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U.S. Securities and Exchange Commission

Securities Exchange Act of 1934
Release No. 50437 / September 24, 2004

Administrative Proceeding
File No. 3-11682

In the Matter of Michael Carnicle

The Commission has instituted administrative proceedings against Michael Carnicle ("Carnicle") pursuant to Section 15(b) of the Securities Exchange Act of 1934 (Exchange Act) with respect to his participation in offerings of penny stock. The proceedings are based on an injunction entered against Carnicle on September 7, 2004, which enjoined Carnicle from future violations of the securities registration, antifraud and lying to auditors provisions of the federal securities laws.

In the underlying civil action the Division of Enforcement alleged, among other matters, that in or about December 1993, Carnicle arranged a financing agreement to provide funding for AutoCorp Equities, Inc., to promote a live stage production of the American Gladiators television show in Las Vegas, Nevada. The Division of Enforcement also alleged that the financing transaction involved AutoCorp's acquisition of $5 million in certificates of deposit, ostensibly issued by a Russian bank. The Division of Enforcement further alleged that while the CDs had a face value of $5 million, Carnicle knew the CDs were worthless because the CDs were not, in fact, issued by the Russian bank, but were instead printed at a Florida Kinko's copy center by one of Carnicle's co-defendants in the civil case. The Division of Enforcement also alleged Carnicle arranged for Autocorp to pay for the Russian CDs by issuing Regulation S stock, structuring the transaction to create the appearance that the sale met the requirements of Regulation S under the Securities Act; however, the issuance of stock did not comply with Regulation S because the stock was sold to a United States resident. Finally, the Division of Enforcement alleged that Autocorp included the Russian CDs as assets on its financial statements, which were included in a Form 10-Q filed with the Commission.

The Division of Enforcement further alleges that Carnicle was enjoined from future violations of Sections 5(a), 5(c) and 17(a) of the Securities Act and Section 10(b) of the Exchange Act and Rules 10b-5 and 13b2-1 thereunder and from aiding and abetting violations of Section 13(b)(2)(A) of the Exchange Act.

A hearing will be scheduled before an administrative law judge to determine whether the allegations contained in the Order are true, to provide Carnicle an opportunity to dispute these allegations, and to determine whether, pursuant to 15(b) of the Exchange Act, it is appropriate and in the public interest to bar Carnicle from participating in any offering of penny stock, including: acting as a promoter, finder, consultant, agent or other person who engages in activities with a broker, dealer or issuer for purposes of the issuance or trading in any penny stock; or inducing or attempting to induce the purchase or sale of any penny stock.

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

See also the Order in this matter.



Modified: 09/24/2004