"Part 9" of 8K
HUTTOE MANIPULATES THE MARKET FOR SOE SECURITIES
HUTTOE ISSUES MATERIALLY
FALSE AND MISLEADING PRESS RELEASES
29. In connection with the unregistered distribution of its stock,
SOE, under the direction of Huttoe, issued a series of materially false and
misleading press releases touting its success in the video tele-conferencing
business and announcing other corporate developments. These releases, together
with other false information contributed by SGA Goldstar, caused SOE's stock
price to skyrocket from $0.28 on December 26, 1995, to over $4.50 on June 10,
1996, before retreating to $3.00 on July 12, 1996.
a. In a December 26, 1995 press release, SOE announced
that ICMX, which SOE was in the process of acquiring, had already booked $10
million in sales for Fiscal 1996. In fact, ICMX (now SOE) never had revenues
or orders of that magnitude, or even approaching it.
b. On May 28, 1996, SOE falsely announced that World
Communications Group had ordered approximately 1,000 video tele-conferencing
units, and estimated the value of the order to be $3.4 million. There was no
such order.
c. On June 12, 1996, SOE falsely announced that it had
acquired Lazer Tek Designs and "projected revenues over the next 12 months of
$10 million," failing to
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disclose that Lazer Tek was owned by SOE's new president, Kenneth Walther, and
his wife. In fact, there was no acquisition, and there was no basis for the
revenue projection.
d. On June 20, 1996, SOE falsely announced that it had
sold 12 video tele-conferencing units to VueCom, Inc. (also known as ICSN). In
fact, no more than four units were ordered as of October 16, 1996.
e. On July 12, 1996, SOE falsely announced that it had
received through ICE Communications, Inc., multiple orders of several hundred
thousand dollars each in video tele-conferencing equipment. In fact, SOE never
received ICE orders even approaching this magnitude.
30. Huttoe and SOE knew or recklessly disregarded the fact that
each of these releases was materially false and misleading.
SGA GOLDSTAR RESEARCH, INC. TOUTS
SOE FOR UNDISCLOSED COMPENSATION
31. In connection with the unregistered distribution of SOE
shares, SGA initiated aggressively promotional coverage of SOE in its
newsletter, the Whisper Stock Report, on or about January 23, 1996. As
compensation for this coverage, SOE issued shares to Melcher and his nominee
Alpha Securities, and to Terry and his nominee Dunbar Holdings, Ltd.
32. SGA's reports were highly promotional, strongly urging
accumulation of the stock, discouraging sales, and even discouraging investors
from independently verifying SGA's information.
33. SGA's highly promotional reports were materially false and
misleading, and failed to disclose material facts. |
