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U.S. Securities and Exchange Commission

UNITED STATES OF AMERICA
Before the
SECURITIES AND EXCHANGE COMMISSION

SECURITIES EXCHANGE ACT OF 1934
Release No. 47656 / April 10, 2003

ADMINISTRATIVE PROCEEDING
File No. 3-11037


In the Matter of

WILLIAM E. KRAEMER


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ORDER MAKING FINDINGS AND IMPOSING SANCTIONS BY DEFAULT

The Securities and Exchange Commission ("Commission") instituted this proceeding pursuant to Section 15(b) of the Securities Exchange Act of 1934 ("Exchange Act") on February 10, 2003. The Division filed a Motion For Default pursuant to Rule 155(a) of the Commission's Rules of Practice on March 19, 2003. See 17 C.F.R. § 201.155(a).

Findings

On February 25, 2003, Denis Royston a solicitor in London, England, informed the Division of Enforcement ("Division") in a telephone conversation that Respondent William E. Kraemer had authorized Mr. Royston to accept service, and that Mr. Royston had received a copy of the Order Instituting Proceedings ("OIP"). Mr. Royston confirmed these representations in a letter to the Division dated March 6, 2003.1 Mr. Kraemer failed to file an answer within twenty days of when he was served with the OIP. Accordingly, I find the following allegations in the OIP to be true. See 17 C.F.R. §§ 201.155(a), .220(f).2

Mr. Kraemer, a sixty-one year old former resident of Bethlehem, Pennsylvania, who now resides in Europe, was, at all relevant times, the founder, owner, chairman, and chief executive officer of Prexomet Corporation ("Prexomet"), a now defunct Smithfield, Rhode Island-based corporation. On July 27, 2001, the Commission filed a complaint in the United States District Court for the District of Rhode Island against Mr. Kraemer and others, based on alleged violations of certain provisions of the federal securities laws in a civil action entitled SEC v. William E. Kraemer, Civil Action Number 01-358-ML. The complaint alleged that Mr. Kraemer participated in a scheme that utilized a variety of materially false and misleading statements to induce fourteen investors to invest a total of approximately $240,000 in Prexomet. According to the complaint, between January and September 1997, Mr. 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, Mr. 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, Mr. Kraemer, nor any 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.

The Complaint also alleged that investors have not recovered any portion of their original investment and have not received any of the promised returns. Through the conduct described above, Mr. Kraemer participated in the offering of the common stock of Prexomet, which is a penny stock.

The Commission's complaint in the civil action was served by hand upon Mr. Kraemer on July 24, 2002. Based upon his failure to file a timely answer to the complaint, the court entered a default against Mr. Kraemer on August 21, 2002. On September 18, 2002, the court entered a final judgment by default against Mr. Kraemer, permanently enjoining him from future violations of Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, and ordering him to pay disgorgement, along with prejudgment interest, in the total amount of $279,245, and a civil monetary penalty in the amount of $192,163. See SEC v. William E. Kraemer, Civil Action Number 01-358-ML (Sept. 18, 2002).

Order

Based on the above findings and public interest considerations, I GRANT the Division's Motion for Default. Further, pursuant to Section 15(b)(6) of the Securities Exchange Act of 1934, I ORDER, that William E. Kraemer be, and hereby is, BARRED from being associated with a broker or dealer and from participating in any offering of penny stock.

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Brenda P. Murray
Chief Administrative Law Judge

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1 Mr. Royston told the Division that Mr. Kraemer did not intend to file a response to the OIP in a telephone conversation on March 5, 2003.
2 Rule 220(f) of the Commission's Rules of Practice specifies that a party respondent who fails to file a required answer within the time provided may be deemed in default pursuant to Commission Rule 155(a). Rule 155(a) provides that findings may be made against a party in default based on the record, including the OIP.

 

http://www.sec.gov/litigation/admin/34-47656.htm


Modified: 04/11/2003