SEC says former Cape man took part in 'pump and dump' stock scheme

A former Cape Girardeau businessman is being sued for allegedly orchestrating a fraudulent "pump and dump" scheme involving the stock of Quality of Life Health Corp.

The Securities and Exchange Commission has obtained a temporary restraining order and frozen the assets of George A. Todt, who currently resides in Malibu, Calif.

The SEC alleges that Todt, the investor-relations specialist for Quality of Life Health Corp., issued press releases that contained false claims that boost the company's stock, then reaped at least $800,000 by selling inflated shares through an account in another name.

Todt is a Cape Girardeau native who graduated from Notre Dame Regional High School. In 1987, he purchased the Todt Sheet Metal Co. and Industrial Supply in Cape Girardeau. Three years later, the company filed Chapter 11 federal bankruptcy. His brother, David Todt, is Quality of Life's chief financial officer and a member of its board of directors.

In the lawsuit, the SEC said Todt split profits with traders who received Quality of Life shares from him.

The company uses a St. Louis County address as its headquarters in SEC filings. However, its administrative and accounting offices are in Fairfield, Iowa, and most of its operations also are elsewhere.

George Todt did not respond to a request for comment. Neither did Quality of Life or the SEC attorneys in Los Angeles, where the complaint was filed Friday in U.S. District Court.

The SEC suit also targeted Jeffrey H. Evans of Napa, Calif., Ray Slaback of Dakota, Minn., and seven business entities. Their assets also were frozen.

The SEC said in its complaint that from March 2003 until at least October 2004, Todt and others inflated the price of Quality of Life's stock by issuing press releases claiming that the company owned nursing homes worth $60 million.

Those claims were repeated on Quality of Life's Internet site. Other press releases discussed the company's revenue and earnings from its nursing home subsidiary.

Twice in the period covered by the SEC's suit, Quality of Life's stock shot from roughly 50 cents a share to about $3.50 a share, then slumped back to the earlier level.

Quality of Life's shares trade on the over-the-counter market, which largely consists of small companies with limited revenue, assets or operating histories.

Quality of Health issued a press release in December 2004 clarifying the acquisition of the nursing homes. The company said the person from whom it had agreed to buy the facilities had only an option to purchase them and ultimately was unable to complete the deal.

Quality of Life said last year that it had entered into an agreement in December 2003 with the true owners to take over a select number of the nursing homes. However, its deal to buy or lease seven of the properties was not completed until December 2004.

The SEC complaint alleges that George Todt orchestrated a second scheme involving four other companies whose shares trade on the OTC market. None is in Missouri or Illinois.

The suit says George Todt was involved in distributing false and misleading information about those companies and sought to manipulate the market for shares in three of them.

The St. Louis Post Dispatch and staff writer Callie Clark Miller contributed to this report.