SEC OBTAINS FINAL JUDGMENTS AGAINST THE HARTCOURT COMPANIES, INC., ALAN V.
PHAN, AND YONGZHI YANG FOR FRAUD AND REGISTRATION VIOLATIONS
The Commission announced that the Honorable Lourdes G. Baird, U.S.
District Judge for the Central District of California in Los
Angeles, entered final judgments against The Hartcourt Companies,
Inc., a Utah corporation with executive offices in Shanghai, China,
Alan V. Phan, Hartcourt’s former chairman, president, and CEO, and
Yongzhi Yang, a former consultant to Hartcourt and a resident of
Irvine, California. The judgments against Phan and Yang were
entered on Feb. 28, 2005, while the judgment against Hartcourt was
entered on March 11, 2005.
The final judgments imposed the following sanctions against
Hartcourt, Phan, and Yang: (1) permanent injunctions against each
defendant against future violations of the antifraud and securities
registration provisions of Sections 5(a), 5(c), and 17(a) of the
Securities Act of 1933 and Section 10(b) of the Securities Exchange
Act of 1934 and Rule 10b-5 thereunder; (2) disgorgement of ill-
gotten gains and prejudgment interest totaling $832,598 from
Hartcourt and $189,619 from Yang; (3) civil penalties of $275,000
against Hartcourt, $55,000 against Phan, and $20,000 against Yang;
and (4) an order barring Phan from serving as an officer or
director of a public company.
In its Dec. 14, 2004, order granting the SEC’s motion for summary
judgment, the Court found that the defendants violated the
registration and antifraud provisions of the federal securities
laws in connection with a false Form S-8 registration statement
filed by Hartcourt on Sept. 7, 1999. The defendants used a Form S-
8 registration statement to issue one million Hartcourt common
shares to Yang’s wife, purportedly to compensate her for providing
bona fide consulting services to Hartcourt. Instead, Yang
performed the actual consulting services and, at Phan’s direction,
improperly sold or transferred over 836,400 of those shares to
provide a benefit of approximately $819,363 to Hartcourt. The
Court also found that Yang received a personal benefit of $186,604
from the scheme. [SEC v. The Hartcourt Companies, Inc., Alan V.
Phan, and Yongzhi Yang, Civil Action No. 03-3698 LGB (PLAx) (C.D.
Cal.)] (LR-19133) |
