UNITED STATES OF AMERICA
SECURITIES AND EXCHANGE COMMISSION
Securities Exchange Act of 1934
Release No. 48862 / December 1, 2003
File No. 3-11347
PUBLIC ADMINISTRATIVE PROCEEDINGS INSTITUTED AGAINST VALENTIN FERNANDEZ, JUAN FERNANDEZ, DANIEL J. PHILLIPS, MATTHEW D. STONE AND HASKELL P. STONE
On December 1, 2003, the Commission entered an Order Instituting Public Administrative Proceedings Pursuant to Section 15(b) of the Securities Exchange Act of 1934 (Order) against Valentin Fernandez (V. Fernandez), Juan Fernandez (J. Fernandez), Daniel J. Phillips (Phillips), Matthew D. Stone (M. Stone) and Haskell P. Stone (H. Stone) (collectively, Respondents) of South Florida, based on their criminal convictions for conspiracy to commit securities fraud, mail fraud and wire fraud in connection with a penny stock manipulation scheme. The criminal indictment filed on April 20, 2001 alleged that while employed as registered representatives at two registered broker-dealers, J. Fernandez, Phillips, M. Stone and H. Stone accepted secret cash payments from V. Fernandez, an unregistered person, to manipulate the securities of the following penny stock issuers: Lifekeepers International, Inc., BIZ Holdings, Inc. and Piccard Medical Corp. (collectively, the Issuers). The indictment further alleged that as the Issuers' securities increased in volume and price, V. Fernandez sold his shares into the market at artificially inflated prices to the detriment of unwitting investors.
The Order alleges that V. Fernandez and J. Fernandez pled guilty to two counts of a criminal indictment charging them with conspiracy to commit securities fraud, mail fraud and wire fraud and conspiracy to commit mail and wire fraud, respectively, and were each sentenced to 51 months in prison, three years probation and ordered to pay $8,936,761 in restitution. The Order also alleges that Phillips pled guilty to one count of the indictment charging him with conspiracy to commit securities fraud, mail fraud and wire fraud and was sentenced to 24 months in prison and ordered to pay $6,786,784 in joint and several restitution. The Order further alleges that M. Stone and H. Stone each pled guilty one count of the indictment charging them conspiracy to commit securities fraud, mail fraud and wire fraud and were sentenced to five years of probation, 200 hours of community service, and ordered to pay $3,831,099.
A hearing will be scheduled before an administrative law judge to determine whether the allegations contained in the Order are true, to provide the Respondents an opportunity to dispute these allegations, and to determine what remedial sanctions, if any, are appropriate and in the public interest.