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U.S. Securities and Exchange Commission

UNITED STATES OF AMERICA
Before the
SECURITIES AND EXCHANGE COMMISSION

April 15, 2004

ADMINISTRATIVE PROCEEDING
File No. 3-11459


In the Matter of

MICHAEL BOSTON,

Respondent.


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ORDER INSTITUTING
ADMINISTRATIVE PROCEEDINGS
PURSUANT TO SECTION 15(b) OF THE
SECURITIES EXCHANGE ACT OF 1934

I.

The Securities and Exchange Commission ("Commission") deems it appropriate and in the public interest that public administrative proceedings be, and hereby are, instituted pursuant to Section 15(b) of the Securities Exchange Act of 1934 ("Exchange Act") against Michael Boston ( "Respondent" or "Boston").

II.

As a result of its investigation, the Division of Enforcement alleges that:

A. RESPONDENT

Boston, age 29, is a former registered representative who was associated at all relevant times with Baxter, Banks, & Smith Ltd. ("BBS"), a defunct broker-dealer. During November 1997 through January 1999, Boston supervised a New York branch office of BBS.

B. OTHER RELEVANT ENTITIES

BBS, a Delaware corporation, maintained its principal office in Tampa, Florida and two branch offices in New York. On April 28, 2000, BBS ceased all operations after the State of Florida Department of Banking and Finance permanently revoked its broker-dealer license.

C. FRAUDULENT SCHEME

  1. On January 14, 2002, the Commission brought an action in federal district court against Boston and others alleging that Boston violated Sections 5(a), 5(c), and 17(a) of the Securities Act of 1933 and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, in connection with trading the stock of Maid Aide, Inc. ("MDAN"), a thinly-traded shell company. SEC v. Tanner, et al., 02 Civ. 0306 (S.D.N.Y.) (WHP).

  2. The Commission's Complaint alleges, among other things, that Boston participated in a scheme to manipulate the public trading market for MDAN stock. To facilitate the scheme, the defendants gained control of MDAN and set up two boiler room operations at BBS. Boston was the supervisor of one of the boiler rooms through which unlicensed brokers sold unregistered MDAN stock at artificially inflated prices, using high-pressure sales tactics, in exchange for undisclosed kickbacks. Boston allowed the unregistered brokers to assume his identity during calls they made to investors to solicit purchases of MDAN, in order to conceal the fact that the brokers were not registered with the Commission or licensed by the NASD. Through this scheme, Boston and the other defendants defrauded investors out of more than $3.7 million.

  3. On October 10, 2002, the Court entered a default judgment and order that permanently enjoins Boston from violating the federal securities laws, orders him to disgorge $150,000 that Boston obtained as a result of his fraudulent scheme, plus $53,745.49 in prejudgment interest, and orders him to pay a civil monetary penalty of $175,000.

III.

In view of the allegations made by the Division of Enforcement, the Commission deems it necessary and appropriate in the public interest that public administrative proceedings be instituted to determine:

  1. Whether the allegations set forth in Section II. above are true and, in connection therewith, to afford Boston an opportunity to establish any defenses to such allegations; and

  2. What, if any, remedial action is appropriate in the public interest, pursuant to Section 15(b) of the Exchange Act.

IV.

IT IS ORDERED that a public hearing for the purpose of taking evidence on the questions set forth in Section III hereof shall be convened at a time and place to be fixed, and before an Administrative Law Judge to be designated by further order as provided by Rule 200 of the Commission's Rules of Practice, 17 C.F.R. 201.200.

IT IS FURTHER ORDERED that Respondent shall file an answer to the allegations contained in this Order within twenty (20) days after service of this Order, as provided by Rule 220 of the Commission's Rules of Practice, 17 C.F.R. 201.220.

If Respondent fails to file an answer or fails to appear at a hearing after being duly notified, the Respondent may be deemed in default and the proceedings may be determined against him upon consideration of this Order, the allegations of which may be deemed to be true as provided by Rules 155(a), 220(f), 221(f) and 310 of the Commission's Rules of Practice, 17 C.F.R. 201.155(a), 201.220(f), 201.221(f) and 201.310.

This Order shall be served upon Respondent personally or by certified mail.

IT IS FURTHER ORDERED that the Administrative Law Judge shall issue an initial decision no later than 210 days from the date of service of this Order, pursuant to Rule 360(a)(2) of the Commission's Rules of Practice.

In the absence of an appropriate waiver, no officer or employee of the Commission engaged in the performance of investigative or prosecuting functions in this or any factually related proceeding will be permitted to participate or advise in the decision of this matter, except as witness or counsel in proceedings held pursuant to notice. Since this proceeding is not "rule making" within the meaning of Section 551 of the Administrative Procedure Act, it is not deemed subject to the provisions of Section 553 delaying the effective date of any final Commission action.

By the Commission.

Jonathan G. Katz
Secretary

 

http://www.sec.gov/litigation/admin/34-49568-o.htm


Modified: 04/16/2004