Let's read about that other fine Jones Jensen audited firm...Golf Ventures...
SEC Charges 58 Defendants With Penny-Stock Fraud (Update4) 12/18/97 19:31
New York, Dec. 18 (Bloomberg) -- The U.S. Securities and Exchange Commission charged 58 defendants with penny-stock manipulation in one of the largest stock-fraud cases ever. The SEC filed four civil fraud suits today in New York and one in Salt Lake City, Utah. The suits allege that penny-stock promoters and officials of small, publicly traded companies bribed brokers to get them to sell the companies' stocks to brokerage customers. The five separate schemes caused unsuspecting investors to overpay for stocks whose prices were being secretly controlled by the defendants, the agency alleged. The defendants were caught in an undercover government sting and include 55 people across the U.S., two brokerage firms and one stock issuer, the SEC said.
'These schemes are designed to defraud people,'' said Henry Klehm III, senior associate director of the SEC regional office in New York. ''Investors are way overpaying for stock that has inflated value.'' The seven stocks the defendants allegedly manipulated are Securitek International Corp.; Golf Ventures Inc.; Stocknet Inc.; International Investment Group Inc.; Interactive Information Solutions; Spaceplex Amusement Centers International Ltd.; and America's Coffee Cup Inc., the SEC said.
Golf Ventures is the only stock issuer that was sued by the agency today. The defendants include the brokerage firms J.S. Securities
Inc., La Jolla Capital and brokers at other securities firms. In July, J.S. Securities changed its name to First National Equity Corp.
Government Probe
The SEC said the 58 defendants made more than $3.3 million illegally. The regulator is seeking millions of dollars from the defendants and a court order to prevent them from continuing their allegedly fraudulent practices. The charges are part of a government probe of penny-stock price manipulation that led to the arrests of 45 people last year in a joint FBI and SEC sting. Several of the defendants in last year's criminal prosecution are defendants in today's SEC suits. Fourteen of today's defendants have previously been criminally charged with fraud, the SEC said.
SEC suits are civil actions and don't carry penalties or prison time. The SEC said it expects to charge more people, but declined to comment further. Stocks that trade at less than $1 are widely referred to as penny stocks, though the National Association of Securities Dealers rules designate all stocks that trade under $5 as penny
stocks. Penny stocks tend to be thinly traded, making it relatively easy for their prices to be artificially inflated or depressed.
The suits allege that brokers recommended stocks to
investors in exchange for bribes from officials at the companies that issued stock and from stock promoters, people who act as middlemen between publicly held companies and brokers.''Investors have a right to believe that brokers are making
investments that are in their best interest,'' the SEC's Klehm said. ''That's not what is going on here.''
Brokerages Charged
Officials at First National Equity, formerly called J.S. Securities, in Point Pleasant Beach, New Jersey, weren't available for comment. Officials at San Diego-based La Jolla Capital were also unavailable. Many of the seven small companies whose stocks were promoted by the defendants had disconnected phone numbers, were unlisted or were otherwise unreachable for comment. Golf Ventures was formerly of Salt Lake City. It is in the process of combining with and changing its name to Golf Communities of America in Orlando, Florida. Warren Stanchina, who became chairman, president and chief executive of Golf Ventures in November, said Golf Ventures is now a legitimate company free of people who are connected with the
fraud charges.''We had absolutely no prior dealings with them,'' Stanchina said. ''We're the good guys. We're hoping to be the white knight.''
He said Golf Venture's golf courses throughout the country are valuable assets, in spite of its past ties to people accused of fraud.
Companies Renamed
America's Coffee Cup was renamed in February to Midland Inc (Hey, anybody remember MIDL...Zebras CANNOT change their stripes). of Dallas. The defendants include Robert Marsik, Midland executive vice president, chief financial officer and treasurer, and also Mark Pierce, the secretary of Midland. Wayne Duke, said he has been the president of Midland since just October and didn't know Marsik and Pierce before that.''I've had no reason to not trust them,'' Duke said. ''I was as in the dark as anyone else. I certainly was surprised at what took place today.''
He said Midland denied wrongdoing and the company will seek the resignation of Marsik and Pierce, who weren't available for comment. Securitek in Woodbridge, New Jersey, didn't have a phone listing. A man who answered the phone at an old number the company used said Securitek no longer used the number. Stocknet in New Paltz, New York, didn't have a telephone listing. A phone number listed on an old press release has been disconnected. Interactive Information Solutions in New York didn't have a listing.
International Investment Group Inc. in New York wasn't listed under that name or the company's new name, InterMedia Net Inc.
Spaceplex didn't have a business listing in Westbury, New York. A Fort Lauderdale, Florida, area phone number on a May company press release led to an answering machine. The company said in an April 1996 press release that it was filing for
Chapter 11 bankruptcy protection.
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