SECURITIES AND EXCHANGE COMMISSION vs KEVIN JAMES QUINN
UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
________________________________________________
SECURITIES AND EXCHANGE COMMISSION, )
450 Fifth Street, N.W. )
Washington, D.C. 20549-0911 )
)
Plaintiff, )
) 05 Civ.__________
v. )
)
KEVIN JAMES QUINN, )
)
Defendant. )
________________________________________________)
COMPLAINT
Plaintiff, Securities and Exchange Commission (“Commission”), alleges as
follows:
PRELIMINARY STATEMENT
1. This case involves defendant Kevin James Quinn’s continued violations of
two orders issued by the Securities and Exchange Commission, which: (1) permanently
suspended Quinn from appearing or practicing before the Commission, and (2) barred
Quinn from participating in an offering of penny stock. On September 14, 1999, the
Commission issued an Order suspending Quinn from appearing or practicing before the
Commission pursuant to Rule 102(e)(2) of its Rules of Practice. The Order was based
upon the Commission’s findings that Quinn, an attorney admitted to the practice of law
in California in 1969, had been suspended in 1993 and disbarred in 1997. On February
3, 2000, the Commission issued an Order barring Quinn from participating in an offering
of penny stock. The Order was based upon the Commission’s finding that it was in the
public interest that Quinn be barred from participating in an offering of penny stock
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because Quinn had been permanently enjoined from future violations of Sections 5(a),
5(c), and 17(a) of the Securities Act of 1933 (“Securities Act”), Section 10(b) of the
Securities Exchange Act of 1934 (“Exchange Act”), and Rule 10b-5 thereunder by the
United States District Court for the Central District of California, based upon his
fraudulent participation in a prior penny stock offering.
2. From approximately August 2004 to February 2005, Quinn appeared
and/or practiced before the Commission and participated in a penny stock offerings by
drafting securities filings and filing them with the Commission, and acting as agent,
consultant and counsel for PHC Holdings (“PHC”), a Nevada corporation with its
principal place of business in Florida, which was engaged in a penny stock offering. He
also drafted and filed securities filings with the Commission on behalf of Bluetorch, Inc.
and Cytation Corporation.
3. Unless Defendant is enjoined by this Court, Defendant will continue to
engage in the acts and practices alleged herein.
4. By this action, the Commission seeks: (a) a preliminary injunction
enjoining Quinn from violating the Commission Orders and Section 15(b)(6)(B)(i) of the
Exchange Act; (b) permanent injunctive relief to enjoin Quinn from continuing violations
of the Commission Orders and Section 15(b)(6)(B)(i) of the Exchange Act; (c) an order
commanding future compliance with the Commission orders; (d) disgorgement of all illgotten
gains based upon the conduct alleged herein, together with prejudgment interest;
(e) civil fines and/or penalties; and (f) such further relief as the Court deems appropriate.
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JURISDICTION AND VENUE
5. The Court has jurisdiction of this action pursuant to Sections 21(d), 21(e)
and 27 of the Exchange Act, 15 U.S.C. §§ 78u(d), 78u(e), and 78aa.
6. The Commission Orders that suspended Quinn from appearing or
practicing before the Commission and barred him from participating in a penny stock
offering were issued in the District of Columbia. Moreover, Quinn has drafted and
prepared securities filings and filed them with the Commission in the District of
Columbia.
DEFENDANT
7. Defendant Kevin James Quinn, 62, a disbarred California attorney, resides
in Santa Monica, California, and has represented himself as counsel, agent and consultant
for PHC Holdings (“PHC”), a corporation engaged in a penny stock offering.
FACTS
I. Defendant’s Disciplinary and Regulatory Background
8. Quinn was an attorney admitted to the practice of law in California in
1969. In 1993 he was suspended from the practice of law and he was disbarred in 1997.
9. On September 14, 1999, the Commission filed an injunctive action in
federal district court against Quinn for violating anti-fraud and registration provisions of
the federal securities laws, and simultaneously entered an Order suspending him from
appearing or practicing before the Commission pursuant to Rule 102(e)(2) of its Rules of
Practice. Commission Order of Suspension Pursuant to Rule 102(e)(2), dated September
14, 1999, In the Matter of Kevin James Quinn, Respondent, A.P. File No. 3-10013,
(“102(e) Order”). The 102(e) Order was based upon the Commission’s findings that
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Quinn, a former attorney admitted to the practice of law in California in 1969, had been
suspended in 1993 and disbarred in 1997. Quinn’s address contained in the 102(e) Order
was listed as 122 Ocean Park Blvd. #411, Santa Monica, California.
10. On January 24, 2000, the Commission obtained a permanent injunction
against Quinn for violations of Sections 5(a), 5(c), and 17(a) of the Securities Act,
Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, as well as a permanent
injunction against Quinn serving as an officer or director of a public company. Securities
and Exchange Commission v. Kevin James Quinn, Case No. 99-09325 ABC (ANx) (C.D.
Cal.). Based upon the permanent anti-fraud injunction, the Commission entered an Order
barring Quinn from participating in an offering of penny stock on February 3, 2000.
Commission Order Instituting Proceedings Pursuant to Section 15(b) of the Securities
Exchange Act of 1934, Making Findings, and Imposing Remedial Sanctions, dated
February 3, 2000, In the Matter of Kevin James Quinn, Respondent, A.P. File No. 3-
10137 (“Penny Stock Order”). The Penny Stock Order was based upon the
Commission’s finding that it was in the public interest that Quinn be barred from
participating in an offering of penny stock because Quinn had been permanently enjoined
from future violations of Sections 5(a), 5(c), and 17(a) of the Securities Act, Section
10(b) of the Exchange Act, and Rule 10b-5 thereunder by the United States District Court
for the Central District of California, based upon his fraudulent participation in a prior
penny stock offering.
II. Defendant’s Violative Activities
11. On or about December 30, 2004, Malahat Energy Corporation (“Malahat
Energy”), a publicly traded shell corporation, formally announced that it had undergone a
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name change and become PHC Holdings (“PHC”). PHC is a penny stock, trading from a
low of 4 cents per share on January 4, 2005 (its apparent first day of trading as PHC) to a
high of 67 cents per share on January 19, 2005. It traded at 13 cents per share on
February 23, 2005. PHC is quoted in the Pink Sheets as PHCD.PK. The "Pink Sheets" is
an electronic quotation system that displays quotes from broker dealers for many overthe-
counter (OTC) securities.
12. In or about December 2004, PHC took steps to become a business
development company (“BDC”) under the Investment Company Act of 1940. On or
about December 22, 2004, PHC filed an SEC Form N-54A, “Notification of Election to
be Subject to Section 55 Through 65 of the Investment Company Act of 1940 Filed
Pursuant to Section 54(a) of the Act,” to convert to a BDC. On that form, “Kevin J.
Quinn” is listed as the agent for service of process. Quinn’s address for “service and
process” is listed as PHC Holdings, Quinn & Associates, 122 Ocean Park Blvd., #411,
Santa Monica, CA 90405, telephone (310) 392-2410.
13. On or about December 23, 2004, PHC filed an SEC Form 1-E,
“Notification Under Regulation E,” which attached the offering circular for PHC’s
offering of $5 million in stock under the BDC rules, with the Commission. In that filing,
“Kevin J. Quinn” is listed as “Counsel for Issuer.” The business address given on the
cover page of PHC’s Form 1-E filing is 122 Ocean Park Blvd., Suite 411, Santa Monica,
CA 90405. In addition, Quinn’s name appears as a contact person at the bottom of four
press releases PHC issued in January and February 2005.
14. Quinn was familiar with PHC and Malahat Energy (its predecessor). He
helped effectuate the name change of Malahat Energy to PHC, and helped them become a
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business development company. Quinn provided services to PHC as “a consultant to the
company.”
15. In addition, Quinn prepared documents and sometimes filed them with the
Commission. Quinn filed SEC Forms 1-E and N-54A with the Commission on behalf of
PHC. Quinn helped draft the offering circular for PHC, which was filed with the
Commission as an exhibit to PHC’s Form N-54A. Quinn received cash as compensation
for his services as a consultant to PHC. Quinn is also the custodian of records for PHC.
16. Quinn was involved in similar consulting arrangements with respect to
several other issuers, including, but not limited to, Bluetorch, Inc. and Cytation
Corporation. He prepared securities filings and filed them with the Commission on
behalf of both Bluetorch and Cytation. For his services, Quinn received stock in
Bluetorch and cash from Cytation.
17. Quinn is, in fact, the Kevin J. Quinn disbarred from the practice of law in
California in 1997. Quinn was the subject of prior Commission actions, including the
two Commission Orders referenced above. Quinn still lives at 122 Ocean Park Blvd.,
#411, Santa Monica, California.
FIRST CLAIM FOR RELIEF
Violation of a Commission Order
18. Paragraphs 1 through 17 are realleged and incorporated herein by
reference.
19. Between on or about August 2004 and February 2005, Quinn appeared
and/or practiced before the Commission by drafting and filing securities filings on behalf
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of PHC Holdings, Bluetorch, Inc. and Cytation Corporation, which were, in fact, filed
with the Commission.
20. By reason of the foregoing, Quinn directly violated, and unless
immediately enjoined, will continue to violate the Commission Order of Suspension
Pursuant to Rule 102(e)(2), dated September 14, 1999, In the Matter of Kevin James
Quinn, Respondent, A.P. File No. 3-10013, suspending him from appearing or practicing
before the Commission pursuant to Rule 102(e)(2) of the Commission’s Rules of
Practice.
SECOND CLAIM FOR RELIEF
Violation of a Commission Order
and of Section 15(b)(6)(B)(i) of the
Exchange Act, 15 U.S.C. § 78o(6)(B)
21. Paragraphs 1 through 20 are realleged and incorporated herein by
reference.
22. Between on or about August 2004 and February 2005, Quinn participated
in a penny stock offering by acting as a consultant, agent and/or counsel for PHC
Holdings for the purpose of issuance or trading in a penny stock.
23. By reason of the foregoing, Quinn directly violated, and unless
immediately enjoined, will continue to violate the Commission Order Instituting
Proceedings Pursuant to Section 15(b) of the Securities Exchange Act of 1934, Making
Findings, and Imposing Remedial Sanctions, dated February 3, 2000, In the Matter of
Kevin James Quinn, Respondent, A.P. File No. 3-10137, which bars him from
participating in an offering of penny stock. By violating the Penny Stock Order, Quinn
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has and will continue to violate Section 15(b)(6)(B)(i) of the Exchange Act, 15 U.S.C. §
78o(6)(B).
PRAYER FOR RELIEF
WHEREFORE, the Commission respectfully requests that this Court :
1. Issue findings of fact and conclusions of law that Quinn violated the
Commission Orders and Section 15(b)(6)(B)(i) of the Exchange Act as alleged above.
2. Enter a final judgment: (a) permanently enjoining Quinn from, direct or
indirect, continuing violations of the Commission Orders and Section 15(b)(6)(B)(i) of
the Exchange Act; (b) ordering future compliance with Commission orders; (c) ordering
disgorgement of all ill-gotten gains based upon his conduct alleged herein, together with
prejudgment interest; and (d) ordering him to pay civil fines and/or penalties under
Section 21(d)(3) of the Exchange Act, 15 U.S.C. § 78u(d)(3).
3. Grant a preliminary injunction, pending entry of a final judgment,
enjoining Quinn from, directly or indirectly, violating the Commission Orders and
Section 15(b)(6)(B)(i) of the Exchange Act.
4. Retain jurisdiction over this action in accordance with the principles of
equity and the Federal Rules of Civil Procedure in order to implement and carry out the
terms of all orders and decrees that may be entered, or to entertain any suitable
application or motion for additional relief within the jurisdiction of this Court.
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5. Grant such other and further relief as this Court may determine to be just
and necessary.
Dated: _February 25, 2005____
Washington, D.C.
Respectfully submitted,
_/s/ Jane M.E. Peterson______
Jane M.E. Peterson (MN Bar #185036)
Attorney for Plaintiff
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549-0911
Tele: (202) 942-4728
Fax: (202) 942-9581
e-mail: petersonjme@sec.gov
Of Counsel:
Lawrence A. West
Kenneth R. Lench
Douglas C. McAllister
Rosemary A. Filou |
