Infinite Reality appears to have issued over 239 million shares to Cole, Beacon Heart, and Heart of Humanity, but Infinite Reality reportedly never received the promised investment. After allegedly fraudulently obtaining the stock, Cole, with Welch's assistance, appears to have pledged nearly 45 million shares to secure a $1 million loan from a third-party lender. The complaint further alleges that Welch may have provided forged documents to verify Cole’s assets and made misleading and false assurances to the lender.

Summary generated from official Securities and Exchange Commission press release