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U.S. Securities and Exchange Commission

UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF TEXAS
DALLAS DIVISION


Securities and Exchange Commission,

Plaintiff,   

v.

LEON LEVY, ILAN SABBAH, YANNI ABECASSIS (aka Yannai Abecassis), HENRY LEVY (aka Henry Levy Sakhai), HERTSEL LEVY (aka Hertzel Levy), and JACQUELINE LEVY,

Defendants.   

- and -

ATLANTIC 1 CORP.,

Defendant Solely for the Purposes of Equitable Relief   


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Civil Action No.

3-04-CV-0351-N

COMPLAINT

Plaintiff Securities and Exchange Commission ("Commission") alleges against Defendants Leon Levy, Ilan Sabbah ("Sabbah"), Yanni Abecassis ("Abecassis"), Hertsel Levy, Henry Levy, Jacqueline Levy, ("Defendants") and Relief Defendant Atlantic 1 Corp. ("Atlantic 1"):

I. SUMMARY

1. This case involves insider trading by Defendants in the securities of iDial Networks, Inc. ("iDial").

2. On July 30, 2003, Abecassis, an iDial customer, contacted Mark Wood, iDial's CEO, and described an opportunity for iDial to merge with GlobalNet, Inc. ("GlobalNet"). Following this discussion, Abecassis and Leon Levy, an Abecassis associate, assisted iDial in effecting its merger with GlobalNet. As a result, Abecassis and Leon Levy were privy to material non-public information relating to the merger, which iDial's CEO instructed them to keep confidential, consistent with iDial policy that prohibited consultants from using material non-public information for personal gain.

3. Nevertheless, between August 8 and 22, 2003, Leon Levy purchased 12,500,000 shares of iDial common stock on the basis of material non-public information about the merger, in breach of a duty of trust and confidence that he owed to iDial and its shareholders.

4. In early August, Leon Levy also tipped Henry Levy, Jacqueline Levy (Henry Levy's spouse), and Hertsel Levy (Henry Levy's brother) about the impending merger of iDial and GlobalNet. Hertsel, Henry and Jacqueline Levy knew, or were reckless in not knowing, that this information was confidential and the tip was improper. Nevertheless, between August 7 and August 19, 2003, on the basis of this material nonpublic information, Hertsel, Henry, and Jacqueline Levy, through accounts that Henry Levy held individually and through accounts that Henry Levy held jointly with Jacqueline Levy or with Hertsel Levy, purchased, in the aggregate, 12,453,500 iDial shares.

5. In addition, in early August, Leon Levy and Abecassis tipped Sabbah about the impending merger. Sabbah knew, or was reckless in not knowing, that the information was confidential and the tip was improper. On the basis of this material non-public information, Sabbah purchased 12,050,000 shares of iDial common stock between August 11 and August 21, 2003.

6. On August 27, iDial publicly announced the merger, and iDial's stock price surged over 100%.

7. Shortly thereafter, Leon Levy and Sabbah liquidated a total of 15,250,000 iDial shares for proceeds of approximately $380,000.

8. As a result of Hertsel, Henry and Jacqueline Levy's trading activities, they earned potential trading profits aggregating over $200,000 (based on the value of the shares at the close of trading on August 27, less the purchase price of the shares).

9. To compensate Abecassis for involving him in the merger and affording him the opportunity to acquire material non-public information, Leon Levy transferred some of his iDial shares to a brokerage account in the name of Atlantic 1, a Panamanian company controlled by Abecassis. Similarly, to compensate Abecassis for tipping him to the merger, Sabbah transferred some of his trading profits and iDial shares to Abecassis' Atlantic 1 account.

10. After receiving cash and over 10 million shares of iDial stock from Leon Levy and Sabbah, Atlantic 1 sold 1,929,000 iDial shares for proceeds of approximately $82,000, and subsequently transferred its remaining iDial shares to a brokerage account at a different firm.

11. By reason of these activities, Defendants have violated 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] thereunder. The Commission, in the interest of protecting the public from any further violations of the federal securities laws, brings this action against Defendants seeking permanent injunctive relief, and appropriate civil money penalties, and seeking disgorgement of ill-gotten gains plus prejudgment interest from Defendants and Relief Defendant.

II. JURISDICTION

12. The Commission brings this action under Section 21(d) of the Exchange Act [15 U.S.C. 78u(d)] to enjoin Defendants from future violations of the federal securities laws and to seek disgorgement, prejudgment interest, and a civil penalty.

13. This Court has jurisdiction over this action under Sections 21(d), 21A and 27 of the Exchange Act [15 U.S.C. 78u(d), 78u-1 and 78aa].

14. Defendants, directly and indirectly, made use of the mails and of the means and instrumentalities of interstate commerce in connection with the acts, practices and courses of business described in this Complaint. Relief Defendant was unjustly enriched as a result of these activities.

15. Venue is proper because transactions, acts, practices and courses of business described below occurred within the jurisdiction of the Northern District of Texas, including that all the securities transactions by Leon Levy, Sabbah, and Abecassis (through Atlantic 1) were placed through and processed by an Irving, Texas-based broker-dealer.

III. DEFENDANTS AND RELIEF DEFENDANT

16. Leon Levy, age 37, is either a Spanish or Venezuelan citizen and a resident of Obarrio, Panama, and resides at the same address as Sabbah and Abecassis. Leon Levy was formerly employed as a stockbroker in Panama with Sterling Financial Investment Group, a Boca Raton, Florida-based broker-dealer.

17. Ilan Sabbah, age 27, is a Canadian citizen and a resident of Obarrio, Panama, and resides at the same address as Leon Levy and Abecassis.

18. Yanni Abecassis (A/K/A Yannai Abecassis), age 33, is a Canadian citizen and resident of Obarrio, Panama, and resides at the same address as Leon Levy and Sabbah. During the relevant time, Abecassis and Leon Levy were business associates.

19. Hertsel Levy (A/K/A Hertzel Levy) is believed to be 46 years of age and to reside in Panama. He holds at least one brokerage account jointly with his brother, Henry Levy.

20. Henry Levy (A/K/A Henry Levy Sakhai) is believed to be 35 years of age and to reside in Panama. He is married to, and holds at least one brokerage account jointly with his wife, Jacqueline Levy. Henry Levy also holds at least one brokerage account jointly with his brother, Hertsel Levy.

21. Jacqueline Levy is believed to be 33 years of age and to reside in Panama. Henry and Jacqueline Levy are believed to be husband and wife, and they jointly hold at least one brokerage account.

22. Atlantic 1 Corp. is a newly formed Panama corporation, duly incorporated on September 17, 2003, three weeks after the merger of iDial and GlobalNet was announced. Atlantic 1 is in the business of making investments. Abecassis is the President and a director of Atlantic 1. Atlantic 1 shares the same mailing address as Leon Levy, Sabbah and Abecassis, and also has a brokerage account at the same Irving, Texas based broker-dealer through which Leon Levy and Sabbah purchased shares of iDial in August 2003.

IV. RELATED ENTITIES

23. During the relevant time, iDial Networks, Inc. was a Nevada corporation with its principal place of business in The Woodlands, Texas, and was in the telecommunications business. During the relevant time, iDial's common stock was registered with the Commission under Section 12(g) of the Exchange Act, and traded on the Over-The-Counter Bulletin Board ("OTCBB") under the symbol IDNW. Following its merger with GlobalNet, iDial assumed GlobalNet's name and began trading under the OTCBB symbol GLBT.

24. During the relevant time, GlobalNet, Inc. was a Nevada corporation that provided international voice and data telecommunications services. GlobalNet was a subsidiary of Titan Corp. ("Titan"), a San Diego, California-based technology company. Titan's common stock is registered under Section 12(b) of the Exchange Act, and trades on the New York Stock Exchange under the symbol TTN.

25. In May 2003, Growth Enterprise Fund, S.A. ("GEF"), a Panamanian holding company, acquired the rights to purchase GlobalNet from Titan Corp.

V. STATEMENT OF FACTS

Merger Discussions Begin

26. On July 30, 2003, Abecassis, an iDial customer, who acted as a "finder" for iDial in its merger with GlobalNet, called Wood, iDial's CEO, and described an opportunity for iDial to merge with GlobalNet.

27. The following day, Abecassis arranged a three-way call involving Wood, Abecassis, and Richard Marshall ("Marshall") of GEF, which at the time had the rights to acquire GlobalNet from Titan. During the conference call, it was agreed that: (1) iDial and GEF were interested in pursuing a merger between iDial and GlobalNet; and (2) a term sheet would be negotiated setting forth the terms and conditions of the potential acquisition.

28. On August 1, 2003, Wood informed Daniyel Erdberg ("Erdberg"), an iDial employee, about the potential merger and instructed him to coordinate with Abecassis in obtaining preliminary due diligence on GlobalNet from Marshall for a meeting that was scheduled to take place in Panama on August 4.

Merger Terms Are Agreed Upon

29. On August 4, 2003, Wood, Erdberg, Abecassis, Leon Levy and other interested parties met in Panama City, Panama to discuss the merger. Abecassis attended the meeting because he was working as an agent on behalf of iDial to complete the merger. Leon Levy attended the meeting as an assistant to Abecassis. Leon Levy informed iDial officials that he was formerly a Vice President of Bear Stearns in Panama and therefore very familiar with merger and acquisition work. Abecassis confirmed to iDial officials that these representations were accurate. The National Association of Securities Dealers' Central Registration Depository does not reflect, however, that Leon Levy was ever an employee or registered representative of Bear Stearns.

30. During the August 4 meeting, Wood conveyed to all the participants that the information presented and discussed during the meeting was privileged and confidential. Pursuant to iDial's policies, iDial consultants who come in possession of material non-public information concerning iDial are required to safeguard the information and keep it confidential. Furthermore, iDial's policies prohibit insiders from trading in iDial's stock when in possession of material non-public information, prohibit the use of non-public information for personal gain and prohibit passing such information to someone who has no need to know the information for legitimate, company reasons.

31. During the August 4 meeting, Marshall (who participated by teleconference) and Wood agreed on: (1) an initial set of terms for the transaction; (2) who would provide the funding necessary to complete the transaction; and (3) scheduling a meeting on August 6, in Miami, Florida to formalize the term sheet and discuss the next steps to complete the merger.

32. Following the August 4 meeting in Panama, Erdberg continued to talk with Leon Levy about the iDial and GlobalNet merger.

33. On August 6, 2003, several meetings were held in Adventura, Florida, at which iDial officials, GEF officials, and other interested parties discussed financing options and terms for the merger. During the course of these meetings, iDial and GEF executed a new term sheet and decided that a new investment group would take the lead in providing financing for the merger. Over the next couple of weeks, additional meetings and discussions occurred, during which due diligence continued and financing arrangements were made.

Leon Levy and Sabbah Open Brokerage Accounts and Begin Buying iDial Stock

34. In early August, Leon Levy and Abecassis tipped Sabbah about the impending merger.

35. On August 7 and 8, 2003, Leon Levy and Sabbah, respectively, opened brokerage accounts with Richmark Capital Corp. ("Richmark"), an Irving, Texas-based broker-dealer, with the same account executive. According to Leon Levy and Sabbah's account opening documents, the two men share the same residence, mailing address, and evening telephone number in Panama.

36. Immediately after opening the accounts, Leon Levy and Sabbah began buying iDial stock. Specifically, between August 8 and 22, 2003, Leon Levy and Sabbah purchased 12,500,000 and 12,050,000 shares of iDial common stock, respectively, at prices ranging from approximately $0.004 to $0.008 per share, in multiple unsolicited transactions, for a total cost of approximately $130,600.

37. Leon Levy made his purchases on the basis of material non-public information, and in breach of a duty of trust and confidence that he owed to iDial.

38. Similarly, Sabbah made purchases on the basis of material non-public information about the merger that he received from Leon Levy and Abecassis, both of whom had a duty to keep the information confidential. Sabbah knew or was reckless in not knowing that the tip violated a duty of confidentiality.

Leon Levy Tips Hertsel, Henry and Jacqueline Levy About the Merger, and They Begin Buying iDial Stock

39. In early August, Leon Levy provided material non-public information about the merger to Hertsel, Henry and Jacqueline Levy. Hertsel, Henry and Jacqueline Levy knew or were reckless in not knowing that Leon Levy's tip violated a duty of confidentiality.

40. On the basis of Leon Levy's tip, Hertsel, Henry, and Jacqueline began purchasing iDial common stock. Specifically, between August 7 and August 19, 2003, Hertsel, Henry and Jacqueline Levy, through accounts that Henry Levy held individually and through accounts that Henry Levy held jointly with Jacqueline Levy or with Hertsel Levy, purchased, in the aggregate, 12,463,500 iDial shares, at prices ranging from approximately $0.0027 to $0.0079 per share, in multiple unsolicited transactions, for a total cost of approximately $47,000. Some of these shares were in an account maintained at Leon Levy's former employer, Sterling Financial Investment Group, a Florida broker-dealer with a Panama office.

The Merger is Completed and Publicly Announced

41. On August 23, 2003, officials from iDial, Titan and GEF met in Washington, DC, and closed the merger between iDial and GlobalNet.

42. On August 27, 2003, at 9:20 a.m., iDial announced its merger with GlobalNet. Following the announcement of the merger, iDial's stock price surged over 100%, from an August 26 closing price of $0.01 to an August 27 closing price of $0.0205. Trading volume increased by roughly 900% on August 27, as compared to historical average daily trading volume.

Leon Levy and Sabbah Begin Selling Their iDial Stock and Transferring Cash and Stock to Abecassis

43. Beginning on September 30, Leon Levy and Sabbah began liquidating their iDial holdings. Between September 30 and November 26, 2003, Sabbah liquidated his 12,050,000 shares at prices ranging from $0.0175 to $0.032095 for proceeds of approximately $295,000, and a profit of approximately $221,000. On October 10, 2003, Leon Levy liquidated 3,200,000 of his iDial shares at $0.0262 for proceeds of approximately $84,000.

44. On October 1, about two weeks after incorporating Atlantic 1, Abecassis opened a brokerage account at Richmark in the name of Atlantic 1 with the account executive responsible for handling the Leon Levy and Sabbah accounts. According to brokerage records, Atlantic 1 shares the same Panamanian mailing address as Leon Levy and Sabbah. In addition, Atlantic 1's incorporation documents indicate that Abecassis shares the same residence as Leon Levy, Sabbah and Abecassis.

45. Between October 10 and 15, to compensate Abecassis for involving him in the transaction and affording him the opportunity to acquire material non-public information, Leon Levy transferred all his remaining shares of iDial to Abecassis' Atlantic 1 account, effectively closing his account.

46. On November 26, to compensate Abecassis for tipping him to the merger, Sabbah transferred all the cash and stock remaining in his brokerage account to Atlantic 1, effectively closing his account.

47. During the limited time Leon Levy and Sabbah's accounts were active, only iDial securities were traded in the accounts, with the exception of only one transaction.

48. After receiving cash totaling almost $200,000 and over 10 million shares of iDial stock, Atlantic 1 sold 1,929,000 iDial shares for proceeds of approximately $82,000, and subsequently transferred its remaining iDial shares to an account at another brokerage firm.

Hertsel, Henry and Jacqueline Levy Earn Over $200,000 in Potential Trading Profits

49. Hertsel, Henry and Jacqueline Levy earned, in the aggregate, potential trading profits of approximately $208,500 (based on the value of the shares at the close of trading on August 27 ($255,500), less the purchase price of the shares ($47,000)) by trading iDial shares on the basis of Leon Levy's tip.

VI. CLAIMS

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] Thereunder by Defendants

50. Plaintiff Commission repeats and incorporates paragraphs 1 through 49 of this Complaint by reference as if set forth verbatim.

51. Defendants, by engaging in the conduct described above, directly and indirectly, in connection with the purchase and sale of securities, and by use of the means and instrumentalities of interstate commerce and of the mails, have:

  1. employed devices, schemes and artifices to defraud;
     
  2. 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
     
  3. engaged in acts, practices or courses of business that have operated or will operate as a fraud and deceit upon other persons.

52. Defendants intentionally, knowingly or recklessly made the untrue statements and omissions and engaged in the devices, schemes, artifices, transactions, acts, practices and courses of business described above.

53. By reason of their foregoing acts and practices, Defendants 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 thereunder [17 C.F.R. 240.10b-5].

Claim against Relief Defendant as Custodian of Investor Funds

54. Plaintiff Commission repeats and incorporates paragraphs 1 through 49 of this Complaint by reference as if set forth verbatim.

55. Relief Defendant received funds and property from one or more of the Defendants, which are the proceeds, or are traceable to the proceeds, of the unlawful activities of Defendants, as alleged in paragraphs 1 through 49, above.

56. Relief Defendant obtained the funds and property alleged above as part of and in furtherance of the securities violations alleged in paragraphs 1 through 49 and under circumstances in which it is not just, equitable or conscionable for it to retain the funds and property. As a consequence, Relief Defendant has been unjustly enriched.

VII. REQUEST FOR RELIEF

The Commission respectfully requests that this Court enter a judgment:

  1. permanently enjoining Defendants 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;
     
  2. ordering Defendants to pay civil penalties pursuant to Section 21A of the Exchange Act [15 U.S.C. 78u-1] for their violations of the federal securities laws as alleged herein;
     
  3. ordering Defendants and Relief Defendant to disgorge all ill-gotten gains from the conduct alleged herein, with prejudgment interest; and
     
  4. granting such other relief as this Court may deem just and appropriate.

Dated this ________ day of February, 2004.

Respectfully submitted,

_____________________________
TOBY M. GALLOWAY
Texas Bar No. 00790733
UNITED STATES SECURITIES AND
EXCHANGE COMMISSION
Fort Worth Office
Burnett Plaza, Suite 1900
801 Cherry Street
Fort Worth, Texas 76102-6882
Telephone: (817) 978-6447
Facsimile: (817) 978-4927

Of Counsel:
Spencer C. Barasch
Alan M. Buie
Robert Long
Will Fergus
UNITED STATES SECURITIES AND
EXCHANGE COMMISSION
Fort Worth Office
Burnett Plaza, Suite 1900
801 Cherry Street
Fort Worth, Texas 76102-6882


http://www.sec.gov/litigation/complaints/comp18500.htm


Modified: 12/12/2004