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Long Island Recidivist Charged with Running $4 Million Fraud

(HedgeCo.Net) The Securities and Exchange Commission charged recidivist securities law violator Donald A. Milne III, of Merrick, New York, and his company, Instaprin Pharmaceuticals, Inc., with operating a long-running offering fraud that raised over $4 million from more than seventy investors, many of them elderly.

The SEC’s complaint, filed in federal court in the District of New Jersey, alleges that Milne falsely told investors that their money would be used to pay for the operating expenses of Instaprin Pharmaceuticals, which was purportedly developing a revolutionary fast acting aspirin to instantly stop heart attacks and strokes. Instead, Milne allegedly used investors’ money to largely pay for personal expenses, such as a vacation, clothing, spa treatments, divorce expenses, and on Island Raceway & Hobby, Inc., his now-defunct remote-controlled toy racecar business, which had previously operated in Lindenhurst, New York.

The SEC’s complaint charges Milne and Instaprin with violating the anti-fraud provisions of Section 17(a) of the Securities Act of 1933 (“Securities Act”) and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and the registration provisions of Section 5(a) and 5(c) of the Securities Act. Without admitting or denying the allegations in the complaint, Milne and Instaprin have consented to the entry of final judgments permanently enjoining them from violating the charged provisions of the federal securities laws, ordering full disgorgement and prejudgment interest of $3,628,325, and imposing civil penalties of $554,301 and $2,771,493, respectively. The SEC’s complaint also names Island Raceway as a relief defendant. Island Raceway has consented to the entry of a final judgment agreeing to pay $941,100 in disgorgement and prejudgment interest. The settlement is subject to court approval.

The SEC’s Retail Strategy Task Force and Office of Investor Education and Advocacy (OIEA) encourage investors to check the background of anyone selling or offering them an investment using the free and simple search tool on Investor.gov. Investors can also use the SALI feature to find information about certain people who have had judgments or orders issued against them in SEC court actions or administrative proceedings.

The SEC’s investigation was conducted by Han Nguyen, Daniel Berman and Kingdon Kase in the Philadelphia office with assistance from Karen M. Klotz and Jennifer Chun Barry, and supervised by Kelly L. Gibson.

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