CIVIL ACTION AGAINST NET WORLD MARKETING, INC., ET AL.
On November 7, Judge Wesley Brown, U.S. District Judge for the District
of Kansas, Wichita Division, issued various emergency orders sought by
the U.S. Securities and Exchange Commission (the Commission) to halt a
securities fraud scheme that targeted victims throughout the Untied
States, by various means, including the Internet. According to the
Commission's complaint, the defendants raised over $1.3 million from at
least 1,000 investors by selling unregistered securities of microcap
companies. As part of their scheme, the Defendants caused the
securities of two companies to be publicly traded, and then used the
Internet, press releases and certain offering materials to distribute
false information in an effort to inflate the share price of these
companies. The named Defendants and Relief Defendant are:
ú Edward B. Williamson III (Williamson), age 53, a securities recidivist,
is a resident of Wichita, Kansas, and the owner and controlling officer of
Defendant Fifth Avenue Communications, Inc. and Relief Defendant AGE
Investment Company. Williamson is also an officer, director or undisclosed
person of New Horizons, Andros Hotel and Casino, Inc., and Net World
Marketing, Inc.
ú Fifth Avenue Communications, Inc. (Fifth Avenue), is a domestic business
corporation formed in 1996 within the State of New York, but operated by
Williamson from Wichita, Kansas. A purported public relations firm, Fifth
Avenue operates an Internet website known as www.stocksfifthavenue.com which
is registered to Williamson.
ú Net World Marketing, Inc. (Net World), is a Nevada corporation formed in
1997 with its only officer being Williamson's wife, Georganna Williamson.
Net World claims to operate an Internet shopping mall. Edward Williamson is
an authorized signatory for a Net World bank account.
ú Andros Hotel and Casino, Inc. (Andros), is a Nevada corporation. Andros
claims to own two tracts of undeveloped land located in the Caribbean. Its
headquarters is an office in Wichita, Kansas that is also utilized by Net
World and Fifth Avenue.
ú AutoAuction.com, Inc. (AutoAuction), is a Nevada corporation. The Fifth
Avenue website claims that AutoAuction operates Internet car auctions.
ú AGE Investment Company (AGE), is named solely as a relief defendant. It
is located in the same Wichita, Kansas office as Williamson and the other
corporate Defendants. Williamson is the sole officer of AGE, and the AGE bank
records indicate that AGE received $307,806 of Net World investor proceeds
for no apparent consideration.
In its lawsuit, filed today, the Commission sought and the Court granted
emergency orders: (1) freezing the assets of the Defendants; (2)
freezing the assets of Relief Defendant AGE, received, directly or
indirectly, from the activities described in the Commission's complaint;
(3) requiring the Defendants and Relief Defendant to furnish an
accounting of monies raised from investors; (4) prohibiting the
destruction of documents; (5) authorizing expedited discovery; and (6)
appointing a receiver to recover assets for the benefit of investors.
The Commission's lawsuit alleges that from at least April of 1997 to the
present, Defendant Williamson organized a fraudulent scheme involving
the Defendants, who singularly or in concert, fraudulently sold $1.3
million of securities to over 1000 investors nationwide. The lawsuit
alleges that the Defendants provided investors with false and misleading
information, and failed to disclose information that was material.
During the course of the securities sales, investors were not informed
of the key role Williamson played with the Defendant companies. This
nondisclosure was significant because of Williamson's extensive criminal
and regulatory history which includes: a 1997 wire fraud conviction for
attempting to bribe Federal Bureau of Investigation (FBI) agents posing
as stock brokers; expulsion from the financial services industry by the
National Association of Securities Dealers in 1993; a 1992 conviction
for felony theft of funds from his elderly mother; and a 1967 conviction
for murder. In connection with his 1997 wire fraud conviction, the
Commission, on June 13, 2000, ordered Williamson to cease-and-desist
from committing securities fraud and barred him from participation in
penny stock offerings.
Additionally, the investors were falsely told that the proceeds from
these offerings would be used by the companies for legitimate business
purposes. The lawsuit alleges that the approximately one-half of the $1
million raised in the Net World offering, alone, was siphoned off and
misappropriated by Williamson and other persons and entities connected
with him
Following the unregistered sales of common stock of Andros, Net World
and New Horizons, Defendants caused the stock of Andros and AutoAuction
to be publicly traded, as penny stocks, through listings on the Pink
Sheets. The Defendants then attempted to manipulate the value of the
securities by disseminating false information via the Internet and press
releases.
The SEC's complaint charges that Defendants violated Section 17(a) of
the Securities and Section 10(b) of the Securities Exchange Act and Rule
10b-5 thereunder. Further, the complaint charges that Defendant
Williamson failed to comply with the terms of the Commission's June 13,
2000 Order Making Findings, Imposing Remedial Sanctions and Imposing a
Cease-and-Desist Order, In the Matter of Edward B. Williamson III, which
ordered that Williamson cease-and-desist from violations of 17(a) of the
Securities Act and Section 10(b) of the Exchange Act, and Rule 10b-5
thereunder, and also barred him from participating in penny stock
offerings. In addition to the emergency relief set out above, the
Commission is seeking preliminary and permanent injunctions,
disgorgement and civil penalties against all Defendants, and
disgorgement from the Relief Defendant. Additionally, The Commission is
seeking an Order requiring Defendant Williamson to comply with the terms
of the prior order issued by the Commission, as set forth in the
Commission's Compliant, and an Order barring him from acting as an
officer or director of a public company.
The Commission wishes to acknowledge the assistance of the State of
Kansas in this matter. The case was investigated jointly by the
Commission and the Office of the Kansas Securities Commission.
Investors are advised to read the SEC's Cyberspace Alert before
purchasing any investment promoted on the Internet. The free
publication, which alerts investors to the telltale signs of online
investment fraud, is available on the Investor Assistance and Complaints
link of the SEC's Home Page on the World Wide Web www.sec.gov. It can
also be obtained by calling 800-SEC-0330.
Investors are encouraged to report suspicious Internet offerings (or
other suspicious offerings) via e-mail to enforcement@sec.gov. A user
friendly form to assist you in making a report is available at the SEC
Home Page www.sec.gov. Investors can also mail a report to SEC's
Enforcement Complaint Center, Mail Stop 8-4, 450 Fifth Street, N.W.,
Washington, D.C. 20549. [SEC v. Net World Marketing, Inc., New
Horizons Airways, Inc., AutoAuction.com, Inc., Andros Hotel and Casino,
Inc., Fifth Avenue Communications, Inc, and Edward B. Williamson III,
Defendants; and Age Investment Company, Relief-Defendant, Civil Action
No. 00-1459WEB; USDC/KS/WICHITA DIVISION] (LR-16794)
sec.gov. |
