Facts

The Securities and Exchange Commission filed suit against Defendants Curative Biosciences, Inc., also known as Healthient, Inc., William M. Alverson, the Chairman of the Board, and Katherine West Alverson, the President and Chief Executive Officer, for violations of the Securities Act of 1933 and the Securities Exchange Act of 1934.

PLAINTIFF'S CONTENTIONS: Plaintiff contended Defendants made materially false and misleading statements to the investing public in the Company's 2013 Forms 10-K and 10-K/A, for the purpose of concealing their unregistered sales of more than 33 million shares of the Company's stock, which resulted in majority of the proceeds being paid to themselves. Plaintiff contended Alverson and West devised a plan to divert millions of shares of stock to business acquaintance Steven G. Patton, which would be disguised in the Company's public filings as payment for consulting services, when Patton never performed such services. Plaintiff contended that pursuant to the plan, Alverson directed Patton to sell all of the shares the company issued to him, keep a small payment for himself, and divert the bulk of the proceeds back to Alverson and two entities also controlled by Alverson. Overall, Plaintiff contended the Alversons used nearly $4 million in diverted proceeds for personal expenses that included country club fees, spa fees, retail purchases, restaurant tabs, personal use and other unrelated business expenditures.

DEFENDANTS' CONTENTIONS: Defendants denied Plaintiff's contentions.

Result

The jury found in favor of the SEC. The Alversons were ordered to pay $847,851 in disgorgement and each one of them was required to pay $640,000 as a civil penalty. Additionally, the court imposed permanent officer-and-director and penny stock bars against the Alversons, as well as conduct-based injunctions that barred them from participating in the issuance, offer, or sale of any security except securities sold on a national exchange for their own accounts.