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Roslyn lawyer charged in 'penny-stock scheme'

A federal lawsuit filed by the Securities and Exchange Commission accuses a Roslyn lawyer and his partner, a Woodbury businessman, of selling to the public millions of unregistered shares in a Long Island-based shell company.

The SEC suit, filed Monday in U.S. District Court, in Manhattan, claims that attorney Mitchell Segal, 55, and his business partner, Howard Borg, 56, used false documentation to sell shares of the shell company, Alternative Green Technologies Inc., to unsuspecting investors.

Alternative Green Technologies, or ATGI, a Nevada corporation with headquarters in Uniondale, was a shell company, the SEC said, because it had no sales, assets or operations.

In order to conceal that fact from the SEC and from investors, Segal made a deal with a Virginia firm -- a "shell packager" to buy a corporate entity that could be converted, through a series of name changes, mergers and controlling-interest stock sales, into Alternative Green Technologies, prosecutors said. A shell packager buys and sells corporate entities for use as shell companies.

Segal's shell packaging partner was Joseph Meuse, of Belmont Partners Llc., of Warrenton, Va., the SEC claimed in court documents. With his help Segal was able to use backdated, fabricated documents to deceive a transfer agent, and to have AGTI stock issued for sale to the public, the SEC said.

“Shell packagers who buy and sell public companies for use by fraudsters have no rightful place in our markets,” David Rosenfeld, associate director of the SEC’s New York regional office, said in a prepared statement.

“These shell packagers not only sold the shell company, but created the false documents necessary to cause the transfer agent to issue shares that should never have been sold to the public," Rosenfeld said.

Meuse and Segal gave the shell corporation an air of authenticity by creating "a sham assignment of debt and a fabricated and backdated corporate resolution and convertible note," the SEC said.

In December 2008 Alternative Green Technologies Inc. merged with a separate company, Reddiform World Wide, and undertook a 1-to-20,000 reverse stock split that increased the number of shares ATGI could sell to investors, the SEC said.

Blocks of tens of thousands of shares were given to promoters as compensation for selling other shares to investors, prosecutors said.

So far in the SEC's crackdown on the fraud scheme, Borg and several other defendants have entered into plea agreements with the SEC in which they will pay fines and surrender more than four million illegally issued shares, without admitting or denying the truth of the allegations.

The SEC said it seeks permanent injunctions against all those charged in the scheme; to have them pay back any money they made; and to have them pay financial penalties.

Segal did not immediately respond to a voicemail request for comment at his Great Neck office; Borg did not immediately respond to a voicemail request for comment at his Woodbury home; and Meuse did not immediately respond to a voicemail request for comment at his office at Belmont Partners Llc. in Warrenton, Va.

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