Men Offering Internet Broadcast Shares Ordered to Pay $14.8 Mln
Washington, Nov. 1 (Bloomberg) -- Two California men -- a disbarred lawyer and a convicted felon -- were ordered to pay almost $14.8 million for allegedly selling unregistered shares in a company that purported to run Internet entertainment ``channels'' the Securities and Exchange Commission said.
Ronald T. Mulhall, 54, Eugene M. Carriere, 51, and several entities they owned were ordered by U.S. District Judge Christina A. Snyder of Los Angeles to pay back a total of $13.8 million in alleged illegal profits plus $752,500 in interest, the SEC said. Each man also was fined $110,000.
The SEC cannot locate either man, and the court entered a default judgment ordering them to pay the money, said Gregory C. Glynn, a senior trial counsel in the SEC's Los Angeles office.
``I don't think we'll collect a dime unfortunately,'' Glynn said. ``The money went offshore.''
Mulhall, 54, is a lawyer who was disbarred by the California Bar Association for misappropriating client funds and Carriere, 51, is a convicted felon who served a prison term in the 1980s for conspiracy to smuggle endangered wildlife, the SEC said.
The SEC alleged the two men sold unregistered shares in Yes Entertainment LLC to investors throughout the country through at least two boiler rooms in California. Yes Entertainment LLC has no relation to Yes! Entertainment Corp. of Pleasanton, California which makes toys and children's electronic products, Glynn said.
Investors were told in a high pressure sales pitch that 85 percent of all investor proceeds would go to Web site creation and design, operating and administrative expenses, advertising and marketing, the SEC said.
In fact, almost $6 million was wired offshore and ``hundreds of thousands of dollars'' were diverted to Mulhall and Carriere for their personal use, the SEC said.
Investors were also told that 12 percent of the proceeds would go to sales commissions, which in fact consumed 45 percent of proceeds, the SEC said. Mulhall, the company's chief executive, was described to investors as a ``highly successful'' lawyer.
While the company did operate a Web site, it's not clear whether Internet broadcasting over any channels ever took place, or whether Mulhall and Carriere really planned any actual broadcasting, Glynn said. Investors were told the Web site channels would offer ``family programming.''
``We wanted to ask them about that but we never got the chance,'' Glynn said. ``We couldn't find them.''
Though Mulhall, a onetime resident of El Segundo, California, answered the SEC's original complaint, he failed to show for a deposition and other ordered appearances, Glynn said. Carriere was never found, he said.
Nov/01/2000 17:10 ET
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