Securities Act of 1933
Release No. 8045 / December 19, 2001
Securities Exchange Act of 1934
Release No. 45173 / December 19, 2001
Administrative Proceeding
File No. 3-9187
In the Matter of CARMEL EQUITY PARTNERS,
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ORDER MAKING FINDINGS AND IMPOSING REMEDIAL SANCTIONS AND CEASE-AND-DESIST ORDER AGAINST RESPONDENTS JOHN B. MORRIS AND CARMEL EQUITY PARTNERS |
I.
The Securities and Exchange Commission ("Commission") instituted public administrative and cease-and-desist proceedings pursuant to Section 8A of the Securities Act of 1933 ("Securities Act"), and Sections 15(b), 19(h) and 21C of the Securities Exchange Act of 1934 ("Exchange Act") in this matter on November 18, 1996. Respondents John B. Morris ("Morris") and Carmel Equity Partners ("Carmel Equity") have submitted an Offer of Settlement ("Offer") which the Commission has determined to accept.
Solely for the purpose of these proceedings and any other proceedings brought by or on behalf of the Commission or in which the Commission is a party, and without admitting or denying the findings herein, except for those contained in paragraphs II. A., B., C., D., E., and G., below, which they admit, Morris and Carmel Equity consent to the entry of this Order Making Findings and Imposing Remedial Sanctions and Cease-and-Desist Order ("Order").
II.
On the basis of this Order and Respondents' Offer, the Commission makes the following findings:
A. Cohig & Associates Inc. ("Cohig") is a broker-dealer registered with the Commission pursuant to Section 15(b) of the Exchange Act (File No. 8-33481) since March 1985, with its principal place of business in Denver, Colorado. At relevant times, it maintained a branch office in Solana Beach, California.
B. At all times relevant to this proceeding, Eagle Holdings, Inc. ("Eagle") was a publicly held corporation with its principal place of business in Mesa, Arizona. At all times relevant herein, Eagle common stock was listed on NASDAQ.
C. At all times relevant to this proceeding, Teletek, Inc. ("Teletek") was a publicly held corporation with its principal place of business in Las Vegas, Nevada. At all times relevant herein, Teletek common stock traded in the over-the-counter markets, and during certain periods was listed on NASDAQ.
D. Morris is a resident of San Diego, California. He was employed by Cohig as a registered representative from approximately October 1991 to April 1995. From approximately October 1991 to June 1994, Morris was the branch manager of Cohig's Solana Beach, California, office.
E. Carmel Equity is a Colorado general partnership formed by Morris which at all relevant times maintained its principal place of business in San Diego, California. Morris is the sole general partner of Carmel Equity.
F. From at least September 1992 to at least June 1993, Morris and Carmel Equity willfully violated Section 17(a) of the Securities Act, Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, in that they, directly or indirectly, in connection with the offer, purchase or sale of certain securities, by use of the means or instrumentalities of interstate commerce and by use of the mails, employed devices, schemes, or artifices to defraud, obtained money or property by means of, and made, untrue statements of material fact and omitted to state material facts necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading, and engaged in transactions, acts, practices, or courses of business which would and did operate as a fraud or deceit upon purchasers of such securities.
1. As part of the aforesaid conduct, Morris, while a registered representative at Cohig, received, directly and through Carmel Equity, undisclosed payments from persons controlling or otherwise affiliated with Eagle in return for selling Eagle stock to investors.
2. During the same period, Morris, directly and through Carmel Equity, paid a portion of the funds received from Eagle control persons to other registered representatives at Cohig to induce them to sell Eagle stock to investors.
3. As a further part of the aforesaid conduct, from September 1992 through approximately February 1993, Morris conspired with others to receive undisclosed compensation from person controlling or otherwise affiliated with Teletek in return for selling Teletek stock to investors.
G. On January 26, 2000, Morris was convicted by the United States District Court for the District of Nevada of one count of conspiracy to commit securities fraud based upon his receipt of undisclosed payments for selling Teletek stock (U.S. v. Morris, Case No. CR-S-97-023-LDG (D. Nev.)).
III.
In view of the foregoing, it is in the public interest and for the protection of investors to impose the sanctions specified in the Offer.
Accordingly, IT IS HEREBY ORDERED THAT:
A. Pursuant to Section 8A of the Securities Act and Section 21C of the Exchange Act, Morris and Carmel Equity be, and hereby are, ordered to cease and desist from committing or causing any violations and any future violations of Section 17(a) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder;
B. Morris be, and hereby is, barred from association with any broker or dealer;
C. Morris and Carmel shall comply with their undertaking to provide, at the Commission's request, on reasonable notice and without service of a subpoena, discovery and to testify truthfully at any deposition and at any judicial or administrative proceeding related to the order instituting proceedings in this matter or any allegations therein, or any other proceeding brought by the Commission as a result of its investigation titled In the Matter of Eagle Holdings, Inc., and continue to be considered parties to this action for purposes of the Right to Financial
Privacy Act of 1978 [12 U.S.C. 3401-22], except that Morris and Carmel do not hereby waive their privilege against self-incrimination under the Fifth Amendment to the United States Constitution.
By the Commission.
Jonathan G. Katz
Secretary