"Part 10" of 8K
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a. SGA Goldstar did not disclose the material facts that
its principals, Melcher and Terry, were compensated by SOE for promoting SOE
stock, the amount of such compensation, or that the form of the compensation
was SOE stock.
b. SGA did not disclose the material fact that Terry,
and, on information and belief, Melcher, the authors of the Whisper Stock
Report, while issuing a strong buy recommendation to their readers, were
selling their SOE stock into the market;
c. SGA published materially false and misleading reports
about the SEC's investigation into the company, and the company's response
thereto.
34. These promotional materials, together with the materially
false and misleading company press releases, caused SOE's stock price to
skyrocket.
35. SGA, Melcher, Terry, and Huttoe knew or recklessly disregarded
the fact that these reports were materially false and misleading.
HUTTOE, TERRY, AND MELCHER SELL THEIR
UNREGISTERED SOE STOCK INTO THE INFLATED MARKET
36. During the period from January 16, 1996 through August 28,
1996, while knowingly or recklessly flooding the market with materially false
and misleading information, Huttoe and Terry, and on information and belief,
Melcher, sold millions of shares of SOE stock to the public.
37. Huttoe directed the unregistered SOE shares, including shares
purported registered on Form S-8, into nominee accounts he controlled. Huttoe
then caused those accounts, including accounts under the names of National
Trading Services, Inc., Word Corporation, Tammy Jo Perkins, Karen Purvis, and
Josephine Brooks, to sell the
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unregistered shares, amassing for himself unlawful profits of at least $9.7
million. Within eight (8) days following the May 28, 1996 announcement, Huttoe
alone realized profits of over $5 million.
38. During this same time period of heavy selling, Melcher and
Terry were publishing strong buy recommendations through their newsletter SGA
Goldstar.
39. In selling his SOE stock, Huttoe, knowingly or recklessly,
failed to disclose material facts:
a. Melcher and Terry's promotional materials hyping the
stock were materially false and misleading,
b. The company's press releases were materially false
and misleading;
c. The company's periodic public disclosure reports were
materially false and misleading;
d. Huttoe was selling his SOE stock;
e. The SOE shares were not registered for sale.
40. In selling their SOE stock, Melcher and Terry, knowingly or
recklessly, failed to disclose material facts:
a. Terry, and, on information and belief, Melcher, were
selling their SOE stock while they were making their strong buy recommendations
to the investing public;
b. Melcher and Terry's promotional materials hyping the
stock were materially false and misleading. |
