SEC ‘body slams’ defunct MMA promoter
SEC fines promoter $1,000,000, orders $2,000,000 disgorged
On March 31, 2012, a Worldwide Mixed Martial Arts (WMMA) 1 took place in El Paso, Texas. It was titled Fight For A Better World, and $25,000 apparently went to the Wounded Warrior Project. International partners were announced, as were highly ambitious national plans.
“WMMA: United States is set to begin its quest to find an inaugural national champion,” read the release. “WMMA: United States’ first region will host their first regional event on Saturday, April 14, 2012 at Tim’s Toyota Center in Prescott, Arizona.”
“WMMA REGION 4 – ROUND 1” was in fact held on April 14, 2012, in Prescott Valley, Arizona.
And then there were words.
By the end of 2012, there was nothing.
These things happen in MMA, a lot. However N. Peter Rasmussen reports for Bloomberg BNA, that an Administrative Law Judge (ALJ) has “body slammed” the owner of the dead MMA promotion, Edward M. Daspin, over charges made by the Securities and Exchange Commission.
The judge ordered Daspin to pay a fine of $950,000 and to disgorge $1,950,000. Plus interest. The revenue did not come from the shows themselves, but from investors, apparently eager to cash in on the sport.
The SEC charged Edward M. Daspin, the owner of several defunct companies engaged in the promotion of mixed martial arts competitions, with fraud and registration violations. During the course of the litigation, Daspin missed multiple hearings, caused his wife to violate an order to appear, and inundated the judge’s office with multiple piecemeal and repetitive filings. ALJ James E. Grimes also stated that, contrary to the judge’s orders, Daspin has sent my office hundreds of e-mails, many of which were unprofessional and abusive.
Not surprisingly, Daspin failed to persuade ALJ Grimes of the righteousness of his cause. The judge imposed industry and penny stock bars, as well as a cease-and-desist order. ALJ Grimes also ordered disgorgement of approximately $1.95 million plus prejudgment interest, and imposed civil penalties of $915,000.
The SEC charged that the corporate structure of the companies established by Daspin was a sham designed to show investors that the companies were operating under independent management. In reality, Daspin controlled the business operations of the companies and his wife was the controlling stockholder. He raised over $2 million in unregistered offerings that did not qualify for any exemptions, and the ALJ found that the disclosure documents Daspin prepared were replete with material misstatements and omissions. According to ALJ Grimes, Daspin deceived investors with numerous lies and omissions about core aspects of the companies, which later failed. ALJ Grimes added that Daspin also deceived them with schemes to hide his control and enable his fraud.
Daspin with friends.
These things happen in mixed martial arts.