United States Securities and Exchange Commission
Securities Exchange Act of 1934
Release No. 49568 / April 15, 2004
Administrative Proceeding File No. 3-11459
Administrative Proceedings Instituted Against Michael Boston
On April 15, 2004, the Commission instituted an administrative proceeding against Michael Boston ("Boston"), a former registered representative associated with the defunct broker-dealer Baxter, Banks, & Smith, Ltd. ("BBS"). The Order Instituting Administrative Proceedings Pursuant to Section 15(b) of the Securities Exchange Act of 1934 ("Order") alleges that Boston supervised a New York branch office of BBS during November 1997 through January 1999.
On October 10, 2002, the United States District Court for the Southern District of New York entered a default judgment against Boston permanently enjoining him from violating the securities registration and antifraud provisions of the Securities Act of 1933 and the Securities Exchange Act of 1934. The complaint in the civil injunctive action alleged that Boston participated in a scheme to manipulate the public trading market for the stock of Maid Aide, Inc. ("MDAN"), a public shell corporation. To facilitate the scheme, the defendants gained control of MDAN and set up two boiler room operations at BBS. Boston supervised 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.
Boston was also ordered to disgorge $150,000 that he obtained as a result of his fraudulent scheme, plus $53,745.49 in prejudgment interest. He was ordered to pay a civil monetary penalty of $175,000.
A hearing will be scheduled before an administrative law judge to determine whether the allegations contained in the Order are true, to provide Boston an opportunity to dispute these allegations, and to determine what remedial sanctions, if any, are appropriate and in the public interest.
The Commission directed that an administrative law judge shall issue an initial decision in this matter within 210 days from the date of the service of the Order.
For further information see Litigation Releases No. 17305 (January 14, 2002) and 17790 (October 17, 2002).
See also the Order in this matter