Two audit firms and seven partners in those firms are accused of ignoring signs that an stock promoter, who allegedly hid his control of several shell companies, was engaging in fraud. The The firms subject to the SEC proceeding are De Joya Griffith LLC and partners Arthur De Joya, Jason Griffith, Philip Zhang, and Chris Whetman and M&K CPAS PLLC and partners Matt Manis, Jon Ridenour, and Ben Ortego. Both firms were engaged by Briner for auditing the financial statements of his mining companies. The SEC said both companied conducted audits that were so deficient "they amounted to no audits at all" and that they ignored red flags that Briner was engaging in fraud.
A Colorado-based attorney Diane Dalmy is also subject to the proceedings. She is alleged to have falsely stated she conducted an investigation of stock issuance of 18 of the mining companies.
The SEC alleges that after it suspended Briner, he recruited clients and associates to become figured executive officers in companies he secretly controlled. The agency also said none of the mining companies had any intention of engaging in mining and that mineral claims they supposedly owned had not been transferred to them. The securities registration statements also claimed each company was capitalized by the CEO's purchase of $30,000 in stock when Briner was in fact funding them.
The SEC's stop order proceedings last year led to the suspension of the registration of 20 microcap companies before any investors purchased the stocks. The SEC described the companies as "ripe for pump-and-dump schemes."
