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Luke Zouvas' Goose Is Finally Cooked!
Initially Posted: July 16, 2018 5:10 p.m. PDT   Last Updated: July 17, 2018 1:00 p.m. PDT

Luke and Leena Zouvas
Obviously in better times
Among the filthiest of the filthy attorneys that infest the penny stock markets is San Diego's own Luke Zouvas. A former partner of disgraced attorneys Louis Carrillo and Wade Huettel who were knee deep in the Awesome Penny Stocks scandals, Zouvas has finally made it big on his own. In fact, he was deemed worthy of something that even Carillio and Huettel couldn't muster: an indictment.

On July 11th, Luke was arrested on a Grand Jury indictment for laundering the proceeds of securities fraud. While this particular charge came as a surprise to me, Luke was long due for a stint in the federal pokey and my guess is that the SEC/FBI took what they could get. He posted $50,000 bail the next day and is free pending prosecution of the case.

Of course this is just a small sampling of Luke's work and he was an indspensible cog in several pump and dump schemes, including tickers DRNK, APHD, CUBV, HMNC, VCPS, and the very dirty Stock Castle promotion, USGT, just to name a few. His CPA brother, Mark Zouvas, was usually attached to Luke's schemes, and more than once, fellow San Diego barrister, Steve Lucero, was found nearby as well.

Luke's connection to USGT is undeniable as he paid me shut-up money in advance not to sue US Gaphite, Inc. At the time, I had a policy of suing the subjects of Stock Castle promotions for violations of spam email statutes. Those lawsuits, which were announced with a press release, always had a devastating effect on the promotion, and quickly cut the scheme short. Zouvas figured that by paying me off in advance, he could get me to lay off the company. When I was in Luke's office, he introduced me to Mark, who was obviously full well apprised of why I was there.

What Luke didn't know is that I knew that you can't settle a case in advance of the criminal activity. After receiving a check for $17,500, I sued US Graphite anyway, and was granted a judgment against the company and its nominee CEO, Wayne Yamamoto. Not surprisingly, Steve Lucero represented Zouvas' nominee CEO during the discussions of the payoff of the judgement.

This is hardly Zouvas' first encounter with the SEC. On April 25, 2016 Luke was charged for obfuscating the control position of Christopher Larson in Crown Dynamics Corp. (CDYY). Zouvas was also accused of participating in manipulative trades in his own account to create the appearance of buying interest in the stock. Shares of CDYY were the subject of promotion campaigns during 2012, after which the company's name and symbol were changed to the current Airway Labs Corp. (AIRW) and promoted anew. Among the several wrongdoings by Zouvas as alleged in that complaint, he created several false stock purchase agreements including one in which he purportedly purchased 87,500 shares of AIRW for $2,000. According to the SEC, Zouvas never paid for those shares nor did he receive them under the phony purchase agreement. The purported seller of the shares never communicated with Zouvas or actually owned the shares, but found her signature forged on a stock certificate anyway. Zouvas himself directed the Transfer Agent to transfer those shares to his name. Within his instruction letter to the TA, Zouvas wrote, “We certify that these shares have been validly purchased by the following parties,” which included himself. The statement was a lie because Zouvas did not purchase the shares referred to in the letter, and the stated owner did not sell the shares. Zouvas eventually realized over $10,000 in gains from the sales of the stock in addition to his legal fees and other payments.

Luke Zouvas has a healthy reputation for screwing over his clients. In one of many examples, PrimeGen Energy (PGNE) retained a New York law firm to commence litigation against Zouvas and his then partner, Marc Applbaun, for dissemination of untruthful, false and misleading information to shareholders.

On May 24, 2013, Zouvas was sued by an insurance company who had been paid to indemnify his legal practice. Shortly after the acquisition of the policy, the insurance company agreed to provide a defense in a malpractice suit against him brought by a former client. After forking out about $250K in legal costs, the insurance company came to the realization that the actions for which Zouvas claimed coverage had at least partially occurred prior to the coverage period, thereby relieving them of responsibility to cover him. They sued Zouvas for recovery of the expended costs. In the underlying case, which was attached as Exhibit A to the insurance company's complaint, the former client had sued Zouvas for failing to act on the adverse party's discovery demands, and for failing to disclose a settlement proposal made by the adverse party. The former client alleged that Zouvas' negligence had cost him no less than $750K. Now instead of only footing the bill for his defense in the litigation brought by the former client, Zouvas was faced with an action to recover a bunch of money from him by the insurance company. Suspiciously, on June 14, 2013, just two days before Zouvas filed for bankruptcy, an undisclosed settlement was entered in the case brought by the former client. One might suspect that the former client was held hostage under the threat of the pending bankruptcy, forcing him to capitulate to a discounted settlements. The bankruptcy enabled Zouvas to get the litigation brought by the insurance company, stayed. Zouvas, who lives a fancy shmancy lifestyle, driving hundred thousand dollar cars and living in multi-million dollar homes, while wearing designer suits, listed $63K in bank and credit card debt as the only other unsecured creditors.

It will be interesting to see how Luke's wife, Leena Spahr Zouvas, reacts to the prospect of losing everything she has, and facing the fact that she has a pending convict for a husband.

Grand Jury Indictment

~ George