Securities and Exchange Commission obtained a temporary restraining order against future violations of the antifraud, issuer reporting, books and records, internal controls and officer certification provisions of the federal securities laws. It is alleged these violations occurred in furtherance of a scheme orchestrated by Michael Borish and Michael Ciarlone, through Freedom Environmental Services, Inc. (Freedom) which also involved misappropriation of corporate assets by Borish and Ciarlone. The court also appointed a receiver to preserve and marshal assets, froze Borish’s assets, prohibited the destruction of documents and records, and ordered expedited discovery.
The Commission’s complaint, filed in the U.S. District Court for the Middle District of Florida (Orlando Division), alleges Borish, Freedom’s former chief executive officer, orchestrated a scheme to remain in control of the company after being removed by the board of directors. Despite the board’s action, Borish continued to act as the company’s de facto CEO and to control its operations. From at least July 2010 – both before and after his ostensible removal – Borish caused Freedom to file numerous false and misleading annual, quarterly, and periodic reports with the Commission. Freedom also issued a false press release regarding the acquisition of another company, failed to file Forms 8-K regarding material events, such as Freedom’s recent bankruptcy filing, insider litigation settlements, and repeatedly misrepresented the composition of the board of directors and identities of Freedom’s officers in Freedom’s filings. It is further alleged that Borish and Ciarlone, from July 2011 through at least May 2012, stole corporate funds to pay personal expenses.