Charles T. Tamburello->COMMISSION CHARGES FORMER HEAD OF DICOM IMAGING SYSTEMS, INC. AND FIVE FLORIDA PROMOTERS IN FRAUDLENT STOCK MANIPULATION
The Commission announced that on August 13 in U.S. District Court for
the Southern District of Florida, it filed suit against the former
president of Dicom Imaging Systems, Inc. (OTCBB: DCIM), and five Florida
stock promoters, alleging that they committed securities fraud through
baseless financial projections and the stock promoters' "scalping."
Scalping is the practice of recommending the purchase of a stock to the
general public while selling the stock at or near the same time. The
Commission's complaint also alleges that the promoters touted Dicom's
stock but did not disclose all of the compensation they were to receive.
The Commission's complaint names the following defendants:
* David Gane, D.D.S., age 49, of White Rock, British Columbia, Canada.
Gane was Dicom's president, CEO, and a member of the board of directors.
Dicom was a provider of dental imaging software from 1999 to 2001 but has
ceased operations.
* Jeffrey D. Welsh, age 53, of Boca Raton, Florida.
* Southern Financial Services, Inc. (SFS), Welsh's financial consulting
firm.
* Southern Waste, Inc., dba Strategic Investors Group (SIG), Welsh's
financial public relations firm.
* Charles T. Tamburello, age 30, of Weston, Florida.
* Capital Research Group, Inc. (CRG), Tamburello's investor relations,
which operates www.thesubway.com website.
The Commission's complaint alleges that Dicom hired the promoters to
tout Dicom's stock in return for compensation. Gane supplied the
promoters with Dicom's financial projections for the next three years:
$24.7 million in revenues and $19.7 million in earnings. Welsh and
Tamburello each wrote investment opinions that described Dicom as an
investment and set progressively higher targets for its stock price.
Welsh issued his investment opinions through SFS and SIG, while
Tamburello issued his through CRG. In January 2000, Dicom announced
that it was restating its financial results for the third quarter of
fiscal 1999 from a gain to a loss. Nevertheless, the stock promoters
continued to repeat the projections in their investment opinions and set
even higher targets for Dicom's stock price. In addition, Gane, who had
approved the announcement about the restatement, publicly announced even
higher three-year revenue projections in January 2000, $50 million and
$60 million, during interviews broadcast on television and over the
Internet. Dicom's stock price increased from $5.08 per share, when
trading began in November 1999, to a high of $36 in March 2000.
The Commission's complaint also alleges that the stock promoters failed
to disclose all of the compensation and that they engaged in scalping,
resulting in their receipt of over $1.1 million in trading proceeds.
The Commission seeks to enjoin Gane, Welsh, SFS, SIG, Tamburello, and
CRG from future violations of Section 10(b) of the Securities Exchange
Act of 1934 and Rule 10b-5 thereunder and to enjoin Welsh, SFS, SIG,
Tamburello, and CRG from future violations of Sections 17(a) and 17(b)
of the Securities Act of 1933. The Commission also seeks civil
penalties against each of the defendants and disgorgement of ill-gotten
gains with prejudgment interest from Welsh, SFS, SIG, Tamburello, and
CRG. Finally, the Commission seeks a court order permanently barring
Gane from serving as an officer or director of a public company.
[SEC v. David Gane, Jeffrey D. Welsh, Southern Financial Services, Inc.,
Southern Waste, Inc., dba Strategic Investors Group, Charles T.
Tamburello, and Capital Research Group, Inc., Civil Action No. 03-61533-
CIV-SEITZ, S.D. Fla.] (LR-18286) |
