"Part 6" of 8K
COMPLAINT
Plaintiff Securities and Exchange Commission alleges:
SUMMARY
1. This case involves an on-going fraudulent scheme in which
defendant Charles Huttoe, Chairman of the Board and Chief Executive Officer of
Systems of Excellence, Inc. ("SOE" or the company), caused SOE to engage in a
massive unregistered distribution of the company's stock. The stock price was
manipulated to artificial heights with materially false and misleading press
releases issued by SOE, under Huttoe's direction, and through fraudulent stock
promotion by SGA Goldstar Research,
Inc. SOE issued the unregistered stock to recipients controlled by Huttoe, and
to accounts controlled by Theodore R. Melcher, Jr., and Shannon Terry, SGA
Goldstar's principals.
2. Huttoe and Terry and, on information and belief, Melcher, then
quickly sold their SOE stock to an unsuspecting public, not disclosing that the
prices were grossly inflated due to their own unlawful activities. Huttoe
alone amassed at least $9.7 million in aggregate unlawful profits thereby.
3. Huttoe later engaged in a massive cover-up, once his scheme
began to unravel, to create the false impression that the shares had been
properly registered on Form S-8, a Commission form which allows the
registration of company stock issued to company employees and consultants. As
part of the cover-up scheme, Huttoe fabricated bogus Forms S-8 and forged
consultant agreements, and later had them filed with the Commission.
4. By knowingly or recklessly engaging in this conduct,
defendants directly or indirectly violated, are violating, and unless
restrained will violate the antifraud, registration, and filing provisions of
the federal securities laws, specifically, Sections 5(a), 5(c), 17(a), and
17(b) of the Securities Act of 1933 ("Securities Act") [15 U.S.C. Sections
77e(a), 77e(c), 77q(a), and 77q(b)], Sections 10(b), 13(a), 13(b)(2)(A),
13(b)(2)(B), 13(b)(5), and 16(a) of the Securities Exchange Act of 1934
("Exchange Act") [15 U.S.C. Sections 78j(b), 78m(a), 78m(b)(2)(A),
78m(b)(2)(B), 78m(b)(5), and 78p(a)], and Rules 10b-5, 12b-20, 13a-1, 13a-11,
13a-13, 13b2-1, 13b2-2, 16a-2, and 16a-3, thereunder [17 C.F.R. Sections
240.10b-5, 240.12b-20, 240.13a-1, 240.13a-11, 240.13a-13, 240.13b2-1,
240.13b2-2, 240.16a-2, and 240.16a-3].
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JURISDICTION
5. This Court has jurisdiction of this action pursuant to Section
22(a) of the Securities Act [15 U.S.C. Section 77v(a)], and Section 27 of the
Exchange Act [15 U.S.C. Section 78aa], and 28 U.S.C. Section 1331.
6. The Commission brings this action pursuant to authority
conferred upon it by Section 20(b) of the Securities Act [15 U.S.C. Section
77t(b)], and Section 21(d)(1) of the Exchange Act [15 U.S.C. Section
78u(d)(1)].
7. Defendants, directly or indirectly, have made use of the means
and instrumentalities of interstate commerce, or of the mails, or of the
facilities of a national securities exchange in connection with the acts,
practices, and courses of business alleged herein.
DEFENDANTS
8. CHARLES O. HUTTOE, age 49, resides in Miami, Florida. Since
1994, he has served as Chairman of the Board and Chief Executive Officer of
Systems of Excellence, Inc. Huttoe directed the hyping and distribution of
unregistered SOE stock, including shares purportedly registered on Form S-8,
using nominee accounts he controlled that were maintained in the names of the
following defendants:
a. NATIONAL TRADING SERVICES, INC. is or was a Florida
corporation, of which Huttoe is the President, Secretary, registered agent, and
controlling person;
b. WORD CORPORATION is or was a Mississippi corporation,
of which Huttoe is the controlling person; |
