A man who regulators said this week planted false information that inflated his company’s stock price was accused last year by Sen. Bernie Sanders' presidential campaign of setting up an unaffiliated and unwelcome campaign committee that used Sanders’ name, as well as websites and social media accounts that solicited donations supposedly to help Sanders get elected.
Cary Lee Peterson, 36, was charged by the Securities and Exchange Commission and the Justice Department for violating the antifraud provisions of the securities laws and an SEC antifraud rule. He was arrested this week at San Francisco International Airport after returning to the United States on an international flight, and made an initial appearance in federal court in San Francisco.
His name is familiar to the Sanders’ presidential campaign, which is officially called Bernie 2016 Inc. and which said it twice issued letters to Peterson last year telling him to cease activities with a political action committee called Bet on Bernie 2016.
It said Peterson later changed the name of the committee, which operates as a so-called super PAC, to Americans Socially United. Super PACs are not allowed to be affiliated with a campaign or use a candidate’s name. But Peterson did not shut down the Bet on Bernie website, which still allows visitors to donate funds, the campaign said.
“We made it clear we wanted him to shut down,” said Brad Deutsch of the law firm Garvey Schubert Barer, lead counsel for the campaign, who issued the letters to Peterson and talked with him on the phone about the campaign’s concerns. He said the campaign was worried potential donations could be siphoned away from the real committee. Peterson came to the campaign’s attention after workers got calls from supporters who felt “duped and frustrated” by Peterson’s committee and website, Deutsch said.
Sanders has staunchly opposed super PACs and their ability to solicit unlimited donations and spend the money how they choose. He has made the issue part of his campaign for the Democratic Party's nomination and often raised it during debates.
When it was clear the unauthorized website would remain operating, however, the campaign moved on to other issues.
“It became a ‘pick your battles’ kind of thing,” Deutsch said. Filing a suit wouldn’t be worthwhile and a complaint with the Federal Election Commission would take too long to be effective, he said.
According to the FEC, the Americans Socially United committee filed one report, in September of last year, saying it raised about $90,000 in contributions through June, much of it in the form of “in-kind” donations where services are contributed instead of cash. It also returned $54,000 to donors, listing explanations that payments had the “incorrect payee name” or that donors were not U.S. citizens. It has not filed any subsequent reports.
The recent securities charges came as a relief to the Sanders campaign.
“We’re happy that the law has caught up with him,” Deutsch said.
Peterson could not be reached to comment. The number listed on SEC filings for his company is no longer in service.
Peterson was accused by the SEC this week of falsely claiming his company, RVPlus Inc., of Jersey City, N.J., had clean energy agreements with governmental bodies in Nigeria, Haiti and Liberia worth $2.8 billion. RVPlus and Peterson gained control of more than 90 percent of RVPlus’s free trading shares and gave them to individuals who unlawfully sold them into the market, the agency said.
“Using a pseudonym, he posted hundreds of messages to an online investors’ forum calling RVPlus stock ‘undervalued',” and urging investors to ‘buy up as much as possible,’” said Andrew M. Calamari, director of the SEC’s New York regional office, in a statement.
The SEC’s complaint charges RVPlus and Peterson with violating the antifraud provisions of the securities laws and an SEC antifraud rule. It also charges RVPlus and Peterson with violating the registration provisions of the securities laws and Peterson with aiding and abetting RVPlus’s violations of the antifraud provisions.
He faces a parallel criminal action from the U.S. Attorney’s Office in New Jersey over the same conduct, the SEC said, in which he could be sentenced to more than 20 years in prison if found guilty.
The SEC suspended trading in RVPlus securities in July 2013, citing “material deficiencies” in the company’s financial statements.
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