Defendants orchestrated a fraudulent scheme to form and sell publicly-traded shell

companies while concealing Defendants' control of the companies and the companies' lack of any

actual or intended business. Defendants operated their lucrative "shell Defendants created at least fifteen shell companies

following essentially the same steps. Defendants formed a United States corporation, issued stock to

nominee officers and directors, created a phony business plan for the corporation, and hired an

accounting firm to perform a sham audit. Defendants then conducted a U.S. initial public offering,

in which they purportedly sold the corporations' shares to purchasers, when in reality Defendants

continued to control the shares while nominally placing them in the names of straw-man

shareholders.

3. To further their scheme, Defendants filed false registration statements (and later

false periodic reports) with the Commission.

4. These filings concealed the fact that Defendants controlled the corporations, created

them solely in order to sell them, and never intended to implement the stated business plans (or any

other business plans) for the corporations, among other things.

5. Once Defendants had conducted a sham initial public offering using straw-man

purchasers, Defendants arranged to obtain a trading symbol for the shell companies, to make the

shells' shares eligible for trading in the over-the-counter market, and to apply for Depository Trust

Company eligibility so that the shares could be traded electronically.

6. Defendants then sold (or tried to sell) the shell companieswith the ready-to-trade

shares Defendants controlledto buyers. Defendants profited by over $1.8 million from their

fraudulent scheme.

2

VIOLATIONS

7. As a result of the foregoing conduct and as alleged further herein, Defendants

violated Section 17(a) of the Securities Act of 1933 ("Securities Act") , Section

10(b) of the Securities Exchange Act of 1934 ("Exchange Act"), and Rule 10 b-5

thereunder.

8. Unless Defendants are permanently restrained and enjoined, they will again engage in

the acts, practices, transactions, and courses of business set forth in this Complaint or in acts,

practices, transactions, and courses of business of similar kind and object.

NATURE OF THE PROCEEDINGS AND RELIEF SOUGHT

9. The Commission brings this action pursuant to the authority conferred upon it by

Securities Act Section 20(b) and Exchange Act Section 21(d) and seeks a final judgment: (i) permanently restraining and enjoining Defendants from

violating Securities Act Section 17(a, Exchange Act Section 10(b) , and Rule 10 b-5 thereunder; (ii) requiring Defendants to disgorge

the ill-gotten gains they received as a result of the violations and to pay prejudgment interest

thereon, pursuant to Exchange Act Section 21(d)(5); (iii) permanently

prohibiting Defendants from participating in any offering of a penny stock, pursuant to Securities

Act Section 20(g) and Exchange Act Section 21(d)(6); and

(iv) ordering any other relief the Court may deem just and appropriate.

JURISDICTION AND VENUE

10. This Court has jurisdiction over this action pursuant to Securities Act Section 22(a)

and Exchange Act Section 27.

11. Defendants have, directly or indirectly, made use of the means or instrumentalities of

interstate commerce or of the mails, in connection with the transactions, acts, practices and courses

of business alleged in this Complaint.

12. Venue lies in the Eastern District of New York under Securities Act Section 22(a)

and Exchange Act Section 27 because certain of the

transactions, acts, practices and courses of conduct constituting violations of the federal securities

laws occurred within this district. Among other things, individuals residing in Brooklyn, New York

purchased securities of at least one of the shell companies after the securities were sold to the

investing public.

DEFENDANTS

13. Perlstein, age 46, has dual Israeli and United States citizenship and currently resides

in Herzliya, Israel. Perlstein runs and beneficially owns a company in Israel known as Chelsea Tech.

He provided financing to create the shells and participated in developing the fictitious business

plans. He led the effort to find nominee shareholders, officers, and directors for the shell companies

and to sell the shells.

14. Swartz, age 52, has dual Israeli and United States citizenship and currently resides in

Nes Ziona, Israel. Swartz, self-employed, practices law in Israel. Swartz participated in preparing the

incorporation documents, the registration statements, and other shell corporation filings with the

Commission and in responding to questions and comments from the Commission staff during the

registration process.

15. Yaron, age 48, is an Israeli citizen residing in Zoran, Israel. An employee of Chelsea

Tech from 2010 to 2015, she served as Perlstein's assistant in the shell factory operation.

4

FACTS

16. Between 2010 and 2014, Defendants created at least fifteen shell companies,

including: Aquino Milling, Inc., now known as AV Therapeutics, Inc.; Duane Street Corp., now

known as Cur Media; Eco Planet Corp., now known as J.E.M. Capital Ltd.; Epsilon Corp., now

known as Gase Energy, Inc.; Flaster Corp.; iLoan, Inc.; Instride, Inc.; L 3 Corp., now known as

Praetorian Property, Inc.; Lollipop Corporation; Marathon Bar Corporation, now known as

Lipocine, Inc.; Olie, Inc., now known as Syndicate Business Development Corporation; Olivia Inc.,

now known as Bio-En Holdings Corporation; Secure It Corporation, now known as Black Stallion

Oil and Gas, Inc.; Universal Tech Corporation, now known as Bay Stakes Corporation; and Zubra

Inc.

17. Defendants followed essentially the same process in creating each of these shell

companies, as described below.

I. Formation of the Shell Corporations

18. Perlstein decided when to form a new shell and provided funding for the formation

expenses.

19. Defendants chose the name of each shell somewhat arbitrarilyfor example, based

on a street where one of the Defendants had lived or the name of a pet dog.

20. Defendants then created a phony business plan that they never intended to

implement for the shell.

21. To find people to serve as each shell's nominal officers and directors, Perlstein asked

relatives or friends or paid an associate of his to find people.

22. The individuals named as officers and directors had no connection to the shell

corporation, except on paper. These nominal directors and officers also purportedly served as the

shell corporation's initial shareholders, although they never actually received any shares.

5

23. Defendants used an Israeli address for some of the shell corporations. In those cases,

Defendants typically used the address of one of the nominee officers or directors as the

corporation's address.

24. Defendants used a U.S. address for other shell corporations. For those shells, Yaron

set up a virtual address in the U.S.

25. Once Defendants had nominee officers, directors, and initial shareholders in place

for a shell, Yaron began its incorporation process.

26. Perlstein or his associate sent Yaron the names of the nominee officers and

directors, along with copies of their photo identifications, biographies, and a sheet of paper with

multiple signatures that Yaron could cut and paste into corporate documents, as needed.

27. Yaron and Swartz collaborated on preparing the corporate by-laws, resolutions, and

other documents needed to form each shell corporation.

28. Yaron set up bank and email accounts for each shell and purchased an Internet

domain name.

29. An attorney located in the U.S. typically helped Yaron set up the shell's U.S. bank

accounts and often served as a nominal corporate officer and signatory on the accounts.

30. In reality, Yaron controlled each shell's bank and email accounts and communicated

on behalf of the shell's nominee officers and directors when necessary.

II. The Shells' Initial Public Offerings

31. To enable each shell corporation to file registration statements with the Commission

on Form S-1, Perlstein hired an accounting firm to audit the shell's financials.

32. The accounting firm dealt exclusively with Defendants and never spoke to the shell's

nominee officers and directors during the audit.

6

33. With assistance from Yaron, Perlstein, and the attorney located in the U.S., Swartz

drafted the S-1 registration statements, caused them to be filed with the Commission, and handled

comments from the Commission staff.

34. Each S-1 registration statement claimed that the corporation had a specified business

plan. For example, L 3 Corp.'s registration statement claimed that the company "engaged in one line

of business," which was "developing and marketing a fitness apparatus by selling such apparatus on

the internet, direct to private trainers, gym and health spas and educating private instructors of the

uses of our fitness apparatus."

35. Yet the S-1 registration statements filed by each shell corporation concealed that:

(a) Defendants had formed and solely controlled each corporation; (b) Defendants had created each

corporation solely to sell it; (c) Defendants had never intended to execute the business plan

provided for each corporation; and (d) for each corporation, Defendants had installed nominee

officers, directors, and shareholders whom Defendants controlled.

36. If the shell corporation's registration statement became effective, Perlstein then

orchestrated an initial public offering of the corporation's shares.

37. Now, at Perlstein's instruction, Yaron contacted Perlstein's associate to have

him find straw-man shareholders.

38. Defendants paid Perlstein's associate a fee and reimbursed him for his expenses in

signing up the purported shareholders, which sometimes included small payments to individuals for

agreeing to act as purported shareholders.

39. Yaron provided Perlstein's associate with the number of purported shareholders

needed, the total number of shares to be issued, and the number of shares to purportedly be

allocated to each shareholder.

7

40. Yaron also provided Perlstein's associate with the documents that Swartz had drafted

for the purported shareholders to sign.

41. Perlstein typically sought approximately 40 purported shareholders for each shell so

that the company would not appear to be controlled by only a few individualswhich Defendants

considered a red flag for regulators, including the Commission.

42. Perlstein's associate had the shareholders sign the documents, including stock

purchase agreements, and provide him with photocopies of personal checks in the amount of the

total price of the shares they were purportedly purchasing to make it appear that they had actually

paid for the shares.

43. Defendants never deposited these checks. Defendants maintained copies of the

checks in order to falsely document the purported sale of the shares to independent shareholders, in

case it ever became necessary to provide such evidence.

44. To further create the appearance that independent shareholders had actually

purchased the shell's shares, Perlstein transferred the amount of money purportedly raised from the

phony sales into the shell corporation's bank account from an account under his control.

45. Perlstein's associate provided Yaron with a list of the purported shareholders he had

recruited.

46. For each shell corporation, Yaron signed a contract with a transfer agent on behalf

of the shell by using the digital signature of one of the shell's nominee directors.

47. Yaron then sent the purported shareholder list she had received from Perlstein's

associate to the transfer agent.

48. Yaron communicated with the transfer agent using an email account that appeared to

come from the shell corporation itself.

8

49. Yaronin the guise of one of the shell's nominee officers or directorsthen

instructed the transfer agent to print stock certificates and a certified shareholder list and to send

these documents to one of the corporation's officers or directors by an overnight delivery service.

50. Next, if she knew she could easily do so, Yaron obtained the package directly from

the nominee officer or director. Otherwise, Yaron contacted the overnight delivery service while the

package was in transit, posed as the package's intended recipient, and asked the delivery service to

re-direct the package to her home address.

51. Yaron retained all of the share certificates for each shell until Defendants sold it.

III. Making the Shells' Shares Eligible for Electronic Trading

52. To maximize the value of the shell to potential buyers, Defendants tried to make

each shell's publicly-held shares eligible to trade in the over-the-counter market.

53. To accomplish this, Perlstein and Yaron arranged for a registered broker-dealer to

file a 15 c 2-11 application ("211 Application") with the Financial Industry Regulatory Authority

and to obtain a ticker symbol.

54. After Financial Industry Regulatory Authority had approved the 211 Application and assigned a ticker symbol to the

shell corporation, Defendants applied for Depository Trust Company eligibility to enhance the value of the shell to buyers.

Depository Trust Company eligibility allowed the shares to be held in street name and trade electronically, which

eliminated the need for brokers to physically transfer paper share certificates.

55. As part of this process, Defendants sought to show that market participants actually

traded the shell company's stock in order to set a price for the stock.

56. To accomplish this, Perlstein orchestrated phony trades by selling shares in one

account he controlled and purchasing the same shares in another account he controlled. This served

to establish a price for the stock and, more significantly, allowed Perlstein to maintain control of the

shares used in the transaction.

9

57. The publicly-traded shares of each shell corporation that succeeded in conducting a

public offering traded for less than five dollars per share.

IV. Selling the Shells for Significant Profit

58. Defendants' ultimate goal was to sell the shell for a significant profit to a buyer

seeking a shell company with publicly-traded shares. This was accomplished either by way of a

traditional stock sale or through a reverse merger, where the public company was taken over by a

private company.

59. To find a buyer for the shells, Perlstein typically used two individuals who acted as

brokers in finding shell buyers. These shell brokers practiced as attorneys in the U.S. and acted as

intermediaries between the shell purchasers and Defendants.

60. When Defendants successfully obtained a buyer for a shell, Yaron sent the stock

certificatesheld in the names of the straw-man shareholderswith signed stock powers to the

shell broker.

61. One of the shell brokers drafted the new stock purchase agreements and related

documents, collected the funds from the buyer, and transferred the net sale proceeds to Perlstein,

usually indirectly, either in a single wire transfer or in multiple checks made payable to each of the

straw-man shareholders.

62. If the broker used checks payable to the straw-man purchasers, Yaron received the

checks and gave them to Perlstein's associate, who then cashed the checks and delivered the

proceeds to Perlstein. Defendants collectively profited by over $1.8 million from the sale of the shell

corporations they had created.

63. The straw-man shareholders never received the proceeds from the sale of the shares

purportedly issued to them.

10

FIRST CLAIM FOR RELIEF

Violations of Securities Act Section 17(a)

(All Defendants)

64. Paragraphs 1 through 63 are re-alleged and incorporated by reference as if fully set

forth herein.

65. Defendants Perlstein, Swartz, and Yaron, directly or indirectly, singly or in concert,

in the offer or sale of securities and by the use of the means or instruments of transportation or

communication in interstate commerce, knowingly or recklessly have: (a) employed devices,

schemes, or artifices to defraud; (b) obtained money or property by means of untrue statements of a

material fact or omissions of a material fact necessary in order to make the statements made, in light

of the circumstances under which they were made, not misleading; or (c) engaged in transactions,

practices, or courses of business which operated or would operate as a fraud or deceit upon the

purchaser.

66. By reason of the foregoing, Defendants Perlstein, Swartz, and Yaron, directly or

indirectly, singly or in concert, have violated, and unless enjoined will again violate, Securities Act

Section 17(a).

SECOND CLAIM FOR RELIEF

Violations of Exchange Act Section 10(b) and Rule 10 b-5 Thereunder

(All Defendants)

67. Paragraphs 1 through 63 are re-alleged and incorporated by reference as if fully set

forth herein.

68. Defendants Perlstein, Swartz, and Yaron, directly or indirectly, singly or in concert,

in connection with the purchase or sale of securities and by the use of the means or instrumentalities

of interstate commerce, of the mails, or of the facilities of a national securities exchange, knowingly

or recklessly have: (a) employed devices, schemes, or artifices to defraud; (b) made untrue statements

of a material fact or omitted to state a material fact necessary in order to make the statements made,

11

in light of the circumstances under which they were made, not misleading; or (c) engaged in acts,

transactions, practices, or courses of business which operated or would operate as a fraud or deceit

upon other persons.

69. By reason of the foregoing, Defendants Perlstein, Swartz, and Yaron, directly or

indirectly, singly or in concert, have violated, and unless restrained and enjoined will again violate,

Exchange Act Section 10(b) and Rule 10 b-5 thereunder.

PRAYER FOR RELIEF

WHEREFORE, the Commission respectfully requests a Final Judgment:

I.

Permanently enjoining Defendants and their agents, servants, employees, and attorneys, and

all persons in active concert or participation with any of them who receive actual notice of the final

judgment by personal service or otherwise, and each of them, from future violations of Securities

Act Section 17(a), Exchange Act Section 10(b), and Rule

10 b-5 thereunder;

II.

Ordering Defendants to disgorge all ill-gotten gains they received directly or indirectly, with

prejudgment interest thereon, as a result of the violations alleged in this Complaint;

III.

Permanently prohibiting Defendants from participating in any offering of a penny stock,

including engaging in activities with a broker, dealer, or issuer for purposes of issuing, trading, or

inducing or attempting to induce the purchase or sale of any penny stock, under Securities Act

Section 20(g)(1)

Weinstein and his firm, WCPA, engaged in improper professional conduct

during the audits and interim reviews of thirteen public companies.

2. Between approximately 2012 and 2015, WCPA performed deficient audits and

interim reviews for four companies that were the products of a fraudulent scheme

orchestrated by others to form and market "shell companies": Duane Street Corp.;

Lollipop Corp.; Olivia Inc.; and Secure It Corp. (the "Shell Issuers").4 Between 2013 and

2017, WCPA also performed deficient audits and interim reviews for nine other issuers

("WCPA Clients 1- 9").

5

3. Weinstein served as the engagement partner for the audits and interim reviews

of the thirteen issuers, and he authorized the issuance of audit reports that were included in

the companies' periodic reports filed with the Commission.

4. WCPA and Weinstein repeatedly violated Public Company Accounting

Oversight Board standards in connection with their audits and

interim reviews of the issuers.

In particular, WCPA failed to conduct engagement quality reviews

during at least 76 audits and interim reviews of certain of the Shell Issuers and WCPA

Clients 1-9. See Auditing Standard ("AS") 1220 (formerly AS No. 7).6

6. WCPA and Weinstein failed to exercise due care and professional skepticism

regarding the Shell Operators' relationship with the Shell Issuers, see AS 1015 (formerly

Interim Auditing Standard ("AU") 230), and failed to obtain an understanding of the

Shell Issuers and their environment, see AS 2110 (formerly AS No. 12). WCPA also failed

to implement adequate client-acceptance and continuance procedures. See System of

Quality Control ("QC") 20. During the course of their engagements with the Shell

Issuers, Weinstein and WCPA ignored red flags that should have alerted them that the Shell

Issuers were controlled by the Shell Operators.

7. Weinstein and WCPA also failed to implement procedures designed to identify

material related party transactions of the Shell Issuers. See AU 334.

7

8. WCPA and Weinstein also failed to maintain independence from their audit

clients by serving as a trustee for three audit clients during their audits or interim reviews,

see AS 1005 (formerly AU 220) and Rule 2-01(b) of Regulation S-X. Finally, WCPA

failed to retain certain audit documentation. See AS 1215 (formerly AS No. 3).

9. As detailed below, these failures constitute repeated instances of unreasonable

conduct, each resulting in a violation of applicable professional standards, that indicate a

lack of competence to practice before the Commission.

B. RESPONDENTS

10. Dov Weinstein & Co., CPA is a public accounting firm that is registered with

the In particular, WCPA failed to conduct engagement quality reviews ("EQRs")

during at least 76 audits and interim reviews of certain of the Shell Issuers and WCPA

Clients 1-9. See Auditing Standard ("AS") 1220 (formerly AS No. 7).6

6. WCPA and Weinstein failed to exercise due care and professional skepticism

regarding the Shell Operators' relationship with the Shell Issuers, see AS 1015 (formerly

Interim Auditing Standard ("AU") 230), and failed to obtain an understanding of the

Shell Issuers and their environment, see AS 2110 (formerly AS No. 12). WCPA also failed

to implement adequate client-acceptance and continuance procedures. See System of

Quality Control ("QC") 20. During the course of their engagements with the Shell

Issuers, Weinstein and WCPA ignored red flags that should have alerted them that the Shell

Issuers were controlled by the Shell Operators.

7. Weinstein and WCPA also failed to implement procedures designed to identify

material related party transactions of the Shell Issuers. See AU 334.

7

8. WCPA and Weinstein also failed to maintain independence from their audit

clients by serving as a trustee for three audit clients during their audits or interim reviews,

see AS 1005 (formerly AU 220) and Rule 2-01(b) of Regulation S-X. Finally, WCPA

failed to retain certain audit documentation. See AS 1215 (formerly AS No. 3).

9. As detailed below, these failures constitute repeated instances of unreasonable

conduct, each resulting in a violation of applicable professional standards, that indicate a

lack of competence to practice before the Commission.

B. RESPONDENTS

10. Dov Weinstein & Co., CPA is a public accounting firm that is registered with

theIn particular, WCPA failed to conduct engagement quality reviews ("EQRs")

during at least 76 audits and interim reviews of certain of the Shell Issuers and WCPA

Clients 1-9. See Auditing Standard ("AS") 1220 (formerly AS No. 7).6

6. WCPA and Weinstein failed to exercise due care and professional skepticism

regarding the Shell Operators' relationship with the Shell Issuers, see AS 1015 (formerly

Interim Auditing Standard ("AU") 230), and failed to obtain an understanding of the

Shell Issuers and their environment, see AS 2110 (formerly AS No. 12). WCPA also failed

to implement adequate client-acceptance and continuance procedures. See System of

Quality Control ("QC") 20. During the course of their engagements with the Shell

Issuers, Weinstein and WCPA ignored red flags that should have alerted them that the Shell

Issuers were controlled by the Shell Operators.

7. Weinstein and WCPA also failed to implement procedures designed to identify

material related party transactions of the Shell Issuers. See AU 334.

7

8. WCPA and Weinstein also failed to maintain independence from their audit

clients by serving as a trustee for three audit clients during their audits or interim reviews,

see AS 1005 (formerly AU 220) and Rule 2-01(b) of Regulation S-X. Finally, WCPA

failed to retain certain audit documentation. See AS 1215 (formerly AS No. 3).

9. As detailed below, these failures constitute repeated instances of unreasonable

conduct, each resulting in a violation of applicable professional standards, that indicate a

lack of competence to practice before the Commission.

B. RESPONDENTS

10. Dov Weinstein & Co., CPA is a public accounting firm that is registered with

the Public Company Accounting Oversight Board and located in Israel. During the relevant period, WCPA had approximately

sixteen employees, including six accountants. As of February 2019, WCPA had nine

public company clients with securities registered with the Commission.

11. Dov Weinstein, age 65, resides in Israel. Weinstein is a CPA licensed in Israel

with the Israel Auditors' Council. During the relevant period, Weinstein was the sole

partner of WCPA. and located in Israel. During the relevant period, WCPA had approximately

sixteen employees, including six accountants. As of February 2019, WCPA had nine

public company clients with securities registered with the Commission.

11. Dov Weinstein, age 65, resides in Israel. Weinstein is a CPA licensed in Israel

with the Israel Auditors' Council. During the relevant period, Weinstein was the sole

partner of WCPA. and located in Israel. During the relevant period, WCPA had approximately

sixteen employees, including six accountants. As of February 2019, WCPA had nine

public company clients with securities registered with the Commission.

11. Dov Weinstein, age 65, resides in Israel. Weinstein is a CPA licensed in Israel

with the Israel Auditors' Council. During the relevant period, Weinstein was the sole

partner of WCPA.

WEINSTEIN'S AND WCPA'S VIOLATIONS OF PROFESSIONAL

STANDARDS

12. Between approximately late 2011 or early 2012 and 2015, the Shell Operators

engaged WCPA to conduct approximately twenty-four audits and interim reviews of the

Shell Issuers' financial statements that were included in registration statements and other

filings with the Commission.

13. In addition to the Shell Issuers, between approximately 2013 and 2017, WCPA

and Weinstein conducted approximately sixty-seven audits and interim reviews of WCPA

Clients 1-9.

14. In the course of those audits and interim reviews, Weinstein and WCPA failed

to comply with Public Company Accounting

Oversight Board standards.

15. The Commission's Rules allow the Commission to censure or deny,

temporarily or permanently, the privilege of appearing or practicing before it in any way

certain professionals who violate "applicable professional standards." 17 C.F.R.

201.102(e). The applicable professional standards include standards issued by the Public Company Accounting

Oversight Board.

16. Weinstein, as the engagement partner for all of the audits and reviews at issue,

was responsible for the audit engagements and their performance, for properly supervising

the work of the engagement team members, and for ensuring compliance with Public Company Accounting

Oversight Board

standards.

Based on the above case and details answer the following questions along with references.

Describe two (2) fundamental principles of professional ethics as stated in APES110,

which were breached by Weinstein during the audit engagements in question and Describe two (2) potential threats to auditor's compliance with the fundamental principles

that might have contributed to the false representation of the financial statements and audits.