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UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Securities Exchange Act of 1934
Release No. 47334 / February 10, 2003

Administrative Proceeding
File No. 3-11037

SEC INSTITUTES ADMINISTRATIVE PROCEEDING AGAINST WILLIAM E. KRAEMER BASED ON ENTRY OF JUDGMENT IN MANGANESE MINE STOCK FRAUD CASE

The Securities and Exchange Commission today instituted an administrative proceeding against William E. Kraemer, formerly of Bethlehem, Pennsylvania and a current resident of Europe, based on the entry of an injunction against him in a civil fraud case the Commission filed against him in Securities and Exchange Commission v. William E. Kraemer, et al. (Civil Action Number 01-358-ML (D. RI.). In the Order Instituting Administrative Proceedings ("Order"), the Division of Enforcement alleges that, on September 18, 2002, the United States District Court for the District of Rhode Island entered a final judgment by default against Kraemer. The final judgment permanently enjoins Kraemer from future violations of the antifraud provisions of the federal securities laws. The final judgment further requires Kraemer to pay a total of $471,408 in disgorgement, prejudgment interest and penalties.

According to the Order, the Commission filed a civil injunctive action against Kraemer and others in the Rhode Island federal court on July 30, 2001, alleging that Kraemer participated in a scheme that utilized a variety of materially false and misleading statements to induce 14 investors to invest a total of approximately $240,000 in Prexomet, a now defunct Smithfield, Rhode Island-based corporation. According to the complaint, between January and September 1997, Kraemer solicited investments in Prexomet by falsely claiming, among other things, that: (1) Prexomet owned a valuable mine in Arizona when, in fact, neither Prexomet, Kraemer nor any of the other defendants owned any mine; (2) Prexomet would conduct an initial public offering ("IPO") within a few weeks or months when, in fact, neither Prexomet, Kraemer nor any of the other defendants ever filed any document with the Commission concerning a proposed IPO or spent any funds in preparation for an IPO; (3) an investment in Prexomet's pre-IPO stock was risk-free when, in fact, an investment in Prexomet was highly risky because the company had no real assets or business prospects; and (4) soon after the IPO, investors who paid $1 per share for pre-IPO Prexomet stock would be able to resell it for $5 per share to Prexomet or a third party when, in fact, there was no reasonable basis for such a claim. According to the complaint, the investors have not recovered any portion of their original investment and have not received any of the promised returns. According to the Order, the Commission's complaint was served by hand upon Kraemer on July 24, 2002. Based upon his failure to file a timely answer to the complaint, the court entered a default against Kraemer on August 21, 2002. Based upon the default, the court issued the final judgment referred to above against Kraemer on September 18, 2002.

A hearing will be scheduled before an administrative law judge to determine whether the allegations contained in the Order are true, to provide Kraemer an opportunity to dispute these allegations, and to determine what sanctions, if any, are appropriate and in the public interest.

For further information, see SEC v. William E. Kraemer, et al., Litigation Rel. No. 17080, 2001 SEC LEXIS 1511 (July 30, 2001) and In the Matter of George T. Helm, Jr., Securities Exchange Act of 1934 Rel. No. 44873, 2001 SEC LEXIS 2006 (September 28, 2001).


http://www.sec.gov/litigation/admin/34-47334.htm


Modified: 02/25/2003