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UNITED STATES DISTRICT COURT
CASE NO.
COMPLAINT FOR INJUNCTIVE AND OTHER RELIEF Plaintiff Securities and Exchange Commission ("Commission") alleges: INTRODUCTION 1. The Commission brings this action to restrain and enjoin Uncommon Media Group, Inc. ("Uncommon Media"), Lawrence Gallo ("Gallo"), and Douglas Rasberry ("Rasberry") (collectively "Defendants") from making materially false and misleading statements and failing to disclose material information in filings with the Commission in violation of the federal securities laws. Beginning in the late fall of 2000, Gallo and Rasberry agreed to participate in a fraudulent scheme whereby Rasberry, an undisclosed control person of Uncommon Media, would sell $8-10 million of Uncommon Media common stock to a European-based investment fund in return for kickbacks to the company and themselves. To further this scheme, Rasberry used several offshore corporate nominees to conceal his ownership interest in Uncommon Media stock and avoid reporting such ownership to the Commission. In addition to a permanent injunction, the Commission seeks an order imposing civil monetary penalties against Defendants pursuant to Section 21(d) of the Securities Exchange Act of 1934 ("Exchange Act"). DEFENDANTS 2. Defendant Uncommon Media, a Florida corporation, creates and delivers targeted advertising using multimedia technology, software, and the Internet. Uncommon Media's principal place of business is New York, New York, and its common stock trades on the Over-The-Counter Bulletin Board. Uncommon Media's securities are registered with the Commission pursuant to Section 12 of the Exchange Act. 3. Defendant Gallo is thirty-eight years old and has been the chairman, chief executive officer, and a director of Uncommon Media at all relevant times. Gallo resides in Brooklyn, New York. 4. Defendant Rasberry, age unknown, has been, at all relevant times, an undisclosed control person of Uncommon Media. Rasberry resides in Ontario, Canada. JURISDICTION AND VENUE 5. This Court has jurisdiction over this action pursuant to Sections 21(d), 21(e), and 27 of the Exchange Act [15 U.S.C. §§ 78u(d), 78u(e) and 78aa]. 6. Certain of the acts and transactions constituting violations the Exchange Act have occurred within the Southern District of Florida. Uncommon Media is a Florida corporation, and Defendants have engaged in many of the acts complained of herein within the Southern District of Florida. 7. Defendants, directly and 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. THE FRAUDULENT SCHEME 8. Between November 2000 and January 2001, Defendant Rasberry and others held a series of discussions concerning ways to sell Uncommon Media stock in a fraudulent scheme in order to personally enrich themselves. Defendant Gallo was present during at least one such discussion, in January 2001, and agreed to participate in the scheme. 9. Defendants participated in a scheme involving a purported European-based investment fund (the "Fund") that would purchase shares of Uncommon Media stock provided that the Fund's representative and several of his associates received undisclosed kickbacks. Unbeknownst to Defendants, the Fund never existed. Its "representative" was actually an undercover agent of the Federal Bureau of Investigation ("UCA") posing as a corrupt securities trader employed by the U.S. based corporate representative of the Fund. 10. The UCA and his associates told Rasberry and Gallo that the UCA worked with two due diligence officers who reviewed and approved securities to be purchased by the Fund. The UCA and his associates further stated that a purported manager of the Fund was corrupt and had knowledge of the UCA's illicit activities. 11. The UCA and his associates explained details about the Fund to Gallo and Rasberry, and how each could profit if the Fund purchased Uncommon Media stock. Gallo and Rasberry agreed to participate in the scheme if they received a portion of the proceeds. 12. It was agreed that the Fund would purchase $8 to $10 million worth of Uncommon Media common stock from Rasberry and others in a private, undisclosed sale. Rasberry, who controlled approximately 35% of Uncommon Media's outstanding common stock and nearly 100% of its free trading shares, would immediately kickback approximately 45% of the purchase price to the UCA and his associates. Rasberry had created at least ten different offshore entities to avoid reporting his ownership of Uncommon Media stock in the company's filings with the Commission. Each entity held less than 5% of Uncommon Media's shares issued and outstanding. 13. Defendant Gallo was to receive as much as $2 million in proceeds from the sale to the Fund in an offshore account. He intended to keep a portion of the proceeds for himself and deliver the remainder to Uncommon Media. 14. Shortly thereafter, the UCA and his associates cancelled the transaction with Gallo and Rasberry. THE MISLEADING FILINGS 15. Section 13(a) of the Exchange Act requires all issuers subject to the reporting requirements of the Exchange Act to file periodic and other reports with the Commission containing such information as the Commission's rules prescribe. Rule 13a-1, promulgated pursuant to Section 13(a), requires issuers to file with the Commission annual reports. In addition to any information expressly required to be included in a statement or report, Rule 12b-20 requires the addition of such further material information, if any, as may be necessary to make the required statements, in the light of the circumstances under which they are made, not misleading. 16. On April 30, 2001, Uncommon Media filed its annual report with the Commission on a Form 10-KSB/A for the year ended December 31, 2000 ("Form 10-KSB"). The Form 10-KSB, signed by Gallo, failed to disclose material information concerning Rasberry's beneficial ownership of Uncommon Media stock. 17. The Form 10-KSB purportedly identifies "the only persons who own of record or are known to own, beneficially, more than 5% of the Company's common stock," but makes no mention of Rasberry, who owned approximately 35% of its issued and outstanding common stock when the Form 10-KSB was filed. 18. The Form 10-KSB also purports to identify all control persons of Uncommon Media, but omits mentioning Rasberry. COUNT I FRAUD IN VIOLATION OF SECTION 10(b)
19. The Commission repeats and realleges paragraphs 1 through 18 of its Complaint. 20. Through a misleading filing that omits to state material information, Defendants directly and indirectly, by use of the means and instrumentality of interstate commerce, and of the mails, and of any facility of any national securities exchange, in connection with the purchase or sale of the securities, as described herein, have been, 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/or (c) engaged in acts, practices and courses of business which have operated, are now operating and will operate as a fraud upon the purchasers of such securities, through acts which included, but are not limited to, making the misrepresentations and omissions of material fact described in paragraphs 1 through 18, above. 21. By reason of the foregoing, Defendants directly or indirectly, each 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. COUNT II VIOLATIONS OF SECTION 13(a) OF THE SECURITIES EXCHANGE
22. The Commission repeats and realleges paragraphs 1 through 18 of its Complaint. 23. At all relevant times, Uncommon Media was an issuer subject to the reporting requirements of Section 13(a) of the Exchange Act. 24. In April 2001, Uncommon Media violated Section 13(a) of the Exchange Act and Rules 13a-1 and 12b-20 thereunder by filing with the Commission a materially false financial and informational statement on a Form 10-KSB. Specifically, Uncommon Media's annual report, filed on a Form 10-KSB, failed to disclose Rasberry's controlling interest in Uncommon Media. 25. By reason of the foregoing, Defendant Uncommon Media violated, and, unless enjoined, will again violate Section 13(a) of the Exchange Act and Rules 13a-1 and 12b-20 thereunder. COUNT III VIOLATIONS OF SECTION 13(a) OF THE SECURITIES EXCHANGE
26. The Commission repeats and realleges paragraphs 1 through 18 of its Complaint. 27. At all relevant times, Uncommon Media was an issuer subject to the reporting requirements of Section 13(a) of the Exchange Act. 28. Defendants Rasberry and Gallo aided and abetted or caused Uncommon Media's violations of Section 13(a) of the Exchange Act and Rules 13a-1 and 12b-20 thereunder by filing with the Commission a materially false financial and informational statement on a Form 10-KSB. Specifically, Rasberry and Gallo caused Uncommon Media to file an annual report, on a Form 10-KSB, that failed to disclose Rasberry's controlling interest in Uncommon Media. 29. By reason of the foregoing, Defendants Rasberry and Gallo aided and abetted Uncommon Media's violations, and, unless enjoined, will again aid and abet violations of Section 13(a) of the Exchange Act and Rules 13a-1 and 12b-20 thereunder. COUNT IV VIOLATIONS OF SECTIONS 13(d) AND 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934 AND RULES 13d-1 AND 16a-3(a) AS AGAINST RASBERRY 30. The Commission repeats and realleges paragraphs 1 through 18 of its Complaint. 31. Sections 13(d) and 16(a) of the Exchange Act requires any person, after acquiring a 5% and 10% beneficial ownership interest, respectively, in the equity securities issued by a company registered with the Commission pursuant to Section 12 of the Exchange Act, to file a statement with the Commission containing such information as Sections 13(d) and 16(a), and the rules promulgated thereunder, prescribe. Sections 13(d) and 16(a) allow the Commission and the public to identify those persons who can influence or control the issuer as a result of their beneficial ownership. 32. Defendant Rasberry, through certain offshore corporations he controlled, acquired approximately 35% of Uncommon Media's common stock. 33. By failing to disclose his ownership of Uncommon Media's common stock, Defendant Rasberry violated, and unless enjoined, will again violate Sections 13(d) and 16(a) of the Exchange Act and Rules 13d-1 and 16a-3(a) thereunder. RELIEF REQUESTED WHEREFORE, the Commission respectfully requests that the Court: I. DECLARATORY RELIEF Declare, determine and find that Defendants each committed the violations of the federal securities laws alleged herein. II. PERMANENT INJUNCTION AS TO ALL DEFENDANTS Issue a Permanent Injunction, restraining and enjoining: (a) Defendant Uncommon Media, its officers, agents, servants, employees, attorneys, and all persons in active concert or participation with it, and each of them, from violating 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, and Sections 13(a) of the Exchange Act [15 U.S.C. §§ 78m(a) and (b)(2)] and Rules 13a-1, and 12b-20 [17 C.F.R. §§ 240.13a-1, 240.12b-20], thereunder; (b) Defendant Rasberry, his officers, agents, servants, employees, attorneys, and all persons in active concert or participation with them, and each of them, from violating Sections 10(b), 13(d), 16(a) of the Exchange Act, [15 U.S.C. § 78j(b)], and Rules 10b-5, 13d-1, and 16a-3(a) [17 C.F.R. §§ 240.10b-5, 240.13d-1, 240.16a-3(a)] thereunder, and from aiding and abetting or causing violations of Section 13(a) of the Exchange Act [15 U.S.C. §§ 78m(a)] and Rules 13a-1 and 12b-20 [17 C.F.R. §§ 240.13a-1, 240.12b-20], thereunder; (c) Defendant Gallo, his officers, agents, servants, employees, attorneys, and all persons in active concert or participation with them, and each of them, from violating 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, and from aiding and abetting or causing violations of Section 13(a) of the Exchange Act [15 U.S.C. §§ 78m(a)] and Rules 13a-1 and 12b-20 [17 C.F.R. §§ 240.13a-1, 240.12b-20], thereunder. III. CIVIL PENALTIES Issue an Order directing Defendants to pay a civil penalty pursuant to Section 21(d)(3) of the Exchange Act, 15 U.S.C. § 78u(d)(3), for their violations of the federal securities laws as complained herein. IV. FURTHER RELIEF Grant such other and further relief as may be necessary and appropriate. Further, the SEC respectfully requests that this 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. Dated: August 13, 2002
http://www.sec.gov/litigation/complaints/comp17685b.htm
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