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Strategies & Market Trends : Anthony @ Equity Investigations, Dear Anthony, -- Ignore unavailable to you. Want to Upgrade?

To: labs who wrote (58010)	7/12/2000 5:53:58 PM
From: steve h	Respond to of 122087

nuthin wrong with a profit

To: labs who wrote (58010)	7/12/2000 6:19:14 PM
From: StockDung	Respond to of 122087

Salesmen for Ex-California Restaurant Firm Charged With Fraud Washington, July 12 (Bloomberg) -- Twelve ex-sales agents employed by former California restaurant firm ``Papashon'' were accused of securities fraud in the sale of $23 million of preferred stock in the food company and its subsidiaries. The Securities and Exchange Commission alleged in a civil complaint filed in federal court in Los Angeles that David J. Naughton and the 11 other current or former Californians failed to tell investors they were charging sales commissions between 31 percent and 40 percent. On June 1, 1999, a federal court permanently barred Papa Holdings, its restaurant subsidiaries and their principal Jonathan C. Papa from future violations of the federal securities laws. On March 8, the court issued a final order that Papa pay over $3.5 million in returned profits, civil penalties and interest, the SEC said. Sandra Harris, associate regional director for the SEC in Los Angeles, said the government's four-month-old effort to collect the $3.5 million is ``ongoing.'' Papa Holdings formerly operated restaurants in the California cities of Pasadena, Beverly Hills, Encino and Long Beach under the name Papashon. Between November 1995 and January 1999, the company, based in Woodland Hills, California, raised nearly $23 million from 1,400 investors nationwide, supposedly to open four new restaurants and create a publicly traded firm, the SEC said. Instead, the company and its four subsidiaries used investors' money to pay hidden sales commissions and to pay for losses at existing restaurants, the SEC said. Sales Commissions In documents from the offering, the 12 salesmen said their sales commissions would be ``10% or more'' or ``a percentage of the purchase price'' of the stock, the SEC said. Actual sales commissions ranged from 31 percent to 40 percent, with the salesmen getting a total of nearly $4 million in commissions from sale of the stock, the SEC said. ``This case demonstrates that investors should be cautious and investigate before investing, especially in response to unsolicited, high-pressure telephone calls,'' said Valerie Caproni, director of the SEC's Pacific Regional Office. `The charges against my clients are without merit,'' said Lawrence Washor, an attorney representing three of the salesmen: Richard C. Reining of Thousand Oaks; Ronald L. Gaiser, formerly of Oxnard; and Michael R. Tompkins, formerly of Westlake Village. ``They have been trying to resolve this with the SEC,'' but have not yet reached an agreement, Washor said. Naughton, who directed two restaurant subsidiaries also knew, but failed to tell investors, that the proceeds from at least one stock offering would be used to cover losses at existing restaurants and to pay commissions rather than to open a new restaurant, as investors were told, the SEC said. An attorney for Naughton was unavailable for comment. Jul/12/2000 18:01 ET For more stories from Bloomberg News, click here. (C) Copyright 2000 Bloomberg L.P.