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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. 49270/ February 18, 2004

ADMINISTRATIVE PROCEEDING
FILE NO. 3-11347


In the Matter of

VALENTIN FERNANDEZ,
JUAN FERNANDEZ,
DANIEL J. PHILLIPS,
HASKEL P. STONE,
and MATTHEW D. STONE


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ORDER MAKING FINDINGS AND
IMPOSING SANCTION BY DEFAULT
AGAINST MATTHEW D. STONE

The Securities and Exchange Commission ("Commission") initiated this proceeding on December 1, 2003, by an Order Instituting Proceedings ("OIP") issued pursuant to Section 15(b) of the Securities Exchange Act of 1934.

On February 3, 2004, the Division of Enforcement ("Division") filed a Motion for Entry of Default Order Against Respondent Matthew D. Stone ("Motion") pursuant to Rules 155(a) and 220(f) of the Commission's Rules of Practice, 17 C.F.R. 201.155(a), .220(f). The Motion has several exhibits: Exhibit A is an affidavit showing that Respondent Matthew Stone was personally served with the OIP on January 8, 2004; Exhibit B is a December 19, 2003, Division letter to Respondent Matthew Stone enclosing an Offer of Settlement; Exhibit C is a notice dated January 13, 2004, to Respondent Matthew Stone indicating that the Division will file the Motion unless it received a signed Offer of Settlement; and Exhibit D is an affidavit of Ilonka Almonte that Matthew Stone had not filed an Answer or responsive pleading with the Commission as of February 3, 2004.

Findings

The Commission's Rules of Practice provide that Respondents who fail to file an answer, appear at a prehearing conference, or answer a dispositive motion may be deemed to be in default and the allegations in the OIP may be deemed true. 17 C.F.R. 201.155, .220. Respondent Matthew Stone has not answered the allegations in the OIP, did not appear at the prehearing conference on January 13, 2004, and did not respond to the Motion. Accordingly, I GRANT the Motion and FIND that the following allegations in the OIP are true.

At all relevant times, Respondent Matthew Stone was a registered representative associated with registered broker-dealers.

At all relevant times, Respondent Matthew Stone participated in the offering of Lifekeepers International, Inc. ("Lifekeepers"), BIZ Holdings, Inc. ("BIZ"), and Piccard Medical Corp. ("Piccard"), collectively, the "Issuers," which are penny stocks.

According to a criminal indictment filed on April 20, 2001, from approximately December 1998 through August 2000, Respondent Matthew Stone knowingly and willfully conspired and agreed to commit securities fraud, mail fraud, and wire fraud by manipulating the securities of the Issuers. The indictment further alleged that Respondent Matthew Stone conspired with others to artificially increase the share price of the Issuers' securities by making undisclosed cash payments to registered representatives who induced their clients to purchase the Issuers' securities. According to the indictment, the secret cash payments to the conspiring brokers boosted the price and demand for the Issuers' securities while Respondent Valentin Fernandez sold his shares into the market at artificially inflated prices. The indictment also alleged that once Respondent Valentin Fernandez sold his stock and ceased making secret cash payments to the co-conspirators, the demand and price for the Issuers' securities plummeted resulting in substantial losses to investors.

On March 1, 2002, Respondent Matthew Stone pled guilty to count one of a criminal indictment charging him with conspiracy to commit securities fraud, mail fraud and wire fraud. On May 10, 2002, Respondent Matthew Stone was sentenced to five years probation, 200 hours of community service, and ordered to pay $3,831,099 in joint and several restitution with his brother, Respondent Haskel P. Stone. United States v. Valentin Fernandez, Case No. 01-8060-CR-Ferguson (S.D. Fla. 2001).

Order

Based on the findings set forth above, I ORDER, pursuant to Section 15(b)(6) of the Securities Exchange Act of 1934, that Matthew D. Stone is barred (i) from association with a broker or dealer and (ii) from participating in an offering of penny stock.

I FURTHER ORDER that the hearing scheduled to begin on March 1, 2004, is canceled.

_______________________________
Brenda P. Murray
Chief Administrative Law Judge

 

http://www.sec.gov/litigation/admin/34-49270.htm


Modified: 03/08/2004