Things have gone from bad to worse for Ives Health Company and its founder Keith Ives. Mr. Ives and the Company have been indicted, and charged with fraud, in connection with their efforts to market an unproven and untested cure for AIDS. In a related case, the Securities and Exchange Commission instituted a civil lawsuit against the Company; Mr. Ives; former Chief Executive Officer Michael Harrison; and promoter James Kosta, for their roles in an Internet market manipulation scheme.
The Securities and Exchange Commission suspended trading in Ives shares on March 5th, the same day Stock Patrol published its first investigative report on the Company. (See Ives Health Company – Ives Wide Shut). At the time, Ives common stock traded on the OTC Bulletin Board, where it reached prices of 73 cents a share in mid-February after the Company announced that its had developed an effective treatment for HIV and AIDS. Since the trading suspension, however, Ives common stock has traded on the Pink Sheets, where share prices have languished at around one or two cents.
At the time of the suspension, Ives was aggressively marketing a product called “T-Factor.” The Company claimed that “T-Factor,” a drug used for HIV and AIDS treatment, had been tested, and proven, in a study called “The Java Project.” But “T-Factor” had never been approved by the Food and Drug Administration, and prosecutors are now saying that “The Java Project” was fabricated to promote Internet sales of the bogus product.
The SEC alleges that Ives, and the other defendants, pumped up the price of the Company’s shares through false press releases and Internet message postings claiming that “T-Factor” was a proven treatment for HIV and AIDS. Those press releases included false claims that tests, performed in conjunction with the World Health Organization, demonstrated that “T-Factor” initiated “profound and sustained suppression of HIV replication.” The SEC says that no such tests were performed, and there is no proof that “T-Factor” has any effect on HIV.
At the same time the Company was sending out those press releases, promoter James Kosta was posting nearly 200 messages touting the stock on the Ives message board at Raging Bull. Kosta, who allegedly posed as an average investor while he was spreading the false “news”, was really a Company affiliate who had received millions of shares from Ives. His messages failed to disclose that he had received those shares, or that he was dumping them at the same time he was encouraging public investors to buy Ives stock. The SEC says that Kosta received almost $500,000 from these illicit stock sales.
The SEC also charges that the Company repeatedly made false claims about the product in its public filings. It is seeking monetary penalties, and an order barring all of the defendants from future violations of the securities laws.
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