On August 3, 2018, the U.S. District Court for the Southern District of Georgia entered a default judgment against now-defunct microcap issuer and former movie studio Medient Studios, Inc., also known as Moon River Studios, Inc.
The court also entered a final judgment by consent on January 17, 2018, against Joel A. “Jake” Shapiro, a former CEO and director of Medient and its successor company, Fonu2, Inc.
The SEC’s complaint, filed on September 23, 2016, alleged, among other things, that Shapiro, along with Medient’s founder and former chairman, Manu Kumaran, schemed to make an assortment of false and misleading statements in Medient’s press releases and corporate filings, and that Shapiro, Kumaran, and others backdated and falsified promissory notes as part of a scheme to issue Medient’s and Fonu2’s common stock in exchange for financing.
The final judgment against Medient, which was entered by default by the Honorable William T. Moore, Jr., enjoins Medient from future violations of antifraud, reporting, registration, and proxy statement provisions of the federal securities laws, including Section 5 of the Securities Act of 1933 (“Securities Act”), Section 17(a) of the Securities Act, Section 10(b) of the Securities Exchange Act of 1934 (“Exchange Act”) and Rule 10b-5 thereunder, Section 13(a) of the Exchange Act and Rules 12b-20, 13a-1, and 13a-11 thereunder, and Section 14(c) of the Exchange Act and Rule 14c-6 thereunder. The judgment also orders Medient to pay $885,000 in disgorgement, $54,368 in prejudgment interest thereon, and a civil penalty of $885,000, for a total of $1,824,368.
Shapiro agreed to settle with the SEC, and without admitting or denying the allegations in the complaint, consented to the entry of a final judgment that enjoins him from future violations of antifraud, reporting, registration, and disclosure provisions of the federal securities laws, including Section 5 of the Securities Act, Section 17(a) of the Securities Act, Section 13(d) of the Exchange Act and Rule 13d-1 thereunder, and Section 16(a) of the Exchange Act and Rule 16a-3 thereunder. The judgment also prohibits Shapiro from acting as an officer or director of a public company or participating in an offering of penny stock for five years and orders him to pay disgorgement of $21,456, prejudgment interest thereon of $2,385, and a civil penalty of $75,000, for a total of $98,841.
The SEC’s litigation is ongoing with respect to Kumaran. The SEC’s litigation is also ongoing with respect to the amount of monetary relief owed by Fonu2 and its former CEO, Roger Miguel.
The SEC’s litigation has been led by Wm. Shawn Murnahan and M. Graham Loomis of the Atlanta office. The SEC’s continuing investigation has been conducted by Joshua M. Dickman, under the supervision of Natalie M. Brunson.