SEC accuses CEO of funneling millions

Michael P. Tremoglie Aug. 30, 2012, 1:45pm

NEW YORK (Legal Newsline) - On Tuesday, the Securities and Exchange Commission charged video software company Wwebnet and chief executive officer Robert Kelly with securities violations.

The SEC says Kelly funneled millions of dollars to himself and misrepresented company revenue.

The SEC's alleges that, between 2005 and 2008, Wwebnet and Kelly made false and misleading statements and omissions to investors, including: (1) failing to disclose and misrepresentations concerning the existence of a related-party transaction which enabled Kelly to funnel at least $2.1 million of investor funds to himself, including approximately $2 million which was sent to his personal options trading account in the Cayman Islands; (2) misrepresentations that Wwebnet had been generating revenue pursuant to contracts with entertainment companies when Wwebnet had never generated any such revenue; and(3) misrepresentations concerning Kelly's effective compensation by failing to disclose that Wwebnet paid approximately $180,000 ($9,000 per month) in rent on Kelly's personal luxury apartment in Manhattan.

Disgorgement, fines and a permanent injunction from future securities law violations and imposition of a penny stock bar and an officer and director bar against Kelly have been requested by the SEC.

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