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Strategies & Market Trends : Castpro - Fraud In The Making? -- Ignore unavailable to you. Want to Upgrade?

To: jl-demeyer who wrote (7)	7/22/2003 10:59:47 PM
From: StockDung	Respond to of 24

ITEM 1. LEGAL PROCEEDINGS The landlord of the building where the corporate office was located filed a Complaint against the Company for the unpaid rental payments and overvalued stock security paid for prepaid rent. The Company filed a response with the court denying all allegations. The case is currently scheduled for a mediation hearing and, if the case cannot be resolved through mediation by late June, it will be scheduled for trial. Management intends to do everything possible to settle the case out of court and has already issued and delivered stock toward satisfaction of the claim for the overvalued stock as per the agreement the Company has with the plaintiff. The unpaid rent liability has been accrued in the financial statements. On August 19, 2002, a lawsuit initiated by Simon G. Talbot and Corey K. Quinn, former officers and directors of the Company, against the Company, Adam Anthony, Robert McNeill and Kevin Quinn was settled out of court. Under the terms of the settlement the lawsuit will be dismissed by the plaintiffs in exchange for $75,000 in cash or free trading stock owned by the president of the Company, payment to be made at the request of the plaintiffs, but in no case will payment be due prior to January 1, 2003. On August 22, 2002, Woltjen Law Firm, PLLC sued the Company, Adam Anthony, Doug Mondo, Steve Aquavia, David Nelson and Robert McNeill. The plaintiff alleges that it was fraudulently induced by the Company to provide legal services by false promises of payment and that the Company is in breach of contract. The Company has answered the complaint denying the allegations and is currently in negotiations with the plaintiff to settle the matter. On December 31, 2002, a Chapter 7 Bankruptcy petition was filed for PTS, TV, Inc. (Prime Time Media Solutions) in the United States Bankruptcy Court, Central District of California, Case Number ND02-13854-RR. The initial Meeting of Creditors is set for February 3rd, 2003. On November 6, 2002, a Chapter 7 Bankruptcy petition was filed for CastPro.com, LLC in the United States Bankruptcy Court, Central District of California, Case Number ND02-13313-RR. Prior to its bankruptcy filing, CastPro had been in negotiation with the Internal Revenue Service (IRS) regarding unpaid employment tax deposits, penalties, and interest for the tax year 2000 and first and second quarters of 2001. In January of 2003, the IRS notified Thaon that the Company has been assessed $30,000 in connection with these unpaid taxes. No collection activity has yet taken place and the Company intended to put in place a payment plan to address the liability at which time the IRS makes notice of collection proceedings. In addition, prior to the bankruptcy filing, CastPro was notified by the Employment Development Department of the State of California (EDD) that unpaid employment taxes, penalties, and interest are owed. No legal proceedings, liens, or attachments have been made or notification of any additional action has been received by or assessed to Thaon in connection with this matter. The full amount of the liability was recorded in the financial statements for the year 2001. CastPro made all employment tax deposits for all subsequent quarters. To the best knowledge of management, there are no other litigation matters pending or threatened against the Company or its subsidiaries. 18

To: jl-demeyer who wrote (7)	7/22/2003 11:01:58 PM
From: StockDung	Respond to of 24

SEC v. KEVIN JAMES QUINN, GO IRISH, LTD., AND HMC LIMITED, LLC, Civil Action No. 99-09325 (C.D. Ca.) (DDP) SECURITIES AND EXCHANGE COMMISSION Litigation Release No. 16281 / September 14, 1999 SEC v. KEVIN JAMES QUINN, GO IRISH, LTD., AND HMC LIMITED, LLC, Civil Action No. 99-09325 (C.D. Ca.) (DDP) SEC FILES FRAUD ACTION AGAINST DISBARRED ATTORNEY AND ISSUES AN ORDER SUSPENDING HIM FROM APPEARING OR PRACTICING BEFORE THE SEC The Securities and Exchange Commission announced that it filed fraud charges today against Kevin James Quinn, a disbarred attorney, and two entities he controls, Go Irish, Ltd. and HMC Limited, LLC. The SEC filed its complaint in the United States District Court for the Central District of California. The complaint filed by the SEC alleges that Quinn stole over 1.2 million shares of stock from two companies in which he served as an officer, director, and/or counsel. Quinn sold most of the stock in secondary market transactions. Quinn’s scheme netted him more than $200,000 in profits. The SEC’s complaint alleges that in 1997 and 1998, Quinn stole 960,000 shares of common stock of Atlantic Central Enterprises Limited and 300,000 shares of common stock of Advanced Laser Products, Inc., companies in which Quinn was an officer, director, and/or counsel. The complaint alleges that Quinn accomplished this theft by misusing his corporate positions with these two companies. The complaint alleges that Quinn (a) falsified board of directors’ resolutions purportedly authorizing the issuance of the shares; (b) provided the fraudulent resolutions to the transfer agent and induced the transfer agent to issue the shares in the name of Quinn, Go Irish, HMC Limited, or a Canadian brokerage firm in which Quinn deposited the shares; and (c) either (i) sold shares into the market, or (ii) transferred the shares into other accounts in the U.S. and Canada. The complaint alleges that no registration statement was filed or in effect with the Commission and no exemption from registration was available for the shares that Quinn, Go Irish, and HMC Limited sold to the public. The complaint also alleges that Quinn provided no consideration for the stock, and that the board of directors for the two companies did not authorize the issuance, offer, or sale of the stock. The complaint alleges that Quinn, Go Irish, and HMC Limited violated Sections 5(a) and (c) and 17(a) of the Securities Act of 1933, and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The complaint seeks permanent injunctions, disgorgement of Quinn’s ill-gotten gains plus prejudgment interest, civil penalties, an accounting, and an officer and director bar. The Commission also announced today that it issued an Order of Suspension Pursuant to Rule 102(e)(2) of the Rules of Practice against Kevin James Quinn. The Order suspends Quinn from appearing or practicing before the Commission based on his disbarment by the Supreme Court of California on September 19, 1997. sec.gov -------------------------------------------------------------------------------- Home \| Previous Page Modified:09/15/1999