SEC, Feds Charge 14 In Alleged Software Company Fraud--Federal prosecutors sued seven defendants in New York
on Monday, including a disbarred broker, for allegedly fleecing nearly $4
million from investors in a California computer software company.
A total of 14 defendants, including four of those subject to criminal
prosecution, also face civil fraud charges filed Monday by the Securities and
Exchange Commission.
According to the SEC, more than 100 investors in 14 states invested $3.9
million in private placements in UniVerse, San Clemente, Calif., and a
predecessor, VikingWare LLC, after receiving cold calls from brokers who told
them sales commissions wouldn't exceed 10% to 15%.
"In fact, the commissions were well above that. They were 40 to 45%," said
Kay Lackey, an assistant regional director in the SEC's New York office. She
said the SEC views the sales as fraudulent since investors weren't informed
that nearly half the funds raised went to salesmen, not to finance the company
or its operations.
UniVerse, its chief executive, Susan Richards, 43 years old, of Mission
Viejo, and her husband, John Richards, 38, formerly the firm's chief financial
officer and chief operating officer, were among those named in the SEC's suit
filed Monday in federal court in the Eastern District of New York. The suit
also named UniVerse's president, Richard Fenning, 44, of San Clemente. No
criminal charges were filed against Fenning, Susan Richards or John Richards.
According to the SEC, the couple recruited a network of people to sell
private placements in their firms, drumming up $2.3 million for VikingWare
between 1996 and 1997, and raising about $1.6 million for UniVerse between
September 1997 and April 1999.
Among those the Richards allegedly recruited was Robert Hasho, 41, of St.
James, N.Y., and his Northport firm, Landmark Corp. In 1991, Hasho, formerly a
broker at J.T. Moran, settled a fraud case brought by the SEC without admitting
or denying the charges, and was subsequently barred from the securities
industry. Hasho's attorney declined to comment on the latest SEC charges, or
criminal charges of conspiracy to commit stock fraud.
David Weichert, an attorney who represents UniVerse and Fenning, declined to
comment on the case. The attorney for John Richards couldn't be immediately
identified.
James Riddet, a Santa Ana attorney who represents Susan Richards, said
UniVerse sells software that translates text from one language to another, and
hoped to put the United Nations on its client list.
"Sue is a hardworking woman trying to make a go of this business," said
Riddet. He said he believes she has acted in good faith to finance the firm.
Also named in the SEC's action were Third Tier Marketing Corp., Hauppauge,
N.Y.; Lawrence Blocker, 35, of Islip, N.Y.; Jeffrey Burton, 36, of North
Patchogue, N.Y.; Danoo Noor, 29, of Ozone Park, N.Y., Howard Toomer, 38, of
Brentwood, N.Y., and his firm, Toomer & Associates; Tore Larsen, 32, of
Middletown, N.Y., and his firm, Fiberlinks Inc.
Noor, Larsen and Toomer also face criminal charges of conspiracy to commit
securities fraud, along with Alfred Napolitano, 39, of St. James, N.Y.; Mayer
Dallal, 27, of Great Neck, N.Y.; and Steven Feldman, 28, of Woodbury, N.Y. If
convicted, the defendants face a maximum sentence of five years in prison.
Their attorneys didn't immediately return phone calls seeking comment.
The SEC is seeking an order that bars the defendants from violating federal
securities laws and requires them to repay their allegedly ill-gotten gains,
with interest, and pay a civil fine.
-By Judith Burns; Dow Jones Newswires; 202-862-6692;
judith.burns@dowjones.com |
