FOR IMMEDIATE RELEASE
March 14, 2008
By
ERIC TORBENSON / The Dallas Morning News
Two Dallas men behind penny stock Connect-A-Jet Inc., whose shares were
halted from trading last fall by regulators who suspected stock manipulation,
are in trouble again.
The Securities and Exchange Commission this week sued Jason Wynn, 25, and
Ryan Reynolds, 36, alleging they illegally manipulated the stock price of
a Minnesota-based company called Beverage Creations Inc. for their own profit.
The SEC halted trading in Beverage Creations on Wednesday and won a temporary
restraining order late Thursday to freeze Mr. Wynn's and Mr. Reynolds' assets
and bar them from any stock promotion efforts.
The SEC's suit alleges that Mr. Wynn and Mr. Reynolds earned at least $2.4
million promoting Beverage Creations after having bought millions of shares
for 2 cents each and selling them for as much as 64 cents each. The shares
were halted at $1.83.
Mr. Reynolds' lawyer, Spencer Barasch of Andrews Kurth, said his client
is innocent and he will defend him vigorously. He also represents Mr. Reynolds
in a separate SEC case filed against him and others last summer related to
penny stocks. Mr. Reynolds has denied those allegations.
In a filing seeking to lift the freeze order in the Beverage Creations case,
Mr. Barasch argues that Mr. Reynolds has lost $65,000 from trading the
shares and that the freeze is too draconian and would prevent him from caring
for his 4-year-old daughter.
Mr. Reynolds was barred from the brokerage industry by regulators in 2003
over an alleged 1997 stock scam involving Dallas-based Continental Investments
Corp.
Mr. Wynn's attorney, David Clouston of Patton Boggs, said his client is
unfairly accused and expects a favorable outcome.
"Although my clients still have not been served or received a complete
copy of the exhibits to the complaint at this time, our initial review indicates
that the vetting of the allegations and the sparse alleged evidence in support
of the complaint will establish that Mr. Wynn and Wynn Industries are being
unfairly targeted," Mr. Clouston wrote in an e-mail.
The SEC's suit also names Carlton Fleming, 47, of McKinney as profiting
in the scheme along with Mr. Wynn and Mr. Reynolds. Attempts to reach Mr.
Fleming, who runs Thomas Wade Investments LLC, weren't successful Friday.
The suit says the three men received 9,999,999 shares total of Beverage
Creations in December and then promoted the company, which says it's developing
a sports drink that includes breathable oxygen, through e-mails and color
fliers produced by Mr. Wynn's company, Wynn Industries Inc.
The company hasn't produced any drinks and is losing money, the SEC suit
says. The shares have traded at over $1 a share, the suit says, and Mr. Reynolds
has bought and sold shares for family members.
The company disavowed any relationship with Mr. Wynn or Wynn Industries
in a news release Feb. 21. The SEC contends the release is false because
the company gave Mr. Wynn shares in exchange for promotion.
The suit asks the court to force the men to give up the money they earned
in trading the shares and to permanently enjoin the defendants from promoting
stocks and participating in any penny stock offering.
In the Connect-A-Jet case, Mr. Wynn and Mr. Reynolds borrowed money from
a Dallas businessman to promote the Austin-based air charter service, whose
shares were halted for two weeks last fall.
The businessman said in a suit filed last fall that he's still owed $250,000
he lent to the pair. Mr. Wynn and Mr. Reynolds have denied the allegations
in that suit.
Promotions of Connect-A-Jet included slick commercials that ran on CNBC
and highlighted the company's stock ticker. The stock peaked at $2.74 a share
in September and now trades at 7 cents.
Mr. Wynn has answered SEC investigators' questions in the case but has faced
no action.
<< BACK
TO BUSINESS LITIGATION ARCHIVE