SEC brings charges against Positron Corp.

October 31, 2014
by Lauren Dubinsky, Senior Reporter
The Securities and Exchange Commission (SEC) filed a lawsuit last month against Patrick R. Rooney and John R. Rooney of Positron Corporation for hiring stock promoters to inflate their company's shares in August 2012. The promoters were cooperating with the FBI.

According to court papers, the Rooneys planned to pay the promoters $4,000 to purchase $20,000 worth of their company's stock. In order to generate the appearance of market activity, they also gave the promoters press releases in advance and instructed them to purchase the stock before the news was published.

Their thought was that by publishing the news a few days after the stock was purchased, it would makes the news appear more credible.

The FBI purchased 700,000 shares of the company's stock for $7,400 on August 28, 2012, which was 27 percent of the stock's volume for that day. On September 6, Positron published a positive press release and then two days later the FBI purchased 210,000 shares of the stock for $2,100, which was about 14 percent of the stock's volume on that day.

By October 2012, the stock promoter only received $1,000 from the Rooneys.

The SEC is asking the court to ban the Rooneys from participating in anymore penny stock offerings, to prohibit Patrick Rooney from holding any officer or director positions at a public company and to have them pay civil penalties.

This is not the first time that the SEC had Patrick Rooney under fire. In July 2014, the United States District Court for the Northern District of Illinois ruled that Rooney and his company, Solaris Management, LLC, must pay $715,700 in disgorgement including a prejudgment interest of $166,476 and a $715,000 civil penalty.

The judge also banned Rooney from operating a private investment fund and holding any officer or director positions for any public company, except for Positron.

In November 2011, Rooney and Solaris drastically altered the Solaris Opportunity Fund LP's (the Fund) investment strategy by becoming wholly invested to Positron, even though the Fund's offering documents and marketing materials did not reflect that. The SEC claims that he misused the Fund's money by investing over $3.6 million in Positron through mostly undocumented private transactions and market purchases.

For over four years, Rooney and Solaris kept his connection with Positron from the Fund's investors. He finally told them in March 2009 in a newsletter but he also said he became chairman in order to defend the Fund's investments.

Positron is a nuclear medicine company based in Westmont, Illinois that specializes in cardiac PET imaging. The company was founded in 1983 and Patrick Rooney became CEO in 2004. Whether Positron will go under or float to the surface still remains to be seen.

DOTmed News will report on any further developments as information becomes available.