SEC HALTS CONVICTED FELON'S NEW INTERNET MICROCAP FRAUD
On October 20, the Commission filed an emergency action to halt the fraudulent activities of Remington-Hall Capital Corp., a Dallas based company whose stock is publicly traded, and its president and chief executive officer, Douglas T. Fonteno, a felon convicted in 1996 for securities fraud and currently on probation. Judge Joe A. Fish, federal district judge for the Northern District of Texas, granted the Commission's request for a temporary restraining order and asset freeze against Fonteno, and Remington-Hall agreed to the entry of a preliminary injunction. The restraining order and preliminary injunction will be entered on October 21.
The Commission's complaint charges that after Fonteno's release from prison in 1997, he raised at least $1 million from investors in a fraudulent offering of unregistered Remington-Hall stock. Further, the complaint alleges that Remington-Hall and Fonteno distributed false and misleading informational releases to the public, including "spamming" (sending unsolicited e-mail) and website postings via the Internet, for the purpose of increasing or supporting the price of the company's publicly traded shares.
The Commission's complaint additionally charges Fonteno with diverting at least $100,000 of investors' funds to pay his probation fees and victim restitution from his prior securities fraud conviction, to pay credit card bills and buy an automobile for his maid. Further, the complaint states that Fonteno, now in jail for violating the terms of his probation, instructed company employees to issue company checks for his attorney fees, and for payment of an anticipated release bond.
The Commission also seeks an order permanently enjoining Remington-Hall and Fonteno from future violations of the federal securities laws, and an order requiring disgorgement of all wrongfully obtained profits, with prejudgment interest, and civil penalties against each defendant. [SEC v. Remington-Hall Capital Corp., and Douglas T. Fonteno, 3:98CV2470-G, USDC, ND/TX, Dallas Division] (LR-15943)
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