John Adams, Jr., et al.

SECURITIES EXCHANGE ACT OF 1934
Release No. 45767 / April 17, 2002

ADMINISTRATIVE PROCEEDING
File No. 3-10702

SUMMARY

This Order bars John Adams, Jr., Michael McDermott, Palmer Myers, and Gary Smolokoff (Respondents) from association with a broker-dealer, based on their felony convictions. Each was convicted of conspiracy to commit securities fraud during his employment with a broker-dealer that used fraudulent sales practices to sell speculative securities to unsuspecting investors.

I. BACKGROUND

The Securities and Exchange Commission (Commission) issued the Order Instituting Proceedings (OIP) in this matter on February 15, 2002, pursuant to Section 15(b) of the Securities Exchange Act of 1934 (Exchange Act). The OIP alleges that Respondents were associated with a broker-dealer during the 1990s, and were convicted of conspiracy to commit securities fraud in 2000. Adams, Myers, and Smolokoff were served with the OIP on February 23, and McDermott, on March 5. Each failed to file an Answer, due twenty days after he was served. See 17 C.F.R. § 201.220(b); OIP at 5. On April 2, the Division of Enforcement filed a Motion for Default, asking that Respondents be barred from association with any broker or dealer. A respondent who fails to file an Answer to the OIP may be deemed to be in default, and the administrative law judge may determine the proceeding against him. See 17 C.F.R. §§ 201.155(a), .220(f). On April 4, Respondents were ordered to show cause by April 12 why they should not be held in default and barred from association with any broker or dealer. None replied.

Respondents are in default because they failed to file Answers or otherwise to defend the proceeding. See 17 C.F.R. §§ 201.155(a)(2), .220(f). Accordingly, the undersigned finds that the allegations in the OIP as to them are true. The findings of fact and conclusions of law in this order are not binding on any other person in this proceeding.

II. FINDINGS OF FACT

Respondents were associated during 1992 to 1995 with L.C. Wegard & Co., Inc. (Wegard), a registered broker-dealer. Adams was employed as a registered representative, branch manager, and regional vice president; McDermott, as a registered representative, national sales manager, branch manager, and regional vice president; Myers, as a registered representative, manager, and assistant branch manager; and Smolokoff, as a registered representative, manager, and assistant branch manager. Wegard operated as a boiler room, with Respondents' participation, inducing unsuspecting investors to purchase speculative high-risk securities through the use of fraudulent and deceptive sales practices. Respondents were convicted of conspiracy to commit securities fraud in July 2000. United States v. Adams, No. 98-414-03 (D. N.J. July 26, 2000); United States v. McDermott, No. 97-647-01 (D. N.J. July 5, 2000); United States v. Myers, No. 97-647-07 (D. N.J. July 12, 2000); United States v. Smolokoff, No. 97-647-05 (D. N.J. July 13, 2000).

III. CONCLUSIONS OF LAW

Adams, McDermott, Myers, and Smolokoff have each been convicted, within ten years of the commencement of this proceeding, of "conspiracy to commit" a felony that "involves the purchase or sale of any security" and also "arises out of the conduct of the business of a broker [or] dealer" within the meaning of Sections 15(b)(4)(B) and 15(b)(6)(A)(ii) of the Exchange Act. Their unlawful conduct was recurring and egregious. There are no mitigating circumstances.

IV. SANCTION

The Division requests that Respondents be barred from association with any broker or dealer. This sanction will serve the public interest and the protection of investors, pursuant to Sections 15(b) and 19(h) of the Exchange Act, and accords with Commission precedent and the sanction considerations set forth in Steadman v. SEC, 603 F.2d 1126, 1140 (5th Cir. 1979).

V. ORDER

IT IS ORDERED that:

JOHN ADAMS, JR., IS BARRED from association with any broker or dealer;

MICHAEL MCDERMOTT IS BARRED from association with any broker or dealer;

PALMER MYERS IS BARRED from association with any broker or dealer; and

GARY SMOLOKOFF IS BARRED from association with any broker or dealer.

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Carol Fox Foelak
Administrative Law Judge