THE HAYTON GROUP DEFRAUDS NEVADA ENERGY
22. The Hayton Group's scheme to defraud Nevada Energy through
its pattern of racketeering activity was as follows: Golden Chance, one of the
members of the Group, would purport to make the payments due under the
Subscription Agreement and the Note (as described below in Paragraphs 23-25),
thus entitling it to receive substantial amounts of Nevada Energy's Class A
Common Stock. After receiving the stock, Golden Chance
13 14
would sell that stock on the open market, reaping the proceeds for the Group.
However, the scheme contemplated that almost all of the money Golden Chance paid
to Nevada Energy would not be used for proper corporate purposes, instead being
improperly taken from the Company by members of the Hayton Group, principally
Jones, McCloy, Peterson and Mortlake. The net result of this scheme was that the
Hayton Group would actually pay very little money to Nevada Energy, yet be able
to keep the considerable proceeds it obtained from selling the Class A Common
Stock. Because this scheme necessarily would involve the repeated use both of
the United States mails (or private interstate or international carriers) and
interstate and international wire communications, it was reasonably foreseeable
to each defendant that the Hayton Group's scheme to defraud Nevada Energy would
be conducted through a pattern of racketeering activity including violations of
the mail fraud statute, 18 U.S.C. Sec.1341 and wire fraud statute, 18 U.S.C.
Sec.1343.
a. As part of the Hayton Group's scheme to defraud Nevada
Energy, between May and August, 1996, Mr. McCloy, on behalf of Golden Chance,
transferred a total of $1,242,381.40 from accounts controlled by Mr. McCloy's
law firm, Jones, McCloy, Peterson, to the Palm Desert Bank Account, allegedly
pursuant to the Subscription Agreement and Note. As a result of these
"payments," on or before July 22, 1996, Mr. McCloy (who was in Canada) directed
Nevada Energy's board of directors (who were in Australia and the Isle of Man),
by facsimile, to authorize the issuance of 1,242,381 shares of restricted Class
A Common Stock to Golden Chance. On July 22, 1996, the board did so, apparently
meeting via a telephone conference call, and the shares were issued on July 24,
1996. Thereafter, 14 15
Golden Chance, pursuant to the Hayton Group's scheme, sold this stock, with the
proceeds benefitting the Hayton Group.
23. The $1,242,381.40 allegedly used to purchase this stock
was deposited in the Palm Desert Bank Account from the following sources:
a. $10,000 from Maynard M. Britlan on May 17, 1996. Nevada
Energy believes that Mr. Britlan was at the time an associate of Mr. Hayton's.
b. $118,495 from Jones, McCloy, Peterson on May 24, 1996.
c. $528,302.50 from Jones, McCloy, Peterson on May 30, 1996.
d. $123,412.50 from Jones, McCloy, Peterson on June 3, 1996.
e. $108,620 from Jones, McCloy, Peterson on June 6, 1996.
f. $113,557.50 from Jones, McCloy, Peterson on June 17, 1996.
g. $49,394.76 from Jones, McCloy, Peterson on June 27, 1996
h. $88,870 from Jones, McCloy, Peterson on July 2, 1996.
i. $81,453.75 from Jones, McCloy, Peterson on July 12, 1996.
j. $20,275.39 from Jones, McCloy, Peterson on July 15, 1996.
24. Based on sworn statements by Mr. McCloy, all of this
money was sent by wire transfer from Jones, McCloy, Peterson's account at the
Canadian Imperial Bank of Commerce, Commerce Place, Vancouver, British Columbia,
Canada to the Palm Desert Bank Account.
25. Almost all of the money deposited in the Palm Desert Bank
Account was immediately withdrawn from that account (frequently the same day
that it was 15 16
deposited), at either Mr. Hayton's or Mr. McCloy's direction (using either the
telephone or the mail). Specifically, at least the following money, totaling
over one million dollars, was diverted improperly from the Palm Desert Bank
Account in the following manner:
a. May 2, 1996--$50,000 to Jones, McCloy,
Peterson; check number 81;
b. May 2, 1996--$10,000 to Jones, McCloy,
Peterson; check number 82;
c. May 10, 1996--$2,000 to Mortlake; check
number 1006;
d. May 17, 1996--$3,000 to Mortlake; check
number 1014;
e. May 21, 1996--$1,500 to Mortlake; check
number 1016;
f. May 24, 1996--$103,000 to Mortlake; check
number 1021;
g. May 30, 1996--$250,000 to Jones, McCloy,
Peterson; check number 1041;
h. May 30, 1996--$177,000 to Mortlake; check
number 1043;
i. June 3, 1996--$5000 to Kevin Quinn; check
number 1050;
j. June 3, 1996--$50,000 to George O.
Rebensdorf; check number 1051. Nevada Energy
believes that Mr. Rebensdorf is an associate
of Mr. Hayton;
k. June 3, 1996--$10,000 to cash, which
plaintiff believes was taken by Mr. Hayton;
check number 1052;
16 17
l. June 6, 1996--$45,000 to Dean Chamberlain,
to pay a debt of Telecom (AE) Limited and/or
Wina Associates, companies controlled by Mr.
Hayton; check number 1053;
m. June 6, 1996--$50,000 to cash, which
plaintiff believes was taken by Mr. Hayton;
check number 1055;
n. June 17, 1996--$60,000 to Jones, McCloy,
Peterson by wire transfer;
o. June 21, 1996--$25,000 to Pillsbury, Madison
& Sutro to pay an existing debt owed either
by Mr. Hayton personally or by one of his
companies; check number 1068;
p. June 25, 1996--$15,000 to Jones, McCloy,
Peterson by wire transfer;
q. June 26, 1996--$10,000 to Mortlake; check
number 1070;
r. July 1, 1996--$10,000 to Mortlake; check
number 1074;
s. July 2, 1996--$10,000 to Mortlake; check
number 1077;
t. July 3, 1996--$75,000 to Jones, McCloy,
Peterson by wire transfer;
u. July 3, 1996--$10,000 to Mortlake; check
number 1081;
v. July 12, 1996--$40,000 to Mortlake; check
number 1084;
w. July 16, 1996--$10,000 to Mortlake; check
number 1087.
17 18
26. None of this money withdrawn from the Palm Desert Bank
Account was used for proper Nevada Energy purposes but was instead paid,
directly or indirectly, to the Hayton Group.
27. In furtherance of the Hayton Group's scheme to defraud
Nevada Energy, all of the checks set forth in Paragraph 26 a-w were mailed from
Palm Desert California, by the United States mail, the same day as or shortly
after they were dated, to the payees in the United States and Canada. The wire
transfers were sent from the Palm Desert Bank Account to Jones, McCloy,
Peterson's account in Canada on the dates set forth above.
28. This money was obtained from Nevada Energy as part of and
in furtherance of a scheme and artifice to defraud in violation of the mail
fraud statute, 18 U.S.C. Sec.1341 and the wire fraud statute, 18 U.S.C.Sec.1343.
29. The Hayton Group's scheme to defraud Nevada Energy was not
yet completed, however, on October 31, 1996, the board of directors of Nevada
Energy (then consisting of Messrs. Cain and Cannell and Stefan Tevis, who had
replaced Mr. Goold), at the direction of Mr. Hayton and Mr. McCloy (using either
or both the telephone and the mail), voted to amend the Subscription Agreement
to allow Golden Chance to receive immediately the remaining Class A Common Stock
it would have been entitled to receive had it paid the remaining amounts due
under the Note in cash. Through this amendment, however, Golden Chance was
required to pay none of that amount in cash, instead being permitted only to
sign a demand note. However, the Hayton Group (pursuant to its scheme) prevented
such a note from being signed, and Nevada Energy received no further money from
18 19
Golden Chance. Nevertheless, pursuant to the Hayton Group's scheme, Golden
Chance received the following unrestricted Class A Common Stock:
a. 1,061,729 shares on October 1, 1996
b. 2,543,734 shares on November 6, 1996.
30. This stock was sent by mail to Mr. McCloy who, pursuant to
the Hayton Group's scheme, thereafter directed that it be sold to third-party
investors at a substantial profit for the Hayton Group. In furtherance of the
Hayton Group's scheme, Mr. Hayton and Mr. McCloy refused to permit Nevada Energy
to sue Golden Chance for failing to pay for this stock.
31. In addition, following a 1-for-6 reverse split of the
shares of Nevada Energy's Class A Common Stock that apparently occurred
effective January 30, 1997, Mr. Hayton and Mr. McCloy, acting pursuant to the
Hayton Group's scheme, instructed the Nevada Energy board to issue the following
post-split shares to the following persons or entities:
a. 220,000 shares (or 1,320,000 pre-split) on
February 3, 1997 to Jones McCloy Peterson to
pay for attorneys' fees incurred by Golden
Chance;
b. 100,000 shares (or 600,000 pre-split) on
February 3, 1997 to the law firm of
Wilson, Elser, Moskowitz, Edelman &
Dicker for legal work done of behalf of
either Mr. Hayton or a company controlled
by Mr. Hayton;
19 20
c. 300,000 shares (or 1,800,000 pre-split) on
February 3, 1997 to Mortlake;
d. 300,000 shares (or 1,800,000 pre-split) on
February 11, 1997 to Pacific International
Securities for the benefit of Golden Chance;
e. 50,000 shares (or 300,000 pre-split) on
February 18, 1997 to Pacific Rim Capital, a
company owned and controlled by Mr. Hayton;
f. 100,000 shares (or 600,000 pre-split) on
February 18, 1997 to The Hartcourt
February 18, 1997 to The Hartcourt
Companies, another company owned and
controlled by Mr. Hayton;
32. Nevada Energy received no consideration for the issuance
of any of this stock.
33. This stock was obtained from Nevada Energy as part of and
in furtherance of a scheme and artifice to defraud in violation of the mail
fraud statute, 18 U.S.C. Sec.1341, and the wire fraud statute, 18 U.S.C.
Sec.1343.
THE HAYTON GROUP DEFRAUDS NEVADA ENERGY
22. The Hayton Group's scheme to defraud Nevada Energy through
its pattern of racketeering activity was as follows: Golden Chance, one of the
members of the Group, would purport to make the payments due under the
Subscription Agreement and the Note (as described below in Paragraphs 23-25),
thus entitling it to receive substantial amounts of Nevada Energy's Class A
Common Stock. After receiving the stock, Golden Chance
13 14
would sell that stock on the open market, reaping the proceeds for the Group.
However, the scheme contemplated that almost all of the money Golden Chance paid
to Nevada Energy would not be used for proper corporate purposes, instead being
improperly taken from the Company by members of the Hayton Group, principally
Jones, McCloy, Peterson and Mortlake. The net result of this scheme was that the
Hayton Group would actually pay very little money to Nevada Energy, yet be able
to keep the considerable proceeds it obtained from selling the Class A Common
Stock. Because this scheme necessarily would involve the repeated use both of
the United States mails (or private interstate or international carriers) and
interstate and international wire communications, it was reasonably foreseeable
to each defendant that the Hayton Group's scheme to defraud Nevada Energy would
be conducted through a pattern of racketeering activity including violations of
the mail fraud statute, 18 U.S.C. Sec.1341 and wire fraud statute, 18 U.S.C.
Sec.1343.
a. As part of the Hayton Group's scheme to defraud Nevada
Energy, between May and August, 1996, Mr. McCloy, on behalf of Golden Chance,
transferred a total of $1,242,381.40 from accounts controlled by Mr. McCloy's
law firm, Jones, McCloy, Peterson, to the Palm Desert Bank Account, allegedly
pursuant to the Subscription Agreement and Note. As a result of these
"payments," on or before July 22, 1996, Mr. McCloy (who was in Canada) directed
Nevada Energy's board of directors (who were in Australia and the Isle of Man),
by facsimile, to authorize the issuance of 1,242,381 shares of restricted Class
A Common Stock to Golden Chance. On July 22, 1996, the board did so, apparently
meeting via a telephone conference call, and the shares were issued on July 24,
1996. Thereafter, 14 15
Golden Chance, pursuant to the Hayton Group's scheme, sold this stock, with the
proceeds benefitting the Hayton Group.
23. The $1,242,381.40 allegedly used to purchase this stock
was deposited in the Palm Desert Bank Account from the following sources:
a. $10,000 from Maynard M. Britlan on May 17, 1996. Nevada
Energy believes that Mr. Britlan was at the time an associate of Mr. Hayton's.
b. $118,495 from Jones, McCloy, Peterson on May 24, 1996.
c. $528,302.50 from Jones, McCloy, Peterson on May 30, 1996.
d. $123,412.50 from Jones, McCloy, Peterson on June 3, 1996.
e. $108,620 from Jones, McCloy, Peterson on June 6, 1996.
f. $113,557.50 from Jones, McCloy, Peterson on June 17, 1996.
g. $49,394.76 from Jones, McCloy, Peterson on June 27, 1996
h. $88,870 from Jones, McCloy, Peterson on July 2, 1996.
i. $81,453.75 from Jones, McCloy, Peterson on July 12, 1996.
j. $20,275.39 from Jones, McCloy, Peterson on July 15, 1996.
24. Based on sworn statements by Mr. McCloy, all of this
money was sent by wire transfer from Jones, McCloy, Peterson's account at the
Canadian Imperial Bank of Commerce, Commerce Place, Vancouver, British Columbia,
Canada to the Palm Desert Bank Account.
25. Almost all of the money deposited in the Palm Desert Bank
Account was immediately withdrawn from that account (frequently the same day
that it was 15 16
deposited), at either Mr. Hayton's or Mr. McCloy's direction (using either the
telephone or the mail). Specifically, at least the following money, totaling
over one million dollars, was diverted improperly from the Palm Desert Bank
Account in the following manner:
a. May 2, 1996--$50,000 to Jones, McCloy,
Peterson; check number 81;
b. May 2, 1996--$10,000 to Jones, McCloy,
Peterson; check number 82;
c. May 10, 1996--$2,000 to Mortlake; check
number 1006;
d. May 17, 1996--$3,000 to Mortlake; check
number 1014;
e. May 21, 1996--$1,500 to Mortlake; check
number 1016;
f. May 24, 1996--$103,000 to Mortlake; check
number 1021;
g. May 30, 1996--$250,000 to Jones, McCloy,
Peterson; check number 1041;
h. May 30, 1996--$177,000 to Mortlake; check
number 1043;
i. June 3, 1996--$5000 to Kevin Quinn; check
number 1050;
j. June 3, 1996--$50,000 to George O.
Rebensdorf; check number 1051. Nevada Energy
believes that Mr. Rebensdorf is an associate
of Mr. Hayton;
k. June 3, 1996--$10,000 to cash, which
plaintiff believes was taken by Mr. Hayton;
check number 1052;
16 17
l. June 6, 1996--$45,000 to Dean Chamberlain,
to pay a debt of Telecom (AE) Limited and/or
Wina Associates, companies controlled by Mr.
Hayton; check number 1053;
m. June 6, 1996--$50,000 to cash, which
plaintiff believes was taken by Mr. Hayton;
check number 1055;
n. June 17, 1996--$60,000 to Jones, McCloy,
Peterson by wire transfer;
o. June 21, 1996--$25,000 to Pillsbury, Madison
& Sutro to pay an existing debt owed either
by Mr. Hayton personally or by one of his
companies; check number 1068;
p. June 25, 1996--$15,000 to Jones, McCloy,
Peterson by wire transfer;
q. June 26, 1996--$10,000 to Mortlake; check
number 1070;
r. July 1, 1996--$10,000 to Mortlake; check
number 1074;
s. July 2, 1996--$10,000 to Mortlake; check
number 1077;
t. July 3, 1996--$75,000 to Jones, McCloy,
Peterson by wire transfer;
u. July 3, 1996--$10,000 to Mortlake; check
number 1081;
v. July 12, 1996--$40,000 to Mortlake; check
number 1084;
w. July 16, 1996--$10,000 to Mortlake; check
number 1087.
17 18
26. None of this money withdrawn from the Palm Desert Bank
Account was used for proper Nevada Energy purposes but was instead paid,
directly or indirectly, to the Hayton Group.
27. In furtherance of the Hayton Group's scheme to defraud
Nevada Energy, all of the checks set forth in Paragraph 26 a-w were mailed from
Palm Desert California, by the United States mail, the same day as or shortly
after they were dated, to the payees in the United States and Canada. The wire
transfers were sent from the Palm Desert Bank Account to Jones, McCloy,
Peterson's account in Canada on the dates set forth above.
28. This money was obtained from Nevada Energy as part of and
in furtherance of a scheme and artifice to defraud in violation of the mail
fraud statute, 18 U.S.C. Sec.1341 and the wire fraud statute, 18 U.S.C.Sec.1343.
29. The Hayton Group's scheme to defraud Nevada Energy was not
yet completed, however, on October 31, 1996, the board of directors of Nevada
Energy (then consisting of Messrs. Cain and Cannell and Stefan Tevis, who had
replaced Mr. Goold), at the direction of Mr. Hayton and Mr. McCloy (using either
or both the telephone and the mail), voted to amend the Subscription Agreement
to allow Golden Chance to receive immediately the remaining Class A Common Stock
it would have been entitled to receive had it paid the remaining amounts due
under the Note in cash. Through this amendment, however, Golden Chance was
required to pay none of that amount in cash, instead being permitted only to
sign a demand note. However, the Hayton Group (pursuant to its scheme) prevented
such a note from being signed, and Nevada Energy received no further money from
18 19
Golden Chance. Nevertheless, pursuant to the Hayton Group's scheme, Golden
Chance received the following unrestricted Class A Common Stock:
a. 1,061,729 shares on October 1, 1996
b. 2,543,734 shares on November 6, 1996.
30. This stock was sent by mail to Mr. McCloy who, pursuant to
the Hayton Group's scheme, thereafter directed that it be sold to third-party
investors at a substantial profit for the Hayton Group. In furtherance of the
Hayton Group's scheme, Mr. Hayton and Mr. McCloy refused to permit Nevada Energy
to sue Golden Chance for failing to pay for this stock.
31. In addition, following a 1-for-6 reverse split of the
shares of Nevada Energy's Class A Common Stock that apparently occurred
effective January 30, 1997, Mr. Hayton and Mr. McCloy, acting pursuant to the
Hayton Group's scheme, instructed the Nevada Energy board to issue the following
post-split shares to the following persons or entities:
a. 220,000 shares (or 1,320,000 pre-split) on
February 3, 1997 to Jones McCloy Peterson to
pay for attorneys' fees incurred by Golden
Chance;
b. 100,000 shares (or 600,000 pre-split) on
February 3, 1997 to the law firm of
Wilson, Elser, Moskowitz, Edelman &
Dicker for legal work done of behalf of
either Mr. Hayton or a company controlled
by Mr. Hayton;
19 20
c. 300,000 shares (or 1,800,000 pre-split) on
February 3, 1997 to Mortlake;
d. 300,000 shares (or 1,800,000 pre-split) on
February 11, 1997 to Pacific International
Securities for the benefit of Golden Chance;
e. 50,000 shares (or 300,000 pre-split) on
February 18, 1997 to Pacific Rim Capital, a
company owned and controlled by Mr. Hayton;
f. 100,000 shares (or 600,000 pre-split) on
February 18, 1997 to The Hartcourt
February 18, 1997 to The Hartcourt
Companies, another company owned and
controlled by Mr. Hayton;
32. Nevada Energy received no consideration for the issuance
of any of this stock.
33. This stock was obtained from Nevada Energy as part of and
in furtherance of a scheme and artifice to defraud in violation of the mail
fraud statute, 18 U.S.C. Sec.1341, and the wire fraud statute, 18 U.S.C.
Sec.1343. |
