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U.S. Securities and Exchange Commission

Wayne M. Carlin (WC-2114)
Regional Director
Northeast Regional Office
SECURITIES AND EXCHANGE COMMISSION
233 Broadway
New York, New York 10279
(646) 428-1510

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK


SECURITIES AND EXCHANGE COMMISSION

Plaintiff,

v.

EPHONE, INC., WEBPHONE, LLP,
NEWERA COMMUNICATIONS, LLP,
ELECTRONIC AUDIO SERVICES, INC.,
NETCALL, INC., WEBPHONE, INC.,
THEODORE BENDER, PETER BERTORELLI,
DONALD KERNS, PATRICIA LEDEZMA,
PHILIP LEITNER, KEVIN LUCE, ARASH NOORAI,
DOUGLAS PARNELL, CHRISTOPHER PLAIN,
DONALD LEE PLAIN, SALLY SAVINSKY,
ANTHONY STARK, DANA VALENSKY,
AND THOMAS DON WALKER,

Defendants.


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02 Civ. ___ ( )

COMPLAINT

Plaintiff Securities and Exchange Commission ("Commission") as and for its complaint against Defendants Ephone, Inc. ("Ephone"), Webphone, LLP ("Webphone"), Newera Communications, LLP ("Newera"), Electronic Audio Services, Inc. ("Electronic Audio"), Netcall, Inc. ("Netcall"), Webphone, Inc. ("Webphone, Inc."), Theodore Bender ("Bender"), Peter Bertorelli ("Bertorelli"), Donald Kerns ("Kerns"), Patricia Ledezma ("Ledezma"), Philip Leitner ("Leitner"), Kevin Luce ("Luce"), Arash Noorai ("Noorai"), Douglas Parnell ("Parnell"), Christopher Plain ("C. Plain"), Donald Lee Plain ("D. Plain"), Sally Savinsky ("Savinsky"), Anthony Stark ("Stark"), Dana Valensky ("Valensky") and Thomas Don Walker ("Walker") alleges as follows:

SUMMARY

1. This action involves three fraudulent schemes, conducted from approximately July 1999 to December 2000, pursuant to which the defendants raised over $2.9 million from over 200 investors located nationwide through unregistered securities offerings in three issuers, Ephone, Webphone, and Newera. These issuers were formed by defendant Noorai for the stated purpose of establishing long distance telephone service through the internet. Each of these issuers offered securities through purported private placements ostensibly to raise capital to create the long distance network. To market their unregistered securities to investors, Ephone, Webphone and Newera retained an "offering manager" - defendants D. Plain and C. Plain - who recruited and coordinated telemarketers known as Independent Sales Offices ("ISOs") to solicit investors.

2. These offerings were fraudulent because almost half of the offering proceeds went to the offering managers and the ISOs as commissions for soliciting investors, rather than to the issuers for their business operations. Of approximately $2.9 million raised in aggregate, about $1.2 million went to D. Plain, C. Plain, Bertorelli and the ISOs, who operated unlawfully as broker-dealers without registering with the Commission. The defendants did not disclose these excessive sales commissions to investors. Indeed, by diverting so large a share of the offering proceeds to pay commissions, defendants violated express representations in the offering memoranda and other materials, which stated that the issuers would use most of the offering proceeds for creating and marketing the long distance telephone network.

3. From approximately July 1999 through October 1999, Ephone, Noorai, D. Plain, C. Plain and over 8 ISO's, aided and abetted by Bertorelli, fraudulently offered and sold Ephone Series A Preferred Stock ("Ephone Series A") to approximately 60 investors generating $910,000 in proceeds. Defendants Kerns, Ledezma, Leitner, Luce, Savinsky, Valensky, Walker and Bender (collectively, the "Ephone Series A ISOs") were ISOs who offered and sold Ephone Series A securities to the public.

4. From approximately May 2000 through January 2001, Ephone, Noorai, D. Plain, C. Plain and at least 5 ISO's, aided and abetted by Bertorelli, fraudulently offered and sold Ephone Series B Preferred Stock ("Ephone Series B") to approximately 55 investors generating $887,000 in proceeds. Defendants Kerns, Luce, Savinsky, Stark, and Valensky (collectively, the "Ephone Series B ISOs") were ISOs who offered and sold Ephone Series B securities to the public.

5. From approximately September 1999 through February 2000, Webphone, Webphone, Inc., Noorai, D. Plain, C. Plain and at least 6 ISOs, aided and abetted by Bertorelli, fraudulently offered and sold Webphone limited liability partnership units to approximately 75 investors generating $925,000 in proceeds. Defendants Leitner, Luce, Savinsky, Valensky, Walker and Parnell (collectively, the "Webphone ISOs") were ISOs who offered and sold Webphone securities to the public.

6. From approximately January 2000 through July 2000, Newera, Electronic Audio, Netcall, D. Plain, C. Plain and at least 2 ISOs, aided and abetted by Bertorelli, fraudulently offered and sold Newera limited liability partnership units to approximately 23 investors generating approximately $300,000 in proceeds. Defendants Leitner and Savinsky (collectively, the "Newera ISOs") were ISOs who offered and sold Newera securities to the public.

7. Defendants Ephone, Webphone, Newera, Noorai, D. Plain, C. Plain, Webphone, Inc., Electronic Audio and Netcall have engaged, and unless enjoined, will continue to engage, directly or indirectly, in transactions, acts, practices and courses of business that constitute, or would constitute, violations of Sections 5(a), 5(c) and 17(a) of the Securities Act of 1933 ("Securities Act"), 15 U.S.C. §§ 77e(a), 77e(c) and 77q(a), Section 10(b) of the Securities Exchange Act of 1934 ("Exchange Act"), 15 U.S.C. §78j(b), and Rule 10b-5, 17 C.F.R. § 240.10b-5.

8. Defendants D. Plain and C. Plain, have engaged, and unless enjoined, will continue to engage, directly or indirectly, in transactions, acts, practices and courses of business that constitute, or would constitute, violations of Section 15(a) of the Exchange Act, 15 U.S.C. §78o(a).

9. Defendants Bender, Kerns, Ledezma, Leitner, Luce, Parnell, Savinsky, Stark, Valensky and Walker have engaged, and unless enjoined, will to continue to engage, directly or indirectly, in transactions, acts, practices and courses of business that constitute, or would constitute, violations of Sections 5(a), 5(c) and 17(a) of the Securities Act, 15 U.S.C. §§ 77e(a), 77e(c) and 77q(a), Sections 15(a) and 10(b) of the Exchange Act, 15 U.S.C. §§ 78o(a) and 78j(b), and Rule 10b-5, 17 C.F.R. § 240.10b-5.

10. Defendant Bertorelli knowingly aided and abetted violations of Section 10(b) of the Exchange Act, 15 U.S.C. § 78j(b) and Rule 10b-5, 17 C.F.R. § 10b-5, by Ephone, Webphone, Newera, Noorai, D. Plain, C. Plain, Webphone, Inc., Electronic Audio and Netcall and unless enjoined, will continue to engage directly or indirectly in transactions, acts, practices and courses of business which constitute violations of Section 10(b) of the Exchange Act, 15 U.S.C. § 78j(b) and Rule 10b-5, 17 C.F.R. § 240.10b-5.

JURISDICTION AND VENUE

11. The Commission brings this action pursuant to the authority conferred upon it by Section 20 of the Securities Act, 15 U.S.C. § 77t, and Section 21(d) of the Exchange Act, 15 U.S.C. § 78(d), for a final judgment: (a) permanently enjoining the Defendants from engaging in the transactions, acts, practices and courses of conduct alleged in this Complaint; (b) ordering the defendants to disgorge all ill-gotten gains plus prejudgment interest; (c) ordering the Defendants to pay civil penalties; (d) barring defendant Noorai from serving as an officer and director of any issuer that has a class of securities registered pursuant to Section 12 of the Exchange Act, 15 U.S.C. § 78l, or that is required to file reports pursuant to Section 15(d) of the Exchange Act, 15 U.S.C. § 78o(d); and (e) imposing such other relief as the Court may deem appropriate.

12. This Court has subject matter jurisdiction over this action pursuant to Sections 20(b) and 22(a) of the Securities Act, 15 U.S.C. §§77t(b) and 77v(a), and Sections 21(d) and 27 of the Exchange Act, 15 U.S.C. §§78u(e) and 78aa.

13. Defendants, directly and indirectly, singly and in concert, have made use of the means or instruments of transportation or communication in, and the means or instrumentalities of, interstate commerce, or of the mails, in connection with the transactions, acts, practices, and courses of business alleged in this Complaint.

14. Venue lies with this Court pursuant to Section 22(a) of the Securities Act, 15 U.S.C. § 77v(a), and Section 27 of the Exchange Act, 15 U.S.C. § 78aa. Venue lies in the Eastern District of New York because, among other things, certain of the transactions, acts, practices, and courses of business alleged in this complaint, including but not limited to, the offer and sale of securities to investors took place in the district.

DEFENDANTS

15. Ephone is incorporated in Nevada and maintains its principal place of business in Encinitas, California. Ephone is in the business of providing internet-based long distance telecommunications.

16. Webphone is a Colorado limited liability partnership formed in September 1999 and maintains its principal place of business in Ft. Lauderdale, Florida. Webphone is in the business of providing internet-based long distance telecommunications.

17. Newera is a Colorado limited liability partnership formed in January 2000 and maintains its principal place of business in San Diego, California. Newera is in the business of providing internet-based long distance telecommunications.

18. Noorai, age 32, resides in San Diego, California. Noorai held himself out as the president of Ephone and controlled Webphone and Newera.

19. D. Plain, age 63, resides in La Jolla, California. D. Plain was the president of Netcall and controlled Webphone, Inc. and Electronic Audio.

20. Webphone, Inc. was incorporated in Nevada in September 1999 with its principal place of business in Reno, Nevada. Webphone, Inc. was the Initial Managing Partner of Webphone. D. Plain controlled Webphone, Inc.

21. Electronic Audio was incorporated in Colorado in January 2000 and is controlled by D. Plain. Electronic Audio was the Initial Managing Partner of Newera.

22. Netcall was incorporated in Nevada in January 2000 and is owned and controlled by D. Plain and C. Plain.

23. C. Plain, age 33 and a resident of Santa Ana, California, is D. Plain's son.

24. Bertorelli, age 39 and a resident of Charlotte, North Carolina, introduced Plain to telemarketers who sold the Ephone, Webphone and Newera offerings and sold investor leads to Plain and certain of the other defendants.

25. Bender, age 51 and a resident of St. Petersburg, Florida, sold Ephone Series A securities to investors through Advent Marketing Group, Inc., a Florida corporation.

26. Kerns, age 40, a resident of Sylmar, California, sold Ephone Series A and Series B securities through Kerns Enterprises, a fictitious entity.

27. Ledezma, age 50 and a resident of Carlsbad, California, sold Ephone Series A securities through PML Consulting and Patricia Ledezma Enterprises, both fictitious entities.

28. Leitner, age 66, is currently incarcerated at the Fort Eglin Federal Prison Camp at Fort Eglin, Florida. Leitner sold Ephone Series A, Webphone and Newera securities to investors through several fictitious entities. Leitner holds a Series 3 license. Leitner also held a Series 7 and Series 63 license, both of which were withdrawn on February 8, 1990.

29. Luce, age 41, a resident of Las Vegas, Nevada sold Ephone Series A and Series B and Webphone securities to investors through Pro Strategies, Inc., a defunct Nevada corporation. Luce held Series 22 and Series 63 licenses, both of which were withdrawn on March 5, 1996. Luce is not affiliated with a registered broker-dealer.

30. Parnell, age 29 and a resident of San Diego, California, sold Webphone securities through ABC Consulting, a fictitious entity.

31. Savinsky, age 55, a resident of Cardiff, California sold Ephone, Webphone and Newera securities to investors through Infinity Financial Group, Inc., a defunct Nevada corporation.

32. Stark, age 40, resides in Mission Viejo, California. Stark sold Ephone securities to investors through Stark Entertainment, which was a corporation he controlled. Stark currently holds a Series 3 license but is not associated with a registered broker or dealer.

33. Valensky, age 52 and a resident of Laguna Niguel, California sold Ephone Series A and B and Webphone securities through Daval Consulting, a fictitious entity. Valensky holds a Series 22 and Series 63 license but is not associated with a registered broker-dealer.

34. Walker, age 47 and a resident of Santa Monica, California sold Ephone Series A and Webphone securities to investors.

THE FRAUDULENT SCHEMES

35. Between 1999 through 2001, the defendants perpetrated a fraud on investors by offering and selling securities in three issuers: Ephone, Webphone and Newera. The stated purpose of these offerings was to raise capital to enable the issuers to establish a long distance telephone network through the internet. In truth, however, between 39% and 46% of the offering proceeds went to defendants D. Plain, C. Plain, Bertorelli and ISOs they recruited to solicit investors - all of whom operated unlawfully as unregistered broker-dealers. These fraudulent securities offerings were as follows:

Issuer Offering Period Approximate
Amount Raised
Commissions: Approximate Amount and Percent
Ephone, Inc. Series A & Series B offerings 1999-2001 $1.7 MM $660,500
39%
Webphone, LLP 1999-2000 $925,000 $421,400
46%
Newera
Communications, LLP
2000 $300,000 $139,000
46%
TOTAL  $2.9 MM $1.22 MM - 42%

Ephone

36. From July 1999 through October 1999, Ephone conducted a purported private placement of 600 units of Ephone Series A preferred stock at $10,000 per unit seeking to raise $6 million. The purpose of the offering was purportedly to raise funds to establish internet-based long distance telephone service. The Ephone Series A offering raised approximately $910,000 from investors.

37. From May 2000 through January 2001, Ephone conducted a purported private placement of 100 units of Ephone Series B preferred stock at $10,000 per unit seeking to raise $1 million. The purpose of the offering was purportedly to raise funds to establish internet-based long distance telephone service. The Ephone Series B offering raised approximately $887,000.

38. The Ephone Series A and Ephone Series B offerings were not registered with the Securities and Exchange Commission.

39. The written offering materials provided to investors in connection with the Ephone Series A and Ephone Series B offerings represented that the offering proceeds would be allocated as follows:

Expenses Directly Related to the Offering 10%
Development Work Pursuant to Service 9%
Marketing and Working Capital 15%
Advertising, Promotions and Marketing 25%
Equipment and Engineering 35%
Legal and Accounting 6%

40. Noorai participated in drafting the Ephone offering materials that were provided to investors. Although offering materials did not designate Noorai as an officer of Ephone, he signed most of the company's checks as its "president," signed contracts with telemarketers, and communicated directly with telemarketers. Noorai retained D. Plain and C. Plain to sell the Ephone Series A offering and organize other ISOs also to sell the offering. Noorai agreed to pay D. Plain and C. Plain a commission of 40% to 45% for the sale of Ephone securities and a 5% fee on investor proceeds solicited by ISOs recruited by D. Plain or C. Plain. Noorai distributed copies of the offering materials for the Ephone Series A offerings to D. Plain and C. Plain, who distributed copies to ISOs.

41. D. Plain and C. Plain recruited the Ephone Series A ISOs to market Ephone Series A securities in return for a 40% to 45% commission payment.

42. Bertorelli sold investor leads to D. Plain and introduced several of the Ephone Series A ISOs to D. Plain. In return, Bertorelli received a 5% commission on all funds raised by Ephone Series A ISOs that he recruited. Bertorelli recruited defendant Leitner as well as several other ISOs to sell Ephone Series A securities.

43. Ephone, Noorai and Bertorelli knew that D. Plain and C. Plain had arranged to pay the Ephone ISO's a 40% to 45% sales commission for the sale of Ephone Series A stock.

44. Each of the Ephone Series A ISOs received a copy of the Ephone Series A offering materials, knew the representations made in these offering materials about the use of proceeds and sales commissions, made unsolicited telephone calls to members of the general public to induce them to purchase Ephone securities and caused Ephone, Noorai, D. Plain and C. Plain to transmit copies of the written offering materials to investors who indicated an interest in Ephone.

45. Ephone, Noorai, D. Plain, C. Plain and Bertorelli maintained the same arrangement for the Ephone Series B offering as described in paragraphs 40 through 43 above. D. Plain, C. Plain and Bertorelli recruited the Ephone Series B ISOs and received 5% commission from offering proceeds solicited by ISOs they recruited. The Ephone Series B ISOs received sales commission of 40% to 45%.

46. Each of the Ephone Series B ISOs received a copy of the Ephone Series B offering materials, knew the representations made in these offering materials about the use of proceeds and sales commissions, made unsolicited telephone calls to members of the general public to induce them to purchase Ephone securities and caused Ephone, Noorai, D. Plain and C. Plain to transmit copies of the written offering materials to investors who indicated an interest in Ephone.

47. The agreements to pay the Ephone Series A ISOs and the Ephone Series B ISOs 40% to 45% sales commissions together with the additional 5% payments to C. Plain, D. Plain and Bertorelli, made the representations about the use of investor proceeds in the Ephone Series A and Series B offering documents materially false. Of the approximately $1.7 million raised from the Ephone Series A and Series B offerings, Ephone paid over $660,000 to the Ephone Series A ISOs, the Ephone Series B ISOs, D. Plain, C. Plain and Bertorelli.

48. The Ephone ISOs received at least the following commissions for offering and selling securities in Ephone:

Ephone ISOs Offering Percentage Commissions Received
(approx.)
Donald Kerns Series A & Series B 45 $126,000
Patricia Ledezma Series A 45 $44,000
Philip Leitner Series A 45 $86,000
Kevin Luce Series A & Series B 45 $28,000
Sally Savinsky Series A & Series B 45 $121,000
Anthony Stark Series B 45 $28,000
Dana S. Valensky Series A & Series B 40-45 $46,000
Thomas Don Walker Series A 45 $41,000
Theodore Bender Series A 45 $46,000
Total     $566,000

49. In addition, D. Plain received approximately $45,500, C. Plain received approximately $31,000 and Bertorelli received approximately $18,000.

50. None of the Ephone Series A or Series B ISOs were registered as a broker dealer with the Commission during the time of the Ephone offering.

51. The misrepresentations set forth in paragraphs 39 through 49 above were and are material. Ephone, Noorai, D. Plain, C. Plain, Bertorelli and the Ephone Series A and Series B ISOs knew or were reckless in not knowing that those misrepresentations were false and misleading.

Webphone

52. From approximately September 1999 through February 2000 Webphone offered to the public 90 limited liability partnership units at $10,000 per unit seeking to raise $900,000. The offering was purportedly designed to raise funds for the acquisition of equipment needed to establish internet-based long distance telephone service. Webphone raised approximately $925,000 from investors. The Webphone offering was not registered with the Commission.

53. Webphone's written offering materials made the following representations about the use of proceeds of the offering and, in particular, expenses related to the offering of the partnership units:

OFFERING EXPENSES
Organizational (Printing) $ 20,000
Selling $ 90,000
Marketing $135,000
Legal $ 25,000
SUBTOTAL $270,000

Webphone thereby represented that it planned to pay $90,000 for commissions and $135,000 for marketing the offering, for total payments of $215,000 or approximately 24% of the offering proceeds. These representations were false.

54. Although not identified in Webphone's offering materials as an officer of Webphone, Noorai controlled Webphone and participated in drafting the Webphone written offering materials and caused them to be provided to the Webphone ISOs for use in soliciting investors. In 1999, Noorai retained D. Plain and C. Plain to recruit ISOs to sell Webphone securities to the public. Noorai agreed to pay D. Plain and C. Plain each 5% of the funds raised in the Webphone offering.

55. D. Plain and C. Plain formed Webphone, Inc. to provide a corporate vehicle through which to facilitate the offering. Although Webphone, Inc. was given the title of "Initial Managing Partner" of Webphone, the only role of Webphone, Inc., D. Plain and C. Plain was to organize and manage the offering.

56. D. Plain and C. Plain recruited the Webphone ISOs to market and sell Webphone securities in return for a 40% to 45% commission payment. D. Plain and C. Plain also agreed to pay Bertorelli a 5% commission on all proceeds raised by Webphone ISOs that Bertorelli recruited and introduced to Webphone. Bertorelli recruited defendant Leitner as well as other ISOs to sell Webphone.

57. Webphone, Webphone, Inc., Noorai and Bertorelli knew that D. Plain and C. Plain had arranged to pay the Webphone ISOs a 40% to 45% commission for the sale of Webphone securities.

58. Each of the Webphone ISOs received a copy of the Webphone offering materials, knew the representations made in these offering materials about the use of proceeds and sales commissions, made unsolicited telephone calls to members of the general public to induce them to purchase Webphone securities, did not disclose their commission arrangements to actual and prospective investors, and caused Webphone, Webphone, Inc., Noorai, D. Plain or C. Plain to transmit copies of the written offering materials to investors who indicated an interest in Webphone.

59. The agreements to pay the Webphone ISOs 40% to 45% sales commissions along with an additional 5% commission to D. Plain, C. Plain and Bertorelli made the representations about the use of investor proceeds in the Webphone offering documents materially false. Of the approximately $925,000 raised from the Webphone offering, Webphone paid over $421,400 to the Webphone ISOs, D. Plain, C. Plain and Bertorelli.

60. The Webphone ISOs received at least the following commissions for offering and selling securities in Webphone:

Webphone ISOs Percentage Commissions Received
(approx.)
Philip Leitner 45 $55,000
Kevin Luce 45 $21,000
Sally Savinsky 45 $119,000
Dana S. Valensky 40-45 $24,000
Thomas Don Walker 45 $31,000
Doug Parnell 45 $78,000
Total   $328,000

61. In addition, D. Plain received approximately $68,000, C. Plain received approximately $22,000 and Bertorelli received approximately $3400.

62. None of the Webphone ISOs were registered as a broker-dealer with the Commission during the time of the Webphone offering.

63. The misrepresentations set forth above in paragraphs 53 through 61 were and are material. Webphone, Webphone, Inc., Noorai, D. Plain, C. Plain, Bertorelli and the Webphone ISOs knew or were reckless in not knowing that those misrepresentations were false and misleading.

Newera

64. From approximately January 2000 through July 2000 Newera offered to the public 100 limited liability partnership units at $10,000 per unit seeking to raise $1 million. The offering was purportedly conducted to finance the acquisition of equipment needed to establish internet-based long distance telephone service. Newera raised approximately $300,000 from investors. The Newera offering was not registered with the Commission.

65. The Newera written offering materials provided to investors made the following representations about the use of proceeds of the offering and in particular, expenses related to the offering of the partnership units:

OFFERING EXPENSES
Organizational (Printing) $ 20,000
Selling $100,000
Marketing $160,000
Legal $ 30,000
SUBTOTAL $310,000

The Newera offering materials therefore represented that Newera would pay $100,000 in commissions and $160,000 to market the offering, which totals $260,000 or approximately 26% of the offering proceeds.

66. These representations were false. Although Noorai is not identified in the offering materials as an officer of Newera, Noorai controlled Newera, participated in drafting the offering materials that were provided to investors, and retained D. Plain and C. Plain to recruit ISOs to sell Newera securities to the public. Noorai agreed to pay D. Plain and C. Plain each 5% of the funds raised in the Newera offering. These payments were made through Netcall, a company D. Plain and C. Plain controlled. D. Plain and C. Plain retained Bertorelli and agreed to pay him a 5% commission from sales solicited from ISOs he recruited to sell Newera.

67. D. Plain and C. Plain formed Electronic Audio to provide a corporate entity through which to facilitate the offering. Although Electronic Audio was given the title of "Initial Managing Partner" of Newera, the only role of Electronic Audio, D. Plain, and C. Plain was to organize and manage the offering.

68. D. Plain and C. Plain recruited the Newera ISOs to market and sell Newera securities in return for a 40% to 45% commission payment.

69. Newera, Noorai and Bertorelli knew that D. Plain and C. Plain had arranged to pay the Newera ISOs a 40% to 45% commission for the sale of Newera securities.

70. Each of the Newera ISOs received a copy of the Newera offering materials, knew the representations made in these offering materials about the use of proceeds and sales commissions, made unsolicited telephone calls to members of the general public to induce them to purchase Newera securities, did not disclose their commission arrangements to actual and prospective investors, and sent or caused Newera, Electronic Audio, Noorai, D. Plain or C. Plain to transmit copies of the written offering materials to investors who indicated an interest in Newera.

71. The agreements to pay the Newera ISOs 40% to 45% sales commissions along with an additional 5% commission to D. Plain, C. Plain and Bertorelli, made the representations about the use of investor proceeds in the Newera offering documents materially false. Of the approximately $300,000 raised from the Newera offering, Newera paid over $139,000 to the Newera ISOs, D. Plain, C. Plain and Bertorelli.

72. The Newera ISOs received at least the following commissions for offering and selling securities in Newera:

Newera ISOs Percentage Commissions Received
(approx.)
Philip Leitner 45 $17,000
Sally Savinsky 45 $50,000
ISOs not charged in this Complaint 40-45 $33,000
Total   $100,000

73. In addition, D. Plain and C. Plain received approximately $36,000 through Netcall and Bertorelli received approximately $3400.

74. None of the Newera ISOs were registered as a broker-dealer with the Securities and Exchange Commission during the time of the Newera offering.

75. The misrepresentations set forth above in paragraphs 65 through 73 were and are material. Newera, Electronic Audio, Noorai, D. Plain, C. Plain, Bertorelli, Netcall, and the Newera ISOs knew or were reckless in not knowing that those misrepresentations were false and misleading.

FIRST CLAIM FOR RELIEF

Violations of Section 17(a) of the Securities Act, 15 U.S.C. § 77q(a),
Section 10(b) of the Exchange Act, 15 U.S.C. § 78j(b),
and Rule 10b-5, 17 C.F.R. § 240.10b-5

(Securities Fraud)

76. The Commission repeats and realleges each and every allegation contained in paragraphs 1 through 75, as if fully set forth herein.

77. Ephone, Webphone, Newera, Electronic Audio, Netcall, Webphone, Inc., Bender, Kerns, Ledezma, Leitner, Luce, Noorai, Parnell, C. Plain, D. Plain, Savinsky, Stark, Valensky and Walker, directly or indirectly, singly or in concert, by use of the means of instruments of transportation or communication in interstate commerce, or of the mails, in the offer or sale, and in connection with the purchase or sale, of securities, have knowingly and recklessly: (a) employed devices, schemes and artifices to defraud; (b) obtained money or property by means of, and otherwise has made, untrue statements of material fact, and omitted to state material facts necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading; and (c) engaged in acts, practices, transactions or courses of business which operated or would operate as a fraud or deceit upon the purchasers of securities and upon other persons.

78. As part of, and in furtherance of, the violative conduct, the defendants, directly or indirectly, singly or in concert, made the misrepresentations and omitted to state the facts alleged in paragraphs 39 through 49, 53 through 61, and 65 through 73 above.

79. The misrepresentations and omissions made by the defendants, more fully described in paragraphs 39 through 49, 53 through 61, and 65 through 73 above, were and are material.

80. The defendants knew, or were reckless in not knowing, that the material misrepresentations and omissions, more fully described in paragraphs 39 through 49, 53 through 61, and 65 through 73 above, were false or misleading.

81. By reason of the foregoing, defendants violated, and unless enjoined will continue to violate, Section 17(a) of the Securities Act, 15 U.S.C. § 77q(a), Section 10(b) of the Exchange Act, 15 U.S.C. 78j(b), and Rule 10b-5, 17 C.F.R. § 240.10b-5.

SECOND CLAIM FOR RELIEF

Violations of Sections 5(a) and 5(c) of the Securities Act,
15 U.S.C. §§ 77e(a) and 77e(c)

(Unregistered Offer and Sale of Securities)

82. The Commission repeats and realleges each and every allegation contained in paragraphs 1 to 81, as if fully set forth herein.

83. Ephone, Webphone, Newera, Electronic Audio, Netcall, Webphone, Inc., Bender, Kerns, Ledezma, Leitner, Luce, Noorai, Parnell, C. Plain, D. Plain, Savinsky, Stark, Valensky and Walker, directly or indirectly, singly or in concert: (a) have made use of the means or instruments of transportation or communication in interstate commerce or of the mails to sell securities through the use or medium or a prospectus or otherwise, or carried securities or caused securities to be carried through the mails or in interstate commerce, by the means or instruments of transportation, for the purpose of sale or for delivery after sale, and (b) have made use of the mails and instruments of transportation or communication in interstate commerce or of the mails to offer to sell, or offer to buy, through the use or medium of any prospectus, or otherwise, securities, when no registration statement has been filed or was in effect as to such securities and when no exemption or safe-harbor from registration was available.

84. As part of and in furtherance of this fraudulent offering scheme, Ephone, Webphone, Newera, Electronic Audio, Netcall, Webphone, Inc., Bender, Kerns, Ledezma, Leitner, Luce, Noorai, Parnell, C. Plain, D. Plain, Savinsky, Stark, Valensky and Walker, offered and sold securities to the public through telephone and mail solicitations when there was no registration statement filed or in effect as to those securities offerings nor were there any registration exemptions available for any of the offerings.

85. By reason of the foregoing, Ephone, Webphone, Newera, Electronic Audio, Netcall, Webphone, Inc., Bender, Kerns, Ledezma, Leitner, Luce, Noorai, Parnell, C. Plain, D. Plain, Savinsky, Stark, Valensky and Walker directly or indirectly, violated and unless enjoined, will continue to violate, Sections 5(a) and 5(c) of the Securities Exchange Act, 15 U.S.C. §§ 77e(a) and 77e(c).

THIRD CLAIM FOR RELIEF

Violations of Section 15(a) of the Exchange Act, 15 U.S.C. § 78o(a)

(Offer and Sale of Securities by Unregistered Broker or Dealer)

86. The Commission repeats and realleges each and every allegation contained in paragraphs 1 to 85, as if fully set forth herein.

87. Bender, Kerns, Ledezma, Leitner, Luce, Parnell, D. Plain, C. Plain, Savinsky, Stark, Valensky and Walker, directly or indirectly, made use of the mails or any means or instrumentality of interstate commerce to effect transactions in, or induced or attempted to induce the purchase or sale of, Ephone, Webphone, or Newera securities without being registered as a broker with the Securities and Exchange Commission.

88. By reason of the foregoing, Bender, Kerns, Ledezma, Leitner, Luce, Parnell, C. Plain, D. Plain, Savinsky, Stark, Valensky and Walker, violated and unless enjoined, will continue to violate, Section 15(a) of the Exchange Act, 15 U.S.C. 78o(a).

FOURTH CLAIM FOR RELIEF

Aiding and Abetting Violations of Section 10(b) of the Exchange Act,
15 U.S.C. §78j(b), and Rule 10b-5, 17 C.F.R. §240.10b-5

89. The Commission repeats and realleges each and every allegation contained in paragraphs 1 to 88, as if fully set forth herein.

90. Bertorelli assisted Ephone, Webphone and Newera in the sale of securities by providing investor leads and recruiting ISOs to sell Ephone, Webphone and Newera securities in return for a 5% commission payment.

91. Bertorelli knew, or was reckless in not knowing, that the Ephone, Webphone and Newera offering materials contained materially false statements and omitted to state material facts necessary to render the documents not misleading as described more fully in paragraphs 39 through 49, paragraphs 53 through 61 and paragraphs 65 through 73 above.

92. By reason of the foregoing and as provided by Sections 20(e) of the Exchange Act, 15 U.S.C. § 78t(e), Bertorelli aided and abetted Ephone, Webphone and Newera's violations of Section 10(b) of the Exchange Act, 15 U.S.C. § 78j(b), and Rule 10b-5, 17 C.F.R. §240.10b-5, and unless enjoined, will continue to violate Section 10(b) of the Exchange Act, 15 U.S.C. § 78j(b) and Rule 10b-5, 17 C.F.R. 240.10b-5.

PRAYER FOR RELIEF

WHEREFORE, plaintiff Commission respectfully requests that this Court enter a Final Judgment:

A. Permanently enjoining Defendants Ephone, Webphone, Newera, Electronic Audio, Netcall, Webphone, Inc., Bender, Kerns, Ledezma, Leitner, Luce, Noorai, Parnell, C. Plain, D. Plain, Savinsky, Stark, Valensky and Walker, their officers, agents, servants, employees, attorneys, and all persons in active concert or participation with them who receive actual notice of the injunction by personal service or otherwise, and each of them, from future violations of Sections 5(a), 5(c) and 17(a) of the Securities Act, 15 U.S.C. §§ 77e(a), 77e(c), and 77q(a).

B. Permanently enjoining Defendants Ephone, Webphone, Newera, Electronic Audio, Netcall, Webphone, Inc., Bender, Bertorelli, Kerns, Ledezma, Leitner, Luce, Noorai, Parnell, C. Plain, D. Plain, Savinsky, Stark, Valensky and Walker, their officers, agents, servants, employees, attorneys, and all persons in active concert or participation with them who receive actual notice of the injunction by personal service or otherwise, and each of them, from future violations of Section 10(b) of the Exchange Act, 15 U.S.C. § 78j(b), and Rule 10b-5, 17 C.F.R. § 240.10b-5.

C. Permanently enjoining Defendants Bender, Kerns, Ledezma, Leitner, Luce, Parnell, D. Plain, C. Plain, Savinsky, Stark, Valensky and Walker, and all persons in active concert or participation with them who receive actual notice of the injunction by personal service or otherwise, and each of them, from future violations of Section 15(a) of the Exchange Act, 15 U.S.C. § 78o(a).

D. Ordering Defendants Ephone, Webphone, Newera, Electronic Audio, Netcall, Webphone, Inc., Bender, Bertorelli, Kerns, Ledezma, Leitner, Luce, Noorai, Parnell, C. Plain, D. Plain, Savinsky, Stark, Valensky and Walker, to disgorge their unjust enrichment from the fraudulent conduct alleged in this Complaint and to pay prejudgment interest thereon.

E. Ordering Defendants Ephone, Webphone, Newera, Electronic Audio, Netcall, Webphone, Inc., Bender, Bertorelli, Kerns, Ledezma, Leitner, Luce, Noorai, Parnell, C. Plain, D. Plain, Savinsky, Stark, Valensky and Walker to pay civil penalties pursuant to Section 20(d) of the Securities Act, 15 U.S.C. § 77t(d), and Section 21(d) of the Exchange Act, 15 U.S.C. § 78u(d), for the violations alleged herein.

F. Barring Defendant Noorai from serving as an officer or director of any issuer or director of any issuer that has a class of securities registered pursuant to Section 12 of the Exchange Act, 15 U.S.C. § 78l, or that is required to file reports pursuant to section 15(d) of the Exchange Act, 15 U.S.C. § 78o(d) pursuant to Section 20(e) of the Securities Act, 15 U.S.C. 77t(e) and Section 21(d) of the Exchange Act, 15 U.S.C. § 78u(d).

G. Granting such other and further relief as the Court may deem just and proper.

Dated: New York, New York

August 5, 2002

Respectfully submitted,

___________________________
Wayne M. Carlin (WC-2114)
Regional Director
Northeast Regional Office
Attorney for Plaintiff
SECURITIES AND EXCHANGE COMMISSION
233 Broadway
New York, New York 10279
Telephone No.: (646) 428-1510
Facsimile No.: (646) 428-1973

Edwin H. Nordlinger
Barry W. Rashkover
G. William Currier
John J. O'Donnell
Elizabeth Goldman
Jimmy Fokas

Of Counsel


http://www.sec.gov/litigation/complaints/comp17660.htm

Modified: 08/08/2002