UNITED STATES OF AMERICA
In the Matter of
ORDER INSTITUTING PUBLIC
The Securities and Exchange Commission (the "Commission") deems it appropriate in the public interest that public administrative proceedings be instituted pursuant to Section 15(b)(6) of the Securities Exchange Act of 1934 ("Exchange Act") against Stanley Schulman ("Schulman" or "Respondent").
In anticipation of the institution of this proceeding, Schulman 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 Schulman admits to the Commission's finding that a Final Judgment of Permanent Injunction as to Stanley Schulman ("Final Judgment") has been entered against him as set forth in Section III.C. below, and also admits the jurisdiction of the Commission over himself and over the subject matter of this proceeding, Schulman consents to the entry of this Order Instituting Public Administrative Proceedings, Making Findings and Imposing Remedial Sanctions ("Order") and to the entry of the findings and the imposition of remedial sanctions set forth below.
On the basis of this Order and the Respondent's Offer, the Commission makes the following findings:
A. Stanley Schulman lives in Devore, California, and purports to run a "consulting" business for public companies.
B. Nemdaco, Inc. ("Nemdaco") is a Colorado shell corporation, controlled by Schulman since 1995.
C. On November 7, 2000, the Commission filed a complaint against Schulman and Nemdaco, among others, in Securities and Exchange Commission v. Nemdaco, Inc., Stanley Schulman, Jeffrey R. Bender and Gary J. Larkin ("SEC v. Nemdaco"), C.D. Calif., Civil Action No. EDCV-00861 RT(SGLx). On July 12, 2000, 2000, Schulman consented to the entry of the Final Judgment against him in SEC v. Nemdaco, without admitting or denying the allegations in the complaint, except as to jurisdiction, which he admitted. On November 16, 2000, the United States District Court for the Central District of California entered the Final Judgment, which permanently enjoins Schulman from violating Sections 5(a), 5(c) and 17(a) of the Securities Act of 1933, Sections 10(b), 13(d)(1) and 16(a) of the Exchange Act and Rules 10b-5, 13d-1, 13d-2 and 16a-3 promulgated thereunder, and further enjoins him from aiding and abetting violations of Section 13(a) of the Exchange Act and Rules 13a-1, 13a-11 and 13a-13 promulgated thereunder.
D. The Commission's complaint filed in SEC v. Nemdaco alleged, among other things, that from 1995 through May of 1997, Schulman took undisclosed control of Nemdaco and proceeded to issue false press releases and make false statements about Nemdaco's business opportunities and acquisitions. None of Nemdaco's purported projects came anywhere near fruition. At the same time, Schulman sold millions of unregistered Nemdaco shares (received from former controlling persons and bogus Regulation S/Form S-8 issuances) through nominee accounts, making over $1.4 million in illicit profits. The complaint also alleged that Schulman failed to make the necessary filings on Schedule 13D disclosing his ownership and control of more than five percent of the outstanding shares of Nemdaco and that he failed to make the necessary filings on Forms 3, 4 and 5 disclosing his ownership interest and disposition of Nemdaco stock. The complaint further alleges that Schulman aided and abetted Nemdaco's violations of Section 13(a) of the Exchange Act.
E. Nemdaco common stock qualified as a "penny stock," as defined by Exchange Act Rule 3a51-1 [17 C.F.R.§ 240.3a51-1], during its fiscal years ended April 30, 1995, April 30, 1996, and April 30, 1997. By engaging in the conduct described in the complaint during the fiscal years ended April 30, 1995, April 30, 1996, and April 30, 1997, Schulman participated in an offering of a 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, Schulman be, and hereby is, barred from participating in any offering of penny stock, including: (i) acting as a promoter, finder, consultant, agent, or other person who engages in activities with a broker, dealer or issuer for purposes of the issuance or trading in any penny stock; or (ii) inducing or attempting to induce the purchase or sale of any penny stock.
By the Commission.
Jonathan G. Katz