SEC Suit Accuses World Homes of Fraud
By WALTER HAMILTON, Times Staff Writer
(notice that adnan is in geni also, another scam company)
The Securities and Exchange Commission has filed a lawsuit alleging securities fraud against World Homes Inc., a Las Vegas-based firm at which the son of U.S. Health and Human Services Secretary Tommy G. Thompson briefly worked as chief financial officer this year.
The federal court case filed Friday alleges that World Homes and two executives, Merle Ferguson and Susan Donohue, issued a series of "false" news releases that misrepresented the firm's prospects.
World's shares plunged 40% to 65 cents on the OTC Bulletin Board on Wednesday, after the company issued a statement saying it is cooperating with the SEC and has instituted policies to "guarantee complete compliance" with the law.
World, which says it develops home-building techniques and has a patented earthquake-proof construction material, announced the hiring of Jason Thompson on March 6.
On May 30 the firm said Thompson had resigned. He wasn't named in the SEC suit.
Thompson left the firm for personal reasons, said Ferguson, World's chief executive, in an interview Wednesday. Thompson could not be reached for comment.
The SEC suit claims that between January 2000 and Feb. 6, 2001, World issued several misleading news releases that it never corrected despite being contacted by the SEC on March 30, 2001.
In the Feb. 6 release, the firm said it expected to earn "gross profit" of $30 million on sales of $480 million in its fiscal year beginning July 1. The company said it based its numbers on "recent contracts and letters of intent."
The firm's shares climbed 240% in the week after the news release, reaching $1.94 on Feb. 13.
The suit claimed that several of the supposed contracts did not exist, and that there was no basis for the forecast.
For example, World said on Aug. 15 that it had a deal with Al Nasr Trading & Industrial Corp., of which former Saudi Arabian arms dealer Adnan Khashoggi is a director. But the release did not disclose that the deal would expire in six months if World did not secure a $7-million private placement, the suit said.
"If you're going to make [projections] of future earnings, they've got to be based on something realistic," said Robert Hunt, an SEC attorney. "The projections were not based on fact."
Just say NO to stock fraud! |
