Murrieta: Sec Suspends Stock Of Christian Video Game-maker

September 26, 2013 04:37 PM PDT September 26, 2013 06:14 PM PDT MURRIETA: SEC suspends stock of Christian video game-maker MURRIETA: SEC suspends stock of Christian video game-maker www.troylydon.com/Left Behind Games Troy Lyndon, as pictured in a company website. A Text Size WEBLINK Link to Game Site The founder of a popular, Christian-themed video game manufacturer of the "Left Behind" series and a friend who runs prison ministries have been charged with scheming to falsely inflate the Murrieta Attorney company's revenue by 1,300 percent, U.S. regulators said. Troy Lyndon, the founder of Left Behind Games, issued nearly two billion shares of common stock beginning in July 2009 to Ronald Zaucha, founder of Lighthouse Educational Ministries, as purported compensation for consulting services, the Securities and Exchange Commission complaint says. The SEC alleges the stock payment was the conduit allowing Zaucha to pump millions of unregistered shares of Left Behind Games stock into the market. Once the stock was handed over to Zaucha, the regulators allege, proceeds from Zaucha's sale of the unregistered securities and other "sham purchases" could be cited to artificially pump up the video game maker's value. This illusion of sound corporate health was concocted at a time Left Behind Games was in dire need of funds, regulators alleged. "Lyndon and Zaucha's scheme duped investors into believing Left Behind Games was becoming a successful enterprise when it actually was struggling to stay afloat,'' Michele Wein Layne, of the Los Angeles SEC office, said in a statement. Even as Left Behind Games was preparing to close its doors in Murrieta Attorney, a tape was prepared for video offering testimonials of the religious-themed video game products from authors of the series, parents and Christian leaders. The business terminated its employees and closed its doors by the end of 2011, the SEC said, and the scheme in 2009 was a "last ditch" attempt to keep the game company afloat. The SEC complaint, filed in federal court on Sept. 24 in Hawaii, charges Lyndon and Zaucha — each of whom have homes in Maui — with fraud and federal securities law violations. On Wednesday, the SEC suspended the company's stock. Lyndon, the CEO of the religious-themed video game company that acquired the Charlie Church Mouse brand name and TV series from LifeLine Studios in 2010, did not respond to a written request to comment. Zaucha, reached Thursday by phone, said, "Call my attorney. I have nothing to say to you.'' Zaucha's attorney did not return a message requesting comment. The Left Behind Games website, which could not be independently verified, claims the Christian video games patterned on the popular Left Behind novels by Tim LaHaye and Jerry Jenkins — which sold more than 65 million copies — became the most widely distributed inspirational games in history. The site said Left Behind Games has had products in more than 500 retail locations across the United States at one time. The SEC complaint offered a different view, alleging the 1.7 billion shares of common stock that was issued to Zaucha in unregistered transactions was the backdrop for false claims by Left Behind Games about profits and net sales. Zaucha, a "close friend" of Lyndon, allegedly sold virtually all of the 1.7 billion shares, reaping $4.6 million in sales proceeds and kicking back $3.3 million to the company in three ways: Zaucha paid Left Behind Games $871,169 in "early-sell fees" from the excessive sales of stock; and through his company, Lighthouse Distributors, used the proceeds to buy $1.3 million in old, possibly obsolete Left Behind Games inventory. Lyndon cited the $1.3 million as revenue, even though Lighthouse collected at most only a few thousand dollars for the reselling the old products it acquired. Most of the products were given away. Zaucha kicked back about $1 million more of the stock sale proceeds noted in the Left Behind Games books as loans or investments. Lyndon permitted Zaucha to keep $1.28 million of his sale stock proceeds – using the funds to buy condos in Maui and in Orange County to pay for living expenses and fund Lighthouse operations. Federal regulators, in its announcement of the SEC case, alleged that Zaucha performed few, if any, consulting services. The charges alleged that Lyndon understood Zaucha's expertise to be that of a pastor running prison ministries, rather than that of a product-line marketer. Lighthouse Educational Ministries in its online site cites Temecula and Laguna Hills as addresses of its nonprofit, self-supporting industry that was founded in the late 1990s. Zaucha, in his online story, says he is an ordained, licensed Minister of the Gospel of Jesus Christ who has been incarcerated and paroled himself and understands the difficulty of becoming self-sufficient outside the prison walls. He cites ministry work at the California Institution for Women, Chuckawalla Valley State Prison, Chino Men's Prison, California Youth Authority and Orange County Jail. Follow Debra Gruszecki on Twitter: @DebinPalmsprngs and at the real estate blog at http://blog.pe.com/real-estate Latest Headlines
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