UNITED STATES OF AMERICA
In the Matter of LOUIS G. KARABOCHOS,
|ORDER INSTITUTING PUBLIC|
MAKING FINDINGS AND IMPOSING
The Securities and Exchange Commission (the "Commission") deems it appropriate that a public administrative proceedings be instituted pursuant to Section 15(b)(6) of the Securities Exchange Act of 1934 ("Exchange Act") against Louis G. Karabochos ("Karabochos").
Accordingly, IT IS HEREBY ORDERED that an administrative proceeding against Karabochos be, and hereby is, instituted.
In anticipation of the institution of this proceeding, Karabochos has submitted an offer of settlement ("Offer"), which the Commission has determined to accept. Solely for the purpose of this proceeding 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 contained herein except that Karabochos admits the jurisdiction of the Commission over him and over the subject matter of this proceeding, Karabochos consents to the issuance of this Order Instituting Public Administrative Proceedings, Making Findings and Imposing Remedial Sanctions ("Order").
On the basis of this Order and the Offer, the Commission makes the following findings:
A. Louis G. Karabochos ("Karabochos") resides in Walnut Creek, California. Karabochos served as Chairman, President, and Chief Executive Officer of Gateways To Space, Inc. until he resigned from those positions on or about October 22, 1996.
B. Gateways To Space ("Gateways") is now a defunct Delaware public company with no current business location or office. Until about October 1996, Gateways' offices were located in Pleasanton, California.
C. On April 7, 2000, a Final Judgment of Permanent Injunction Against Defendant Louis G. Karabochos was entered by the United States District Court for the Northern District of California in a civil action entitled Securities and Exchange Commission v. Louis G. Karabochos, and others, Case No. C-98-3178-MCC (the "Judgment"). The Judgment, which was entered with Karabochos' consent, permanently enjoins Karabochos from violations of Sections 5(a), 5(c), and 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 in connection with the purchase or sale of any security.
D. The Commission's complaint in the civil action alleged that between approximately 1993 and March 1996, defendant Karabochos and others sold unregistered, restricted Gateways stock and engaged in fraud in the offer and sale of that stock to more than 780 investors nationwide, resulting in investor losses of approximately $5 million.
E. The complaint further alleged that Karabochos misrepresented to prospective investors that after six months they could exchange their restricted Gateways stock either for the amount of their original investment, plus interest, or for unrestricted Gateways shares. The Commission alleged that Karabochos made other misrepresentations to investors by materially and falsely overstating the Company's sales of videotapes and the Company's performance.
F. Gateways common stock qualified as a "penny stock," as defined by Exchange Act Rule 3a51-1, during its fiscal year ended December 31, 1993. By engaging in the conduct described in the complaint during the fiscal year ended December 31, 1993, Karabochos participated in an offering of penny stock.
Based on the foregoing, the Commission deems it appropriate and in the public interest to accept the Respondent's Offer and to impose the sanctions specified in that Offer. Accordingly, IT IS HEREBY ORDERED that, pursuant to Sections 15(b)(6) of the Exchange Act, Karabochos be, and hereby is, barred from participating in any offering of penny stock.
By the Commission.
Jonathan G. Katz
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