From today's SEC Digest:
IN THE MATTER OF SKY SCIENTIFIC, INC., ET AL.
An administrative law judge today issued an Initial Decision in the above-referenced matter. The law judge concluded that Respondents Jerry L. Foster (Foster); Robert Schlien (Schlien); American Capital Network, Inc. (ACN); Melvin L. Levine (Levine); William David Jones (Jones); Philip M. Georgeson (Georgeson); Smith, Benton & Hughes, Inc. (SBH); Michael Zaman (Zaman); George T. Hellen (Hellen); Gilbert Marshall & Co. (GM); Michael A. Usher (Usher); and Daniel R. Lehl (Lehl) willfully violated Section 17(a) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder (antifraud provisions) by perpetrating a scheme to defraud involving the sale of Sky Scientific, Inc (Sky) stock. The law judge found that the Respondents had furthered the scheme acting as promoters, broker-dealers, and, in the case of
Foster, a Sky insider. The law judge further concluded that: Schlien, ACN, Jones, Levine, Georgeson, SBH, Zaman, Hellen, GM, Usher, and Lehl violated Sections 5(a) and 5(c) of the Securities Act by distributing unregistered stock to the public; GM, Usher, and Respondents Strategic Resource Management, Inc. (SRM) and William A. Moler (Moler) charged customers excessive markups in violation of the antifraud provisions; Respondents Schlien, ACN, Levine, and Jones violated Securities Act Section 17(b) by circulating tout sheets without disclosing that they had received and would receive consideration from Sky Scientific; and Sky chief financial officer Foster caused violations of certain filing and accounting records provisions of the Exchange Act.
The law judge ordered the following Respondents to disgorge the following amounts: Foster $29,325; Schlien and ACN $2,606,729; Levine $79,350; Jones $4,546,500; Georgeson $273,572; SBH and Zaman $536,921; Hellen $12,962; GM and Usher $5,435,183; Lehl $269,759; SRM and Moler $68,469. The law judge ordered the following Respondents to pay civil penalties in the following amounts: SBH $250,000; Zaman $175,000; Hellen $150,000; Usher $250,000; Lehl $350,000; Moler $50,000. Collateral bars were imposed against Zaman, Hellen, Usher, and Lehl; and Moler was barred from association with any broker or dealer with a right to
reapply in 18 months. The law judge revoked GM's registration and suspended SRM's registration for 90 days. Cease and desist orders were issued as to all Respondents except GM. (Initial Decision No. 137; File No. 3-9201)
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