This was brought to my attention from Arcane. Lou had GIFS restricted shares as many will recall. Coincidence?
CEASE AND DESIST ORDERS ISSUED AGAINST THREE FOR ILLEGALLY OFFERING SECURITIES
OVER INTERNET
The Commission today issued cease-and-desist orders against three people who illegally offered to sell
securities on the Internet auction site run by eBay, Inc. (eBay). The Commission found that in auctions on eBay:
* Respondent Richard L. Davis, of Duncanville, Texas, illegally misrepresented the prospects that a company
he founded would go public and offered to sell unregistered stock.
* J.R. Hoff, of Hudson, Wisconsin, illegally offered to sell unregistered stock in an unincorporated company he
owns.
* Louis P. Sitaras, of Jupiter, Florida, illegally offered to sell restricted securities, meaning securities that
could not be sold publicly.
The Commission approved settlements with all three respondents simultaneously with the institution of the
actions. The Commission ordered each respondent to cease and desist from violating the relevant provisions of
the securities laws. The respondents neither admitted nor denied the claims against them.
In May 1999, Davis posted an offer to sell a 5% interest in Mindhunt.com, a company he founded, for
$250,000. In his offer, Davis claimed that he had "purchased a public shell [company]" and that
Mindhunt.com would be a public company "within 4 to 5 months." The Commission found that at the time of
his offer, Davis had not incorporated Mindhunt.com, had not purchased a public shell company, and had no
reasonable basis for the claim that Mindhunt.com would be public within 4 to 5 months. Moreover, Davis
illegally offered to sell unregistered stock. No one bid in response to Davis' offer.
In April 1999, Hoff posted an offer on eBay to sell 1,000 shares in AmeriGa.net, a company Hoff co-owns. Hoff
illegally offered to sell unregistered stock and, in fact, at the time of his offer AmeriGa.net had not even been
incorporated. Several people bid on the shares, but no sale was consummated.
In May 1999, Sitaras posted an offer on eBay to sell 2,000 shares of Metropolitan Health Networks, Inc.
("MHN"), a health care services company. Although MHN stock trades on the OTC Bulletin Board, the shares
Sitaras offered to sell were restricted and could not be offered for sale publicly until September 1999. In
response to Sitaras' posting, several people placed bids, but no sale of the MHN shares was consummated.
The Commission found that Davis had engaged in securities fraud, in violation of Sections 17(a)(1) and
17(a)(3) of the Securities Act of 1933 ("Securities Act"), and sold unregistered securities, in violation of
Section 5 of the Securities Act. The Commission found that Hoff and Sitaras also violated Section 5 of the
Securities Act. Section 5 requires, among other things, that stock issued to the public be registered with the
Commission, unless an exemption from registration applies. (Richard L. Davis - Rel. 33-7756, File No.
3-10080; John R. Hoff - 33-7757, File No. 3-10081; Louis Sitaras - 33- 7758, File No. 10082); (Press Rel.
99-138) |
