Check out this link. What do you make of it?
newsalert.com
Also this taken from Sec Digest Apr 22/98 Doesn't it say more or less that charges against EOSC were dropped.
SEC v. THOMAS EDWARD CAVANAGH, ET AL.
On April 20, Judge Denise Cote of the United States District Court for the Southern District of New York entered a preliminary injunction prohibiting future violations of Sections 5 and 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 by the primary perpetrators of a market manipulation scheme in the stock of Electro-Optical Systems, Corp. (EOSC). Judge Cote also extended the asset freeze, initially ordered on March 13, as to all proceeds from the defendants' sales of EOSC shares as well as to any shares of EOSC that remain in their custody or control. In a 122-page opinion, Judge Cote noted that the case "concerns a scheme through which the defendants reaped millions of dollars in profits at the expense of
the American investor by creating active trading in the United States securities
market without making the disclosures that were required for the benefit of the
investing public by the Securities Act of 1933."
On March 13, 1998, the Commission filed a complaint alleging that the
defendants defrauded primarily small, on-line investors of at least $5 million
over the course of the scheme, the profits of which allegedly were distributed
among the 13 defendants and 19 relief defendants. On the same day, Judge Cote
issued a temporary restraining order which ordered the defendants to cease
their fraudulent activities and froze the assets of the defendants and the
accounts of the relief defendants that contained EOSC stock or the proceeds
from sales of the stock. On March 13 the Commission also suspended
over-the-counter trading of the securities of EOSC for a single ten-day period.
In her April 20 ruling, Judge Cote found that defendant Cavanagh was the mastermind and a central figure in the fraud who controlled various nominee accounts through which the fraudulent trades were made. Hence, the Commission made a proper showing that defendants Cavanagh, Milestone, Customer Safety, Cambiares, Construcciones, and Chachas violated the antifraud and registration provisions, and that they may be found liable at trial for disgorgement of proceeds plus penalties for their violations. The Court entered preliminary injunctions against each of these defendants, but based the preliminary injunction against Chachas on his violation of the registration provisions only. While Chachas was found to have participated in the fraud, the Court concluded on the evidence available at this stage that "the consequences of this litigation have effectively deterred him" from further fraud violations.
Judge Cote also found that Brooksbank, Hantges, Levy, Optimum,
and Agira violated Section 5 of the Securities Act and entered a preliminary injunction against Levy based on the Commission's showing of a likelihood of repetition. The Court observed that, in particular, Cavanagh and Levy "set in motion a plan that had little to do with raising funds" for the company, "but instead was designed to line their pockets." In addition, defendant Tacopino consented to a preliminary injunction based on antifraud and registration violations, and deposited over $350,000 into the registry of the court pending resolution of the case. The SEC had earlier withdrawn its request for a preliminary injunction against EOSC, while requiring the company regularly to report on it's expenditures. For further information, see Litigation Release No. 15669. [SEC v. Thomas Edward Cavanagh, U.S. Milestone, Electro-Optical Systems Corp., George Chachas, Thomas R. Brooksbank, William N. Levy, Optimum Fund, Agira Trading, Customer Safety, S. L., Cambiares, S.L., Construcciones Solariegas, S.L., Thomas A. Hantges, Cosimo Tacopino, et al., 98 Civil Action No. 1818, SDNY] (LR-15715) |
