2012 BCSECCOM 101

Background
1. Myron Sullivan II a.k.a. Fred Myron George Sullivan (Sullivan) is a resident of British Columbia.

2. Global Response Group (GRG) Corp. (GRG) and IMC – International Marketing of Canada Corp. (IMC) are each British Columbia companies.

3. Sullivan is the director, President and Chief Executive Officer of GRG and the director and officer of IMC.

4. Sullivan promoted GRG as a company possessing oil spill clean-up and fire fighting technology, including “the world’s 1st and only fully amphibious near-shore and shoreline oil spill recovery system”, which he called the MUSKOX system. He used IMC to receive money from persons who invested in GRG.

Misconduct
Illegal distribution
5. Between 2008 and 2011, Sullivan raised approximately $1.74 million from 97 investors by selling GRG shares from his personal holdings, which he acquired directly from GRG.

6. At all relevant times, Sullivan was the control person of GRG and, as of 2011, held approximately 50% of its issued and outstanding shares.

7. Sullivan did not file a preliminary prospectus or a prospectus in respect of any of his distributions of GRG shares and no exemptions from the prospectus requirements of the Act applied to them.

8. On June 1, 2011, the Commission issued a Cease Trade Order against Sullivan for his failure to file a prospectus in respect of his distributions of GRG shares.

9. The Respondents distributed securities contrary to section 61 of the Act by:

(a) trading in a previously issued GRG security from the holdings of a control person; and

(b) participating in a series of transactions involving further purchases and sales in the course of or incidental to a distribution of GRG shares.

Misrepresentations
10. To entice investors to invest in GRG, Sullivan told investors that:

(a) GRG shares would soon be publicly listed on a stock exchange;

(b) once GRG was publicly listed it would trade at a specified price; and

(c) GRG had sold the MUSKOX system to the Chinese National Petroleum Company (CNPC).

11. These statements were false or misleading as:

(a) GRG had not taken any steps to become publicly listed;

(b) Sullivan told different investors different prices and had no basis for making any share price predictions for GRG as he had done nothing to publicly list the company and the company had no sales; and

(c) GRG had not sold the MUSKOX system to CNPC as it had not manufactured a working prototype to the technical specifications and other requirements required by the letter of intent as preconditions to a sale.

12. Sullivan told two investors who invested $145,000 that he would use their money to develop GRG’s business. Instead, he spent at least 40% of their funds on personal items.

13. Sullivan promised two investors who invested $27,071 that he would provide them with GRG share certificates, but did not provide them.

14. In making the above misrepresentations, either directly or through their directing mind Sullivan, the Respondents acted contrary to section 50(1)(d) of the Act.

Fraud
15. By engaging in the conduct described above, the Respondents perpetrated a fraud contrary to section 57 of the Act.

Public interest

Hearing Process