February 16, 2001 SEC moves against LV tech executive
By Richard N. Velotta
<velotta@lasvegassun.com>
LAS VEGAS SUNA Securities and Exchange Commission order has been issued against the former chief executive officer of a Las Vegas Internet software firm that once was one of the showcases of Southern Nevada's bid to become the "Silicon Oasis."The Securities and Exchange Commission on Wednesday issued the order against Michael A. Calderone, the former top executive of Preference Technologies Inc., which formerly operated as StockUp.com.An SEC official said today there was no fine or other sanctions against Calderone.Nancy Grunberg, an assistant director in the SEC's Division of Enforcement, said she could not comment on how the matter involving Calderone came to the agency's attention.While heading StockUp, Calderone, 40, Las Vegas, also was the president and sole shareholder of Marketing Direct Concepts Inc., which the SEC said violated federal securities rules by failing to disclose it received compensation for "advertorials" it produced promoting other public companies.The SEC has accepted a settlement offer from Calderone in which he does not admit or deny the accusations in exchange for acknowledging the cease-and-desist order.Calderone has an unpublished phone number and could not be reached for comment.His attorney, Irving Einhorn, Los Angeles, said Calderone "had a terrific idea that didn't work out for him.""He's not in a position to say anything because of the terms of the settlement," Einhorn said today. "It was one violation that happened some time ago and the fact there was no penalty, no finances disgorged, I think, speaks volumes."According to an SEC filing, Marketing Direct Concepts (MDC) produced a series of "advertorials" -- paid advertisements resembling news stories -- for inflight magazines.The advertorials, promoting Texas American Group Inc., Diversifax Inc., Chadmoore Wireless Group Inc. and Total World Telecommunications Inc., were published in late 1996 and early 1997 and "were deficient because they failed to disclose the specific fact of and the amount of compensation received for their preparation and publication," the SEC order says.The SEC filing focused on an ad for Texas American Group, which paid MDC $135,000 and 1.4 million shares of unregistered common stock.The Texas American advertorial, published in July 1996, "contained false claims concerning TAG's purported assets, including a claim that TAG had acquired the second largest independent retailer in the United Kingdom and that TAG had 'close to half a billion dollars in revenue,' " the SEC said.The SEC filed suit against Texas American in August, seeking a permanent injunction against future violations of federal securities laws and civil penalties. The suit alleges that the company, which lists its headquarters in Verdi, was involved in a fraudulent scheme to promote its stock.Among the assets the company falsely claimed it had, the SEC said, were a vacation resort in the Canary Islands, a software program for Internet lottery and casino games designed for multilingual access, a Nevada-based hotel development and management company and a London pathology testing service.Calderone, who formed StockUp.com as an Internet-based financial information service, oversaw its transformation a year ago to Preference Technologies Inc., a multifaceted Internet information provider.The transition was marked by an event attended by Lt. Gov. Lorraine Hunt, Las Vegas Mayor Oscar Goodman, Las Vegas Chamber of Commerce Board Chairman Bob Forbuss and Nevada Development Authority President Sommer Hollingsworth. It was at that event that Hollingsworth said companies like Preference could lead to the development of the "Silicon Oasis" in Southern Nevada.But since then, Preference's fortunes have nose-dived.Calderone was replaced by Forbuss as chief executive officer in October and in November, the company's board of directors laid off 80 of the company's 113 employees. Since then, President and Chief Operating Officer Bill Louden has left the company and Forbuss, still a member of the board of directors, said the chairman of the board is now Todd Rusteman, president of GR Capital Cos.Rusteman, who maintains an office in Newport Beach, Calif., could not be reached for comment about the status of the company and employees at the Las Vegas office did not answer questions
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