SEC ORDERS THREE COMPANIES TO CEASE MAKING FALSE ANTI-TERRORISM CLAIMS
The Securities and Exchange Commission announced today that it has
ordered three publicly-traded companies to cease committing fraud in
connection with their issuance of false press releases that sought to
exploit the public's anxiety over bio terrorism.
In each case, the company consented to the order without admitting or
denying the Commission's findings. The Commission found that two
companies, Disease Sciences, Inc., of Boca Raton, Florida, and The
Classica Group, Inc., of Lakewood, New Jersey, each had misrepresented
that they had technologies capable of killing anthrax in mail and
packages. In fact, neither company had a technology that had been
tested or otherwise shown to be effective or economical for that
purpose.
The Commission further found that a third company, R-Tec Technologies,
Inc., of Flanders, New Jersey, had falsely claimed that it had
"developed and patented" a "Chemical and Biological Alarm and
Neutralization Defense system," or "C-BAND," which the company described
as the "first mechanically operated system designed to protect civilians
in every day life from biological and chemical terrorism attacks."
The Commission found, among other things, that R-Tec Technologies has
not currently developed such a system, holds no patent on the C-BAND,
and no prototype of the C-BAND has ever been tested.
"The conduct that led to these enforcement actions is reprehensible,"
said SEC Enforcement Division Director, Stephen M. Cutler. "Any effort
to profit by spreading false information that plays on people's fear is
unconscionable. Today's enforcement actions make clear that the
Commission will act in `real-time' to sanction such conduct."
The Commission's Orders found that:
On October 16 and 17, 2001, Disease Sciences issued press releases
concerning a purported remedy - High Pressure Pulse processing - for
anthrax contamination of food, water and mail. Disease Sciences' press
releases, however, omitted to state that High Pressure Pulse had not
been tested for, or shown to be practical or economical for the uses
suggested in the Disease Sciences October 16 press release; and that
Disease Sciences did not yet have a license to use High Pressure Pulse
for any of the uses suggested in the October 16 press release.
On October 11 and 12, 2001, Classica Group issued press releases
concerning the use of microwave technology to kill anthrax in packages
and mail. The Classica Group press releases omitted to state that its
microwave technology had not been tested for or shown to be practical,
economical, or effective for killing anthrax in packages or in mail.
On September 24, 2001, R-Tec Technologies issued a press release that
claimed that it had "developed and patented" a "Chemical and Biological
Alarm and Neutralization Defense system," or "C-BAND," which the company
described as the "first mechanically operated system designed to protect
civilians in every day life from biological and chemical terrorism
attacks." The true facts were otherwise. For example, as R-Tec
Technologies acknowledged in a November 7, 2001 press release: (i) a
prototype of C-BAND has never been tested; (ii) R-Tec Technologies does
not have any immediate plans for the production of C-BAND, and does not
know if the system will ever be commercially available; (iii) R-Tec
Technologies did not create any of the technologies it proposes to use
in C-BAND; and (iv) R-Tec Technologies does not hold any patent for C-
BAND.
The Orders issued today by the Commission order respondents to cease and
desist from committing or causing any violation and any future violation
of Section 10(b) of the Securities Exchange Act of 1934 (Exchange Act),
and Rule 10b-5 promulgated under the Exchange Act.
For further information, contact Linda Chatman Thomsen at (202) 942-4501
concerning Disease Sciences and Classica Group and Barry W. Rashkover at
(646) 428-1856 concerning R-Tec Technologies. (Press Rel. 2001-136)
sec.gov |
