UNITED STATES OF AMERICA
Before the
SECURITIES AND EXCHANGE COMMISSION
Securities Exchange Act of 1934
Release No. 41221 / March 29, 1999 Administrative Proceeding
File No. 3-9856 :
In the Matter of : ORDER INSTITUTING PUBLIC
: PROCEEDINGS PURSUANT TO
Golf Ventures, Inc. : SECTION 21C OF THE
: SECURITIES EXCHANGE ACT OF 1934,
: MAKING FINDINGS AND IMPOSING A
Respondent. : CEASE-AND-DESIST ORDER
: :
:
I.
The Securities and Exchange Commission ("Commission") deems
it appropriate and in the public interest that public
administrative proceedings be, and hereby are, instituted against
Golf Ventures, Inc. ("GVI") pursuant to Section 21C of the
Securities Exchange Act of 1934 ("Exchange Act").
II.
In anticipation of the institution of these administrative
proceedings, GVI has submitted an Offer of Settlement ("Offer"),
which the Commission has determined to accept. Solely for the
purpose of this proceeding and any other proceeding brought by or
on behalf of the Commission or to which the Commission is a
party, and prior to a hearing pursuant to the Commission's Rules
of Practice, GVI consents to the issuance of this Order
Instituting Proceedings Pursuant To Section 21C of the Securities
Exchange Act of 1934, Making findings and Imposing a Cease-and-
Desist Order ("Order") and to the entry of the findings set forth
below, provided that GVI neither admits nor denies the findings
set forth herein, except as to jurisdiction over it and the
subject matter of this proceeding, which GVI admits.
III.
FINDINGS
On the basis of this Order and the Offer submitted by GVI,
the Commission finds[1] that:
A. GVI is a corporation organized under the laws of Utah.
GVI's securities are registered pursuant to Section 12(g) of the
Exchange Act, and GVI's common stock is publicly traded on the
Non-NASDAQ Over-The-Counter Bulletin Board market.
B. Between September 1996 and July 1997, GVI distributed
written information to the public in the form of press releases
and public filings with the Commission. GVI filed the following
documents with the Commission on the following dates:
1. Form 10SB for 1996 ("1996 GVI 10SB"), September
11, 1996;
2. Form 10-QSB for the period ending September 30,
1996 ("September 1996 GVI 10QSB"), December 23,
1996;
3. Form 10-QSB for the period ending December 31,
1996 ("December 1996 GVI 10QSB"), February 13,
1997; and
4. Form 10-KSB for the year ending March 31, 1997
("1997 GVI 10KSB"), July 15, 1997.
GVI also issued press releases and letters to shareholders on the
following dates: October 18, 1996 ("October 18th Press Release");
October 23, 1996 ("October 23rd Press Release"); November 4, 1996
("November 4th Press Release"); November 19, 1996 ("November
Shareholder Letter"); and December 1996 ("December Shareholder
Letter"). Badger's Secret Control Over GVI
C. From December 1992 through at least July 1997, George
Badger ("Badger") acted as the principal officer of GVI and made
all executive decisions. Badger controlled how GVI spent its
funds, determined how GVI raised capital, and was responsible for
its principal strategic business decisions. In April 1997,
Badger pled guilty in the United States District Court for the
Southern District of New York to a four-count, felony information
alleging: (i) conspiracy to commit securities fraud, wire fraud,
money laundering and commercial bribery; (ii) securities fraud;
(iii) criminal contempt; and (iv) perjury. In connection with
prior incidents, Badger previously: (a) pled guilty to bribing an
agent of the Internal Revenue Service; (b) pled guilty to
conspiracy to commit securities fraud; and (c) in an action
brought by the Commission, consented to a permanent injunction
barring him from future violations of the antifraud provisions of
the federal securities laws.
D. GVI filed materially false and misleading reports with
the Commission and issued materially false and misleading press
releases concerning Badger's affiliation with GVI. The 1996 GVI
10SB, the September 1996 GVI 10QSB, the December 1996 GVI 10QSB,
and the 1997 GVI 10KSB did not disclose Badger's substantial
control over GVI. The October 18th Press Release also failed to
disclose Badger's substantial control over GVI.
E. GVI knew, or was reckless in not knowing, that the 1996
GVI 10SB, September 1996 GVI 10QSB, December 1996 GVI 10QSB, 1997
GVI 10KSB, and October 18th Press Release were materially false
and misleading. GVI's Purported Investigation Of Badger
F. In the October 18th Press Release, GVI stated that it
had commenced an internal investigation concerning Badger's
arrest in October 1996 for securities fraud in connection with
GVI. During the period from October 18, 1996 through November
24, 1997, GVI never conducted a substantial, impartial
investigation into the allegations against Badger that led to his
October 1996 arrest and ultimate guilty plea to four felonies
concerning his fraudulent scheme involving GVI securities.
G. GVI knew, or was reckless in not knowing, that the
October 18th Press Release was materially false and misleading.
Misrepresentations Concerning The Red Hawk Project
H. In mid-1996, GVI hired Granite Construction ("Granite")
to perform construction work on GVI's residential golfing and
recreational community called Red Hawk International Golf &
Country Club ("Red Hawk Project"). The Red Hawk Project was
GVI's largest asset and its primary potential source of future
revenue; GVI had no other substantial source of revenue. On
October 31, 1996, Granite ceased working on the Red Hawk Project
because GVI ran out of funds to pay Granite for work being
performed at the Red Hawk Project. At that time, Granite had
completed less than 50% of the work it had contracted to perform.
I. Between October 1996 and July 1997, GVI made numerous
materially false public statements concerning Granite's progress
on the Red Hawk Project. For example, in the October 23rd Press
Release, November 4th Press Release; November Shareholder Letter,
December Shareholder Letter, September 1996 GVI 10QSB, December
1996 GVI 10QSB, and the 1997 GVI 10KSB, GVI touted the
substantial progress that Granite had supposedly achieved toward
completion of the Red Hawk Project when, in fact, Granite
actually had ceased all work after completing less than 50% of
the work it had contracted to perform.
J. GVI knew, or was reckless in not knowing, that the
October 23rd Press Release, November 4th Press Release, November
Shareholder Letter, December Shareholder Letter, September 1996
GVI 10QSB, the December 1996 GVI 10QSB and the 1997 GVI 10KSB
were materially false and misleading.
K. By reason of the conduct and events set forth in
paragraphs III.A through III.J above, GVI violated Sections 10(b)
and 13(a) of the Exchange Act and Rules 10b-5, 12b-20, 13a-1 and
13a-13 thereunder.
L. As previously reported by GVI in filings with the
Commission, on November 25, 1997, GVI entered into a reverse
merger agreement with U.S. Golf Communities, Inc. ("USG") whereby
USG became the approximate 81% shareholder of GVI and management
of USG took over management of GVI's business operations. Since
that time, GVI has issued several amendments to filings that had
been made by GVI's prior management and which the Commission had
alleged were materially misleading. None of the allegations
contained in this Order Instituting Proceedings concern actions
or omissions by the persons who assumed management of GVI's
business operations after its reverse merger with USG on November
25, 1997. **FOOTNOTES**
[1]: The findings herein are made pursuant to GVI's Offer of
Settlement and are not binding on any other person or entity in
this or any other proceeding.
IV.
CEASE-AND-DESIST ORDER
Based on the foregoing, the Commission deems it appropriate
and in the public interest to accept, and impose the sanction
specified in, the Offer submitted by GVI, and accordingly,
IT IS HEREBY ORDERED, effective immediately, that GVI shall
cease and desist from committing or causing any violation, and
from committing or causing any future violation, of Sections
10(b) and 13(a) of the Exchange Act, and Rules 10b-5, 12b-20,
13a-1 and 13a-13. By the Commission.
Jonathan G. Katz
Secretary |
