Rafi M. Khan, a stockbroker who has been charged with stock manipulation by the Securities and Exchange Commission (“SEC”), has been tied to Hemispherx Biopharma, Inc. (AMEX: HEB) (Price: $7.125). In a July 30, 1998 complaint, the SEC charged Mr. Khan with manipulating share prices in two companies. Mr. Khan allegedly conducted his illegal stock promotion while operating the one-person Southern California office of Shamrock Partners, Ltd. (“Shamrock”). According to an NASD Public Disclosure statement, Mr. Khan was employed by Shamrock from October 24, 1994 until December 30, 1996.
In an SEC Form 424B3 dated September 30, 1996, Hemispherx disclosed that it had entered into a consulting agreement with Shamrock in August 1996 wherein Hemispherx granted Shamrock an option to purchase 600,000 shares of HEB stock during the five-year period beginning August 15, 1996, at an exercise price of $2.50 per share. In an SEC filing dated February 25, 1998, Hemispherx registered 600,000 shares for Shamrock. These 600,000 shares represented shares of common stock underlying warrants exercisable through August 15, 2001 at $2.50 per share. Hemispherx paid for the cost of registration, which would allow Shamrock to sell its privately obtained, cheap, insider shares to the public without further notice or disclosure.
Mr. Khan joins a group of fraudulent stock promoters associated with Hemispherx that includes Stratton Oakmont, Inc., which was in December 1996 expelled from the NASD; Stratton’s former chairman, Jordan Belfort, who in September 1998 was indicted and charged with conspiracy, fraud, money laundering and obstruction; and Monroe Parker Securities, Inc., which was in October 1998 named as a defendant in a New York State Attorney General (“NYSAG”) stock-manipulation indictment.
There are numerous other promoters tied to Hemispherx, including Harris Freedman and Sharon Will, who have been vice presidents of Hemispherx since 1994, and a former Hemispherx board member, Stephen J. Drescher. These three have all been associated with three of the companies, including Hemispherx, named in a press release announcing the NYSAG indictment. Among other HEB stock promoters are David C. Drescher, who is related to Stephen Drescher and is the president of Millenium International Communications, Ltd., and Value Management & Research AG (“VMR”), which has released a series of Hemispherx research reports, including one dated April 26, 1999 that made false Ampligen HIV efficacy claims. On April 13, 1999, Hemispherx filed a registration statement with the SEC to allow VMR to sell 750,000 HEB shares plus 250,000 shares underlying warrants.
Further details of the fraudulent VMR report and the involvement of HEB officers in other manipulated stocks can be found here. Ever since its 1995 IPO, Hemispherx has regularly granted options and registered new shares for individuals and entities proved to be stock promoters. This in turn has created the incentive for Hemispherx’s continual, fraudulent stock promotion.
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