FINAL JUDGMENT OF PERMANENT INJUNCTION ENTERED AGAINST WORLD HOMES, INC.,
MERLE FERGUSON AND SUSAN DONOHUE
On January 14, the Honorable Phillip M. Pro issued final judgments of
permanent injunction against World Homes, Inc., currently known as
Composite Industries of America, Inc., and Merle Ferguson, its President
and Chief Executive Officer, enjoining them from future violations of
the securities registration and antifraud provisions of the federal
securities laws. In addition, Susan Donohue, the company's Secretary-
Treasurer, was enjoined from future violations of the securities
registration provisions. The defendants consented to the orders without
admitting or denying the Commission's allegations. Ferguson was also
ordered to pay a civil money penalty in the amount of $120,000.
The complaint alleges that from approximately January 2000 through
February 2001, World Homes, through Ferguson, distributed several false
and misleading press releases misrepresenting, among other things, the
following material facts: 1) that World Homes operated and maintained a
production facility for its cement product; 2) that World Homes had
obtained financing loans of fifteen million dollars; and 3) that World
Homes had generated over $480 million in contracted business. These
false press releases resulted in an increase in the price of World
Homes= common stock and an increase in the volume of shares traded on
the OTC Bulletin Board. In doing so, the complaint alleges World Homes
and Ferguson violated Section 17(a) of the Securities Act of 1933 and
Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5
thereunder.
In addition, it is alleged that from on or about July 16, 1999, through
on or about February 20, 2001, World Homes made nine filings with the
Commission on Form S-8, registering 4,892,977 of its shares with a
stated maximum value of $3,777,313. It is further alleged that many of
these shares were issued to Ferguson and Donahue, or entities controlled
by them. Ferguson and Donahue sold these shares into the market and
remitted most of the proceeds to World Homes, which used the funds to
finance the issuer's operations. The complaint alleges this conduct by
World Homes, Ferguson and Donahue violated Section 5 of the Securities
Act. [SEC v. World Homes, Inc. et al., Civil Action No. CV-S-01-0658-PMP
(LRL), USDC D.Nev.] (LR-17328) |
