UNITED STATES OF AMERICA
SECURITIES AND EXCHANGE COMMISSION
Securities Exchange Act of 1934
Release No. 50875 / December 17, 2004
Admin. Proc. File No. 3-11776
PROCEEDINGS INSTITUTED AGAINST LONNIE DRAGON
The Commission announced that it has instituted administrative proceedings against Lonnie Dragon ("Dragon"), a resident of San Diego, California. In the Order Instituting Proceedings Pursuant to Section 15(b) of the Securities Exchange Act of 1934 ("Order"), the Division of Enforcement alleges that on November 18, 2004, the United States District Court for the Southern District of California entered an order by default permanently enjoining and restraining Dragon from violating Sections 5(a), 5(c) and 17(a) of the Securities Act of 1933; and Sections 10(b) and 15(a) of the Securities Exchange Act of 1934, and Rule 10b-5 thereunder (SEC v. Brian Lee, et al., 03-CV-1957-JH (JFS )). In the injunctive action, the Commission's complaint alleged, inter alia, that between approximately June 2000 and September 2000, Dragon, while not associated with a registered broker-dealer, and others raised approximately $887,503 in an unregistered, non-exempt offering of stock for LevelRed Investments, Inc., and that the offering was fraudulent because the offering materials failed to disclose, among other things, the true control persons of the company and the amount of the offering proceeds that were paid as sales commissions.
A hearing will be scheduled before an administrative law judge to determine whether the allegations contained in the Order are true, to provide Dragon an opportunity to dispute these allegations, and to determine what sanctions, if any, are appropriate and in the public interest. The administrative law judge shall issue an initial decision no later than 210 days from the date of service of the Order.
See also the Order in this matter