Wasatch Pharmaceutical makes the news->Department of Corporations Leads First Boiler Room Task Force Sweep; `Operation Tough Call' Comes Knocking with Warnings, Orders, Arrests
LOS ANGELES--(BUSINESS WIRE)--Jan. 8, 2001--The Department of Corporations today announced the successful conclusion of the first sweep of Southern California telemarketing operations by "Operation Tough Call," a multi-agency task force set up to attack illegal and fraudulent telemarketing operations, usually referred to as "boiler rooms." This action was taken pursuant to a 1999 federal grant awarded to the Department of Corporations by the U.S. Department of Justice.
The targeted companies were offering stock, partnership interests and other investment opportunities in firms marketing electronic components, movie deals, auction websites, computer hardware and software, Internet products and services, auto accessories, medical devices, infomercials, travel services, e-commerce services and others. The offerings were seeking in excess of $200 million in investor funds.
From October to December of this year, teams of investigators from the Department of Corporations, Federal Bureau of Investigation (FBI), Federal Trade Commission (FTC), Commodity Futures Trading Commission (CFTC), San Diego Boiler Room Task Force, County of Orange Boiler Room Apprehension (COBRA) Task Force, postal inspectors and local law enforcement agencies fanned out throughout Los Angeles, Orange and San Diego counties issuing warning letters and serving subpoenas, orders and arrest warrants to active boiler room targets that the department has identified as potentially selling investments illegally and/or fraudulently.
The department cautioned that while many legitimate companies use telemarketing to sell their products or services, investors should be wary of investment products sold online or by strangers "cold calling" them. Since it is difficult to verify the value or validity of offerings made in that manner, many such offerings may be highly risky and subject to abuse. When the financial future of investors is at stake, they should deal with financial professionals with whom they have an established relationship of trust. Investors should investigate all offerings before investing. The Department of Corporations can offer useful information to investors on whether the financial professionals are registered or have any enforcement actions against them. Investors may click on these links for "Financial Safety Tips" and tips on how to "Investigate Before You Invest," from the department's web site.
In the sweep, the task force issued 92 Desist and Refrain Orders to 20 entities and 30 individuals in California, Florida, Nevada and Utah for the illegal and/or fraudulent offer and sale of securities and/or for acting as an unlicensed broker-dealer. To date, the project has also filed two civil actions against six entities and five individuals, served four search warrants, arrested one person and indicted five others for violations that include securities fraud, grand theft, selling securities illegally and acting as a securities broker-dealer without a license.
The teams also issued 20 subpoenas for investor lists, offering materials, sales scripts, financial records, advertising and telephone records to 20 entities and 26 individuals and paid "Knock-and-Notice" visits to 74 companies warning them that they might be violating the state securities laws and seeking their voluntary cooperation in the investigations.
The department noted that this was just phase one of a two-year project that has the goal of attacking illegal and fraudulent telemarketing operations in Southern California with all of the administrative, civil and criminal remedies available to local and state law enforcement and regulatory agencies in the area. A grant from the Bureau of Justice Assistance of the U.S. Department of Justice has funded a command center, project coordinator, databases to track targets of investigations, and outreach efforts to educate investors about how boiler rooms target seniors and other communities and what steps they can take to become "fraud fighters" instead of fraud victims. In fact, many of the leads for the current sweep were obtained through the cooperation of fraud fighter volunteers across the country posing as potential investors.
Follow-up in the weeks and months ahead will include analyzing the documents seized in the raids and provided voluntarily, issuing additional subpoenas, search warrants and orders and bringing civil and criminal actions. The grant project is expected to provide a model for other parts of the country in which illegal telemarketing activity is a serious problem.
The Department of Corporations is a licensing and regulatory agency reporting to Business, Transportation and Housing Agency Secretary Maria Contreras-Sweet and Governor Gray Davis. The department is responsible for the regulation of securities, franchises, off-exchange commodities, investment and financial services, independent escrows, consumer and commercial finance lending and residential mortgage lending. Additional information, or a complaint form, can be obtained from the Department of Corporations' website at www.corp.ca.gov.
Attached is a fact sheet containing a list of the companies and individuals which were the subjects of the sweep and statistics on the non-public investigative actions.
Operation Tough Call Phase One Fact Sheet
Summary: Knock-and-Notice visits to 74 potential boiler room targets in Los Angeles, Orange and San Diego counties, issuance of subpoenas to 20 entities and 26 individuals and issuance of 92 Desist and Refrain Orders for the illegal and fraudulent offer and sale of securities and/or for acting as unlicensed broker-dealers to 30 individuals and 20 entities in California, Utah, Florida and Nevada. To date, the project has also brought two civil actions against six entities and five individuals and criminal actions including four search warrants, one arrest, five indictments and one conviction to date. Total amount of offerings involved is over $200 million.
Desist and Refrain Orders Issued
Summary: Issuance of 92 Desist and Refrain Orders for the illegal and fraudulent offer and sale of securities and/or for acting as unlicensed broker-dealers to 30 individuals and 20 entities. Total amount of the offerings involved was at least $43 million.
1. Subjects: Diamondshow.com, LLC
Robert P. Norton
Douglas F. Parnell
4275 Executive Square, Suite 800
La Jolla, CA 92037
Type of Security: Membership interests in a limited liability
company (LLC)
Type of Business: Website for diamond auctions
Amount raised: To be raised $1,000,000; $300,000 raised --
see #2-#5
Violations: Illegal and fraudulent offer and sale of
securities
Action taken: Desist and Refrain Orders issued --
November 6, 2000
2. Subjects: World Wide Financial Group
Roger Angelo
Allen Andrescu
Mitch Leitner
3800 S. Ocean Drive, Suite 210
Hollywood, FL 33019
Type of Security: Membership interests in LLC
Type of Business: Telemarketer for Diamondshow.com
Amount raised: $300,000 - see #1
Violations: Illegal and fraudulent offer and sale of
securities; unlicensed broker-dealer activity
Action taken: Desist and Refrain Orders issued --
November 6, 2000
3. Subjects: CGB Financial, Inc.
William P. Cullen
22817 Ventura Blvd. #322
Woodland Hills, CA 91364
Type of Security: Membership interests in LLC
Type of Business: Telemarketer for Diamondshow.com
Amount raised: $300,000 - see #1
Violations: Illegal and fraudulent offer and sale of
securities; unlicensed broker-dealer activity
Action taken: Desist and Refrain Orders issued --
November 6, 2000
4. Subjects: American Business Center
Douglas F. Parnell
4275 Executive Square, Suite 800
La Jolla, CA 92037
Type of Security: Membership interests in LLC
Type of Business Telemarketer for Diamondshow.com
Amount raised: $300,000 - see #1
Violations: Illegal offer and sale of securities;
unlicensed broker-dealer activity
Action taken: Desist and Refrain Orders issued --
November 6, 2000
5. Subjects: Investment Partners de Mexico, Inc.
Richard Jenkins
4803 South Mojave Road
Las Vegas, NV 89121
Type of Security: Membership interests in LLC
Type of Business: Telemarketer for Diamondshow.com
Amount raised: $300,000 - see #1
Violations: Unlicensed broker-dealer activity
Action taken: Desist and Refrain Order issued --
November 6, 2000
6. Subjects: Aqcess Technologies, Inc.
Jon-Erik Prichard
Thomas R. Sanford
Kain K. Johnson
3611 S. Harbor Blvd., Suite 105
Costa Mesa, CA 92704
Type of Security: Common stock
Type of Business: Developer of hand-held computer
Amount raised: $25,000,000 - see #7
Violations: Illegal and fraudulent offer and sale of
securities
Action taken: Desist and Refrain Orders issued --
November 16, 2000
7. Subjects: Golden Global Pacific, Inc. aka
Golden Global Pacific Financial
Thomas R. Sanford
Kain K. Johnson
1150 Main Street, #E
Irvine, CA 92614
Type of Security: Common stock
Type of Business: Telemarketer for Aqcess Technologies, Inc.
Amount raised: $25,000,000 - see #6
Violations: Illegal and fraudulent offer and sale of
securities; unlicensed broker-dealer activity
Action taken: Desist and Refrain Orders issued --
November 16, 2000
8. Subjects: Edge Business Services
Windows to the World
Wealth Financial Group
Wayne K. Richardson
Anthony Avalon
Gary Lowenthal
8383 Wilshire Blvd. Suite 1024
Beverly Hills, CA 90211
Type of Security: Corporate Promissory Notes
Type of Business: Venture Capital Funding Business
To be raised: Unknown
Violations: Illegal and fraudulent offer and sale of
securities
Action Taken: Desist and Refrain Orders issued --
June 9, 2000
9. Subjects: Taramar Venture Capital, LLC
NC Software, LLC aka Kidsnet Connect, LLC
Marvin Butler
939 S. Sepulveda Blvd., Suite 261
Los Angeles, CA 90049
Type of Security: Membership in LLC
Type of Business: Educational website
To be raised: Approx. $6.9 million
Violations: Illegal and fraudulent offer and sale of
securities
Action taken: Desist and Refrain Orders issued on
October 19, 2000.
Additionally, Marvin Butler was indicted in
late 1999 by U.S. Attorney charged with
mail fraud and money laundering related to
a prior securities case in 1994-1995. Trial
is pending.
10. Subjects: Modern Marketing Company, Inc.
Diversified Marketing Concepts, LLC
Magna Advisors, Inc.
Modoc Trading Corporation
Wall Street West, Inc.
Dan Scheuer
Paula Belluomini
2865 Mendoza
Costa Mesa, CA 92626
Type of Security: Stock
Type of Business: Manufacturer of coffee brewing devices
To be raised: $128,250
Violations: Fraudulent offer and sale of securities
Action taken: Desist and Refrain Order issued --
October 20, 2000
11. Subjects: ICON Trading, Inc.
Raece B. Richardson
Victor Morris
Phil D'Auria
9003 Reseda Blvd.
Northridge, CA 91324
and
622 Airport Road
Oceanside, CA 92054
Type of Security: Stock
Type of Business: Sportswear manufacturer in surf, snow and
skating business
Amount raised: $3,000,000
Violations: Illegal and fraudulent offer and sale of
securities
Action taken: Desist and Refrain Orders issued --
July 19, 2000
12. Subjects: Wasatch Pharmaceutical, Inc.
David K. Giles
Gary Heesch
714 East 7200 South
Midvale, UT 84047
Type of Security: Common stock
Type of Business: Pharmaceutical company
Amount raised: $500,000 +
To be raised: Unknown
Violation: Illegal offer and sale of securities
Action taken: Desist and Refrain Orders issued --
December 7, 2000
13. Subjects: Aslo Taylor
Rob Heller
Mark Kanusher
Socrates Scatolini
Sean Teamor
Daryl Ragsdale
Provision Capital Funding
2801 Camino del Rio South, Suite 200
San Diego, CA 92108
Type of Securities: Common stock
Type of Business: Sales organization for many issuers
Amount raised: $5 million +
Violations: Illegal offer and sale of securities;
unlicensed broker-dealer activity
Action taken: Desist and Refrain Order for illegal offer
and sale of securities issued on
December 17, 2000 to Provision Capital
Funding, Heller, Taylor, and Scatolini and
Desist and Refrain Order for unlicensed
broker-dealer activity issued on
December 7, 2000, to Provision Capital
Funding, Heller, Teamor, Ragsdale, Kanusher,
and Scatolini.
Knock-and-Notice Visits
The Operation Tough Call Task Force commenced its Knock-and-Notice
visits during October 2000 and concluded them in mid-December. The
task force visited or notified 74 companies that appeared to be
engaged in boiler room activities that they may be in violation of the
Corporate Securities Law. These Knock-and-Notice visits have involved
a number of other members of the Operation Tough Call Task Force,
including the Federal Bureau of Investigation (FBI), Federal Trade
Commission (FTC), Commodities Future Trading Commission (CFTC), County
of Orange Boiler Room Apprehension (COBRA) Task Force, San Diego
Boiler Room Task Force, postal inspectors and local law enforcement
agencies. Of the 74 companies visited, the task force has information
that 17 of the offerings involved a total offering amount of
$74,400,000. Since the Knock-and-Notice visits did not involve public
actions, the subjects of the visits are confidential.
Subpoena Duces Tecum
The task force issued subpoenas for books and records and
testimony to 20 companies and 26 individuals involved in offering at
least $40,278,000 of offerings of securities to the public. Since
subpoenas are an investigative tool and not a public action, the
subjects of the subpoenas are confidential.
Civil Actions
To date, the project has brought two civil actions against six
entities and five individuals in offerings of at least $3 million in
securities.
1. Subjects: Telephonic Yellow Pages, Inc.
Telephonic Yellow Pages, Inc., a California Corporation
Telephonic Yellow Pages, Inc., a Delaware Corporation
Telephonic Yellow Pages of Los Angeles, Ltd.
Telephonic Yellow Pages of California, Ltd.
James Irvin Young, III
Robert D. Stewart
Tammy Garrett-Young
Dan Sanford Webb
6492 South Street, Suite 235
Lakewood, CA 90713
Type of Security: Limited partnership interests; stock; stock
options; notes
Type of Business: Telephonic yellow pages service
Amount raised: $2.2 million
Violations: Illegal and fraudulent offer and sale of
securities; false filings with the Department
of Corporations; violation of Desist and
Refrain Order
Action taken: On May 12, 2000, a criminal indictment was
filed against James Irvin Young, III,
Robert D. Stewart, Tammy Garrett-Young and
Dan Sanford Webb for the illegal and
fraudulent offer and sale of securities and
grand theft. In the civil case, a Permanent
Injunction was issued on December 16, 1999,
against defendant Webb. Permanent Injunctions
were issued against the company and remaining
defendants on May 3, 2000. Broker-dealer and
investment adviser bars have been taken
against all individual defendants.
2. Subjects: Global Internet Gaming, Inc.
Clark Shattuck
14020 Captain's Row, Suite 304
Marina del Rey, CA 90292
Type of Security: Common stock
Type of Business: Developer of internet casino
Amount raised: $950,000
Violations: Illegal and fraudulent offer and sale of
securities; violation of Desist and Refrain
Order
Action taken: Civil complaint filed on December 13, 2000,
seeking injunction and other relief.
Criminal
The task force participants have convicted one individual,
indicted five individuals, arrested one individual and executed
multiple search warrants against individuals and entities. Many of
these actions are not yet public. Securities offerings of at least $53
million are involved in the cases.
1. Subjects: Telephonic Yellow Pages, Inc.
Telephonic Yellow Pages, Inc., a California Corporation
Telephonic Yellow Pages, Inc., a Delaware Corporation
Telephonic Yellow Pages of Los Angeles, Ltd.
Telephonic Yellow Pages of California, Ltd.
James Irvin Young, III
Robert D. Stewart
Tammy Garrett-Young
Dan Sanford Webb
6492 South Street, Suite 235
Lakewood, CA 90713
Type of Security: Limited partnership interests; stock; stock
options; notes
Type of Business: Telephonic yellow pages service
Amount raised: $2.2 million
Violations: Illegal and fraudulent offer and sale of
securities; false filings with the Department
of Corporations; violation of Desist and
Refrain Order
Action taken: On May 12, 2000, a criminal indictment was
filed against James Irvin Young, III,
Robert D. Stewart, Tammy Garrett-Young and
Dan Sanford Webb for the illegal and
fraudulent offer and sale of securities and
grand theft. In the civil case, a Permanent
Injunction was issued on December 16, 1999,
against defendant Webb. Permanent Injunctions
were issued against the company and remaining
defendants on May 3, 2000. Broker-dealer and
investment adviser bars have been taken
against all individual defendants.
2. Subjects: Big Picture Entertainment Group, Inc.
American Media Releasing, Inc.
Internet Entertainment Partners, LLC
David Urbas
Joseph Nittolo
Richard F. Lee
14900 Ventura Blvd., Suite 310
Sherman Oaks, CA 91403
Type of Security: Stock
Type of Business: Telemarketer and production company to make
movies and fund an internet entertainment site
To be raised: $7,800,000
Violations: Illegal and fraudulent offer and sale of
securities; false filings with the Department
of Corporations; violation of Desist and
Refrain Order
Action taken: Broker Richard F. Lee convicted.
3. Subjects: Taramar Venture Capital, LLC
NC Software, LLC aka Kidsnet Connect, LLC
Marvin Butler
939 S. Sepulveda Blvd., Suite 261
Los Angeles, CA 90049
Type of Security: Limited liability membership interests
Type of Business: Educational website
To be raised: Approx. $6.9 million
Violations: Illegal and fraudulent offer and sale of
securities
Action taken: Desist and Refrain Orders issued on 10/19/00.
Additionally, Marvin Butler was indicted in
late 1999 by U.S. Attorney charged with
mail fraud and money laundering related to
a prior securities case in 1994-1995. Trial
is pending.
CONTACT:
California Department of Corporations
G. W. McDonald, 213/576-7615
Julie Stewart, 916/323-7120
KEYWORD: CALIFORNIA
BW0531 JAN 08,2001
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