SEC NEWS DIGEST
Issue 2001-47 March 9, 2001
ENFORCEMENT PROCEEDINGS
LLOYD WOLLMERSHAUSER CONSENTS TO THE ENTRY OF A PERMANENT INJUNCTION
Today, the Commission filed a complaint in federal court, Northern
District of Ohio, Eastern Division, against Lloyd E. Wollmershauser,
also known as the "PennyStockMan," of Cleveland, Ohio, for engaging in
an Internet pump-and-dump scheme. The Complaint alleges that
Wollmershauser obtained over two million shares of Thermotek
International, Inc. (TTKI), a penny stock company that on June 28, 2000
began trading for the first time in the over-the-counter market, and
then disseminated false information about the company, causing the price
of the stock to rise. Wollmershauser then sold TTKI stock at a profit
before the price of the stock plummeted.
According to the complaint, Wollmershauser, the proprietor of an
Internet web site and newsletter service called PennyStockMan, touted
TTKI to PennyStockMan subscribers in his newsletters, on his web site,
and in personal e-mails, and made numerous false statements including
that he had inside information allowing him to project TTKI's price;
that the price of TTKI stock would likely rise to $20 by the end of the
first day of trading; that he believed TTKI was a good investment based
upon his independent research; that mutual funds were interested in
TTKI; and that he did not intend to sell his shares in the short term.
The Commission alleges that Wollmershauser, at the time of these false
statements, intended to sell his TTKI stock during any price increase
caused by his recommendation.
The Commission alleges that when PennyStockMan subscribers demonstrated
an interest in acquiring TTKI stock based on Wollmershauser's
recommendation, Wollmershauser advised them to place limit buy orders at
a specific price. The Commission further alleges that Wollmershauser's
false statements, coupled with his advice to place limit buy orders,
caused PennyStockMan subscribers to buy TTKI stock on June 28 and June
29, 2000 which, in turn, caused the price of TTKI stock to rise. The
Commission also alleges that Wollmershauser placed limit sell orders at
the same time he knew that PennyStockMan subscribers had placed limit
buy orders. Finally, the Commission alleges that Wollmershauser sold
shares of TTKI stock on June 28 and June 29, 2000 for proceeds of
$436,660 before the price and volume of TTKI stock plummeted.
Without admitting or denying the allegations in the complaint,
Wollmershauser consented to the entry of an Order that (i) enjoins him
from violating Sections 5(a), 5(c) and 17(a) of the Securities Act of
1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-
5 thereunder, and Sections 206(1) and 206(2) of the Investment Advisers
Act of 1940; (ii) orders him to pay disgorgement of $436,660; and (iii)
waives disgorgement in excess of $205,000 and does not impose a civil
penalty based on Wollmershauser's sworn statements demonstrating his
inability to pay.
In a related administrative proceeding, the Commission ordered TTKI and
its president, Harold D. Massner, to cease and desist from committing or
causing any violation and any future violation of Sections 5(a) and 5(c)
of the Securities Act of 1933. For further information see release No.
33-7962 (March 6, 2001). [SEC v. Lloyd E. Wollmershauser a/k/a The
PennyStockMan, Civ. No. 101CV530, N.D. Ohio, Eastern Div.] (LR-16926)
TERRY KOONTZ, ORCHESTRATOR OF FICTITIOUS INTERNATIONAL BANK DEBENTURE SCHEME
INVESTIGATED BY SEC, PLEADS GUILTY; COHORTS SENTENCED TO TWO YEARS IN PRISON
The Commission announced today that on March 2 Richard J. Fulcher was
sentenced in Tampa, Florida, to two years in prison for his role in a
prime bank/Ponzi scheme conducted by Terry V. Koontz, Jeffrey A.
DeVille, and others. The Commission also announced that on January 5,
2001, Koontz pled guilty in Tampa to charges of conspiracy, securities
fraud, and wire fraud relating to two schemes in which he orchestrated
the sale of $23 million of fraudulent securities. The charges were
previously filed by the U.S. Attorney's Office for the Middle District
of Florida (Tampa). In addition to pleading guilty, Koontz agreed to
forfeit various assets purchased with proceeds of the fraud. Koontz is
scheduled to be sentenced on April 6, 2001. The Commission also
announced that on January 31, 2001, DeVille was sentenced to two years
in prison for his role in the scheme.
The charges arise out of a vast prime bank Ponzi scheme investigated by
the Commission. Koontz, DeVille, Fulcher, and others conducted this
scheme, in which they induced more than 80 individuals in 16 states to
invest over $20 million in a fictitious "international bank debenture
trading" program called Private Pool, LLC. The Commission filed its
emergency action in the U.S. District Court for the District of
Massachusetts against those defendants and others on September 17, 1998.
Koontz is the fifth defendant to be charged by the Tampa U.S. Attorney
as a result of this scheme. Fulcher (mail fraud), DeVille (securities
and wire fraud), Stewart Koral (false statements), and Joseph Papasidero
(misprision of a felony), have all entered guilty pleas and been
sentenced in U.S. District Court in Tampa, Florida. In addition, the
District Court in Massachusetts has entered judgments in the
Commission's action against defendants Fulcher, Walter Lapp, Lawrence
Seppanen, and Thomas Dolan, all of whom acted at sales agents. The
Commission's action is continuing as to Koontz and other defendants.
[SEC v. Terry V. Koontz, et al., Civil Action No. 98cv11904NG (D. Mass.,
Sept. 17, 1998); United States v. Terry V. Koontz, Action No. 8:00-CR-
341-T-24F (M.D.Fl., Sept. 20, 2000); United States v. Jeffrey A.
DeVille, Action No. 8:00-CR-56-T-23C (M.D.Fl., Feb. 23, 2000); United
States v. Richard J. Fulcher, Action No. 8:00-CR-23-T-23B (M.D.Fl., Jan.
13, 2000)] (LR-16927) |
