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U.S. Securities and Exchange Commission

UNITED STATES OF AMERICA
Before the
SECURITIES AND EXCHANGE COMMISSION

Securities Act of 1933
Release No. 8519 / December 22, 2004

Securities Exchange Act of 1934
Release No. 50908 / December 22, 2004

Admin. Proc. File No. 3-11779


In the Matter of

MARK K. MENZEL,

Respondent.



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ORDER INSTITUTING ADMINISTRATIVE AND CEASE-AND-DESIST PROCEEDINGS, MAKING FINDINGS, AND IMPOSING REMEDIAL SANCTIONS AND A CEASE-AND-DESIST ORDER PURSUANT TO SECTION 8A OF THE SECURITIES ACT OF 1933 AND SECTIONS 15(b)(6) AND 21C OF THE SECURITIES EXCHANGE ACT OF 1934

I.

The Securities and Exchange Commission ("Commission") deems it appropriate and in the public interest that public administrative and cease-and-desist proceedings be, and hereby are, instituted pursuant to Section 8A of the Securities Act of 1933 ("Securities Act") and Sections 15(b)(6) and 21C of the Securities Exchange Act of 1934 ("Exchange Act") against Mark K. Menzel ("Respondent" or "Menzel").

II.

In anticipation of the institution of these proceedings, Respondent has submitted an Offer of Settlement (the "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 to which the Commission is a party, and without admitting or denying the findings herein, except as to the Commission's jurisdiction over him and the subject matter of these proceedings, Respondent consents to the entry of this Order Instituting Administrative and Cease-and-Desist Proceedings, Making Findings, and Imposing Remedial Sanctions and a Cease-and-Desist Order Pursuant to Section 8A of the Securities Act of 1933 and Sections 15(b)(6) and 21C of the Securities Exchange Act of 1934 ("Order"), as set forth below.

III.

On the basis of this Order and Respondent's Offer, the Commission finds1 that:

Respondent

A. Respondent is a resident of Darnestown, Maryland. He is a registered representative of Wachovia Securities, Inc., a broker-dealer registered with the Commission, where he has been employed for his entire career since 1981. The firm was known as First Union Securities during the time period relevant to this Order.

Other Relevant Persons

B. EpicEdge, Inc., a Texas corporation, is the product of a 1999 merger between Design Automation Systems, Inc. ("DASI"), a closely-held computer equipment reseller, and a public shell called Loch Exploration, Inc. Immediately after the merger the public company retained the Loch Exploration name, then took on the DASI name later in 1999 and finally the EpicEdge name in March 2000. The Order will use the name EpicEdge to identify the public company at all times after the merger. EpicEdge was an Internet consulting firm. At times relevant to this Order EpicEdge's stock traded over-the-counter and on the American Stock Exchange.

C. EVTC, Inc., a Delaware corporation, was engaged in the sale of refrigerants and related products. At times relevant to this Order, EVTC's stock traded on the Nasdaq Small-Cap Market.

D. Harris D. "Butch" Ballow ("Ballow") is a four-time convicted felon who resided in Galveston, Texas, until he was incarcerated after being indicted on federal charges in Houston in early 2003. On July 9, 2004, the Commission filed an action against Ballow and others in federal district court in connection with the matters described herein. SEC v. Rose et al., Civil Action No. H-04-CV-2799 (S.D. Texas).

Background

E. During 1999 and 2000, Ballow and others engaged in manipulative trading and unregistered distributions of the stocks of EpicEdge and EVTC. This Order concerns Respondent Menzel's role in the manipulation of EpicEdge and EVTC stocks, and the distribution of EpicEdge stock.

F. To carry out the scheme, Ballow acquired large amounts of EpicEdge stock in 1999 in a transaction registered with the Commission on Form S-8. He used this stock to finance purchases of EVTC stock, sharply diminishing the supply of EVTC stock, for the purpose of driving up the price of EVTC stock. An EVTC officer worked with Ballow by purchasing large amounts of EpicEdge stock, which maintained the price of the EpicEdge stock that Ballow was using to finance the purchases of EVTC stock. To enhance the effect of their EVTC and EpicEdge purchases, Ballow made many purchases at rising prices, particularly in the last half hour of trading, and engaged in simultaneous or near simultaneous purchases and sales of stock.

Facts and Violations

G. Ballow used several broker-dealers to effect the manipulative trading, including First Union Securities. In January 2000, Ballow and an associate opened an account at First Union through Respondent in the name of an offshore company. On the same day, the EVTC officer who was collaborating with Ballow also opened an account through Respondent at First Union Securities. In July 2000, Ballow and his associate opened a second account through Respondent at First Union Securities in the name of another offshore company. Between January and September 2000, Ballow and his associates through Respondent placed hundreds of trades for these three accounts that furthered the scheme.

H. Respondent participated in conference calls with Ballow, Ballow's associate, and the EVTC officer during which certain orders were discussed. As a result, Respondent knew or was reckless in not knowing that Ballow and the others were engaged in a manipulation of EVTC and EpicEdge.

I. The trades placed by Respondent for Ballow included sales of EpicEdge stock that were not registered with the Commission and were not exempt from registration. The trades also included purchases of both EpicEdge and EVTC stock that occurred while Ballow was engaged in distributions of those securities.

J. As a result of the conduct described above, Menzel willfully aided and abetted and caused violations Sections 5(a) and (c) of the Securities Act, which prohibit sales and offers of securities made without a registration statement being in effect or filed with the Commission; Section 17(a) of the Securities Act, Section 10(b) of the Exchange Act, and Rule 10b-5 thereunder, which prohibit fraudulent conduct in the offer and sale of securities and in connection with the purchase or sale of securities; and Rule 101 of Regulation M, which, among other things, prohibits persons participating in a distribution of a security from purchasing or inducing others to purchase the security.

IV.

In view of the foregoing, the Commission deems it appropriate, in the public interest, and for the protection of investors to impose the sanctions agreed to in Respondent Menzel's Offer.

Accordingly, it is hereby ORDERED:

A. Pursuant to Section 8A of the Securities Act and Section 21C of the Exchange Act, that Respondent Menzel cease and desist from committing or causing any violations and any future violations of Sections 5(a) and (c) and 17(a) of the Securities Act, Section 10(b) of the Exchange Act, Rule 10b-5 thereunder, and Rule 101 of Regulation M.

B. Pursuant to Section 15(b)(6) of the Exchange Act, Respondent Menzel be, and hereby is, suspended from association with any broker or dealer for a period of six (6) months, effective on the second Monday following the entry of this Order.

C. IT IS FURTHERED ORDERED that Respondent shall, within ten business days of this Order, pay disgorgement and prejudgment interest in the total amount of $72,305 to the United States Treasury. Respondent shall, within ten business days of this Order, pay a civil money penalty in the amount of $35,000 to the United States Treasury. Such payments shall be: (A) made by United States postal money order, certified check, bank cashier's check or bank money order; (B) made payable to the Securities and Exchange Commission; (C) hand-delivered or mailed to the Office of Financial Management, Securities and Exchange Commission, Operations Center, 6432 General Green Way, Stop 0-3, Alexandria, VA 22312; and (D) submitted under cover letter that identifies Menzel as a Respondent in these proceedings, the file number of these proceedings, a copy of which cover letter and money order or check shall be sent to Donald M. Hoerl, Associate Director, Central Regional Office, 1801 California Street, Suite 1500, Denver, CO 80202-2656.

By the Commission.

Jonathan G. Katz
Secretary


Endnotes


http://www.sec.gov/litigation/admin/33-8519.htm


Modified: 12/22/2004