Former Scottsdale Resident Sentenced For Securities Fraud

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PHOENIX – A Scottsdale man, William “Lance” Mullins, was sentenced to 42 months in prison and three years of supervised release after pleading guilty to engaging in fraudulent interstate securities transactions.

The Court also ordered Mullins to pay more than $2.8 million in restitution to 125 victim shareholders.

Two others pleaded guilty to conspiracy to commit securities fraud in related cases and were sentenced in June 2019. Nicolas Russo, Jr., 72, of Fountain Hills, Arizona, and Larry Eiteljorg, 70, of Scottsdale, Arizona, were sentenced to probation and ordered to pay restitution after cooperating with the government’s investigation.

Mullins, age 50, was involved with a Tempe, Ariz.-based technology company called Xhibit Corporation, whose stock was publicly traded on the over-the-counter market and which merged with the airplane catalog SkyMall in May 2013. In 2012 and 2013, before the SkyMall merger, Mullins and others made misrepresentations about the company when recruiting investors. They also engaged in manipulative trading of Xhibit stock that is prohibited by U.S. securities laws and regulations. Their prohibited trading activities artificially inflated Xhibit’s stock price and made it falsely appear that there was more demand for the stock. Because of these actions and other events, Xhibit’s stock price rose sharply, from less than a dollar in early 2012 to a peak of more than seven dollars in May 2013, and then fell just as quickly. Mullins made more than $1 million from selling much of his own stock before the stock price dramatically fell, while unknowing shareholders lost millions.

“Mr. Mullins was the mastermind of this market manipulation scheme and the 42-month prison sentence Mullins received should send a strong message of deterrence to criminals committing securities fraud in Arizona,” said Sean Kaul, Special Agent in Charge of the FBI Phoenix Division.