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UNITED STATES DISTRICT COURT
Plaintiff Securities and Exchange Commission ("SEC" or "Commission") alleges as follows: INTRODUCTION 1. The Commission brings this action to enjoin Jeffrey D. Chandler ("Chandler") and Randall Jordan ("Jordan") (collectively, "Defendants") from continuing to violate the federal securities laws in connection with a fraudulent offering of securities of eComprar Network, Inc. ("eComprar"), a now defunct company that purportedly operated a television home shopping network in Latin America. From approximately February 2000 to July 2000, Defendants disseminated false and misleading information to investors concerning, among other things, eComprar's operations, expected financial results, and use of proceeds. As part of their scheme, Defendants raised $5 million and used a substantial portion of the proceeds to maintain a lavish lifestyle for themselves and to settle prior legal disputes. As a result, Defendants violated Sections 5(a), 5(c) and 17(a) of the Securities Act of 1933 ("Securities Act") and Section 10(b) of the Securities Exchange Act of 1934 ("Exchange Act") and Rule 10b-5 thereunder. DEFENDANTS 2. Defendant Chandler, age 36, resides in Stuart, Florida and was, at all relevant times, the president and majority shareholder of eComprar. Chandler directed and supervised the activities of eComprar. 3. Defendant Jordan, age 47, resides in Jupiter, Florida and was, at all relevant times, the executive vice-president, director, and a shareholder of eComprar. During the relevant time period, Jordan also directed and supervised the activities of eComprar. JURISDICTION AND VENUE 4. This Court has jurisdiction over this action pursuant to Sections 20(b), 20(d) and 22(a) of the Securities Act of 1933 ("Securities Act"), 15 U.S.C. §§ 77t(b), 77t(d) and 77v(a), and Sections 21(d), 21(e), and 27 of the Securities Exchange Act of 1934 ("Exchange Act"), 15 U.S.C. §§ 78u(d), 78u(e) and 78aa. 5. Defendants, directly or indirectly, have made use of the means and instrumentalities of interstate commerce, the means and instruments of transportation and communication in interstate commerce, and the mails, in connection with the acts, practices, and courses of business complained of herein. 6. The Southern District of Florida is the proper venue for this action. Many of the acts and transactions constituting violations of the Securities Act and Exchange Act occurred within the Southern District of Florida. Moreover, Defendants reside in the Southern District of Florida and eComprar maintained its office here as well. THE FRAUDULENT SCHEME Chandler's and Jordan's Solicitations 7. eComprar, a defunct Florida corporation formerly located in West Palm Beach, Florida, purported to operate a television home shopping network in Latin America. Chandler formed eComprar, which was originally known as Spanish Home Shopping Network, in 1999. 8. Jordan joined eComprar shortly after its formation, and both Chandler and Jordan prepared a business plan, a private placement memorandum (the "PPM") and other documents, and began raising money for eComprar. 9. From February to July 2000, Chandler and Jordan engaged in a fraudulent common stock offering that raised $5 million from investors. In private and group meetings, Jordan and Chandler gave investors the PPM and other offering documents, which contained material misrepresentations and omissions. Chandler and Jordan also repeated orally many of the misrepresentations contained in the PPM during these meetings with investors. Misappropriation of Investor Funds 10. One such misrepresentation concerned the use of investors' proceeds. The PPM contained an itemized table titled "Projected Use of Long-Term Capital Proceeds," which stated that eComprar would spend the funds raised as follows: thirty (30) % on satellite and broadcast equipment; twenty-four (24) % on working capital; twelve (12) % on marketing and advertising; and eight (8) % on research and development. The information in this table also represented smaller spending categories including computer hardware, facilities, personnel, and professional fees. 11. eComprar used little of the $5 million raised on legitimate business expenses. Instead, Chandler and Jordan spent almost one million dollars on automobiles, jewelry, clothing, home furnishings, and entertainment expenses. Further, Chandler used investor funds to purchase a boat, pay child and spousal support, and settle a previously filed lawsuit that was unrelated to eComprar. Misrepresentations and Omissions Concerning Chandler 12. The PPM also contained misrepresentations and omissions concerning Chandler's background. The PPM touted Chandler as having a "proven track record," nine years of experience in television production and operations management, and extensive political and corporate contacts in Latin America. The PPM failed to disclose, however, that there was a pending civil lawsuit against Chandler that alleged that he made false and misleading statements in the sale of securities and defrauded investors of $1.6 million. 13. The PPM further failed to disclose that Chandler had prior felony convictions for forgery and issuing worthless checks. Finally, a business plan given to investors by Chandler and Jordan also falsely stated that Chandler received an undergraduate degree in computer sciences from Duke University. Chandler and Jordan knew, or recklessly disregarded, that these representations and omissions in the PPM concerning Chandler's background and experience were materially false and misleading. Baseless Revenue Projections and Misstatements about eComprar's Operations 14. The PPM misrepresented that eComprar would begin broadcasting its programming in the Dominican Republic in February 2000 and in a new Latin American country each month thereafter. The PPM further stated that eComprar would be broadcasting in nine Latin American countries and record revenues of $68.3 million by year-end 2000 from television sales. 15. The revenue projections in the PPM were misleading and without a reasonable basis. In February 2000, eComprar had only one signed vendor contract, no merchandise, no signed broadcasting agreements, and no shows ready for broadcast. Moreover, eComprar was headquartered in a condominium, had only three salaried employees, including Chandler and Jordan, and had little or no operating capital. 16. The PPM also falsely stated that eComprar had exclusive vendor agreements with Harrod's of London, Hasbro Toys, and LJ International, a large jewelry manufacturer, and that a subsidiary of eComprar had a twenty-year broadcasting agreement with the President of the Dominican Republic. Chandler and Jordan knew, or recklessly disregarded, that these representations and omissions in the PPM concerning eComprar's expected financial results and operations were materially false and misleading. Misrepresentations of a Relationship With Banc of America 17. Beginning in 1999, Chandler and Jordan submitted documents to Banc of America Securities, LLP ("Banc of America") regarding a possible financing that contained false and misleading statements. These documents falsely represented that eComprar had forty-seven (47) employees, revenues of $12 million in 1999, and operations in the Dominican Republic, Venezuela, Argentina, and Chile. 18. On February 28, 2000, based upon the documents provided by Chandler and Jordan, Banc of America signed a letter of intent with eComprar concerning a possible equity financing of the Company. On March 29, 2000 Banc of America terminated the letter of intent because Chandler and Jordan never provided any documents to support Chandler and Jordan's representations concerning eComprar's financial results, contracts, and operations. 19. After March 29, 2000, Chandler and Jordan continued to tell investors that eComprar had a letter of intent with Banc of America and intended to proceed with an initial public offering within eighteen (18) months. Chandler and Jordan also gave investors copies of internal materials prepared by Banc of America concerning eComprar that contained many of the misrepresentations detailed in paragraph 17. Chandler and Jordan knew, or recklessly disregarded, that the representations made to investors about eComprar's relationship with Banc of America were materially false and misleading. COUNT I SALE OF UNREGISTERED SECURITIES IN VIOLATION OF
20. The Commission repeats and realleges paragraphs 1 through 19 of this Complaint. 21. No registration statement was filed or in effect with the Commission pursuant to the Securities Act and no exemption from registration exists with respect to the securities and transactions described herein. 22. From February 2000 through July 2000, Defendants, directly or indirectly, have been: (a) making use of the means or instruments of transportation or communication in interstate commerce or of the mails to sell securities as described herein, through the use or medium of a PPM, business plan, offering documents or otherwise; (b) carrying securities or causing such securities, as described herein, to be carried through the mails or in interstate commerce, by any means or instruments of transportation, for the purpose of sale or delivery after sale; and/or (c) making use of the means or instruments of transportation or communication in interstate commerce or of the mails to offer to sell or buy through the use or medium of any PPM, business plan, offering documents or otherwise, as described herein, without a registration statement having been filed or being in effect with the Commission as to such securities. 23. By reason of the foregoing, Defendants, directly or indirectly, have violated, and unless enjoined, will continue to violate Sections 5(a) and 5(c) of the Securities Act, 15 U.S.C. §§ 77e(a) and 77e(c). COUNT II FRAUD IN VIOLATION OF SECTIONS 17(a)(1),
24. The SEC realleges and repeats its allegations set forth at paragraphs 1 through 19 of this Complaint as if fully restated herein. 25. From February 2000 through July 2000, Defendants, directly and indirectly, by use of the means or instruments of transportation or communication in interstate commerce or by use of the mails, in the offer or sale of securities, as described herein, have knowingly, willfully or recklessly employed devices, schemes or artifices to defraud. 26. From February 2000 through July 2000, Defendants, directly or indirectly, by use of the means or instruments of transportation or communication in interstate commerce or by the use of the mails, in the offer or sale of securities, as described herein, have: (a) obtained money or property by means of untrue statements of material facts and omissions to state material facts necessary to make the statements made, in light of the circumstances under which they were made, not misleading; and (b) engaged in transactions, practices and courses of business that are now operating and will operate as a fraud and deceit upon purchasers and prospective purchasers of such securities. 27. By reason of the foregoing, Defendants, directly or indirectly, have violated and, unless enjoined, will continue to violate Sections 17(a)(1), 17(a)(2), and 17(a)(3) of the Securities Act, 15 U.S.C. § 77q(a)(1). COUNT III FRAUD IN VIOLATION OF SECTION 10(b)
28. The SEC realleges and repeats its allegations set forth at paragraphs 1 through 19 of this Complaint as if fully restated herein. 29. From February 2000 through July 2000, Defendants, directly or indirectly, by use of the means and instrumentalities of interstate commerce or of the mails, or of any facility of any national securities exchange, in connection with the purchase or sale of the securities, as described herein, have knowingly, willfully or recklessly: (a) employed devices, schemes or artifices to defraud; (b) made untrue statements of material facts 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 and courses of business that have operated, are now operating and will operate as a fraud upon the purchasers of such securities. 30. By reason of the foregoing, Defendants, directly or indirectly, have violated 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, thereunder. RELIEF REQUESTED WHEREFORE, the Commission respectfully requests that the Court: I. Declaratory Relief Declare, determine and find that Defendants Chandler and Jordan have committed the violations of the federal securities laws alleged herein. II. Permanent Injunctive Relief Issue a Permanent Injunction, enjoining Defendants Chandler and Jordan, their agents, servants, employees, attorneys, and all persons in active concert or participation with them, and each of them, from violating Sections 5(a), 5(c), 17(a)(1), 17(a)(2) and 17(a)(3) of the Securities Act, 15 U.S.C. §§ 77(e)(a), 77(e)(c), 77q(a)(1), 77q(a)(2), and 77q(a)(3), and Section 10(b) of the Exchange Act, 15 U.S.C. § 78j(b), and Rule 10b-5, 17 C.F.R. § 240.10b-5, thereunder. III. Disgorgement Issue an Order directing Defendants Chandler and Jordan to disgorge all profits or proceeds that they have received as a result of the acts and/or courses of conduct complained of herein, with prejudgment interest thereon. IV. Accounting Issue an Order requiring accountings by Defendants Chandler and Jordan. V. Penalties Issue an Order directing Defendants Chandler and Jordan to pay civil money 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)(3). VI. Retention of Jurisdiction Further, the Commission respectfully requests that the Court retain jurisdiction over this action in order to implement and carry out the terms of all orders and decrees that may hereby be entered, or to entertain any suitable application or motion by the SEC for additional relief within the jurisdiction of this Court.
July 31, 2002 ___________________________ http://www.sec.gov/litigation/complaints/comp17674.htm
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