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U.S. Securities and Exchange Commission

WAYNE M. CARLIN (WC-2114)
Regional Director
Attorney for Plaintiff
SECURITIES AND EXCHANGE COMMISSION
Northeast Regional Office
233 Broadway
New York, NY 10279
(646) 428-1510

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK


SECURITIES AND EXCHANGE COMMISSION,

Plaintiff,
v.

MAX C. TANNER,
DENNIS EVANS,
MARK A. TAYLOR, SR.,
KEVIN KIRKPATRICK,
KENNETH KURTZ,
KEVIN J. RUGGIERO,
MICHAEL BOSTON,
ALEX SHEYFER, and
ALEXANDER ZALMENENKO,

Defendants.


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02 Civ. ( )

COMPLAINT

PRELIMINARY STATEMENT

Plaintiff Securities and Exchange Commission ("Commission"), for its Complaint against defendants Max C. Tanner ("Tanner"), Dennis Evans ("Evans"), Mark A. Taylor, Sr. ("Taylor"), Kevin Kirkpatrick ("Kirkpatrick"), Kenneth Kurtz ("Kurtz"), Kevin J. Ruggiero ("Ruggiero"), Michael Boston ("Boston"), Alex Sheyfer ("Sheyfer"), and Alexander Zalmenenko ("Zalmenenko") (collectively, the "Defendants"), alleges as follows:

1. From at least March 1998 through at least June 1999, the Defendants engaged in an elaborate scheme to manipulate the public trading market for stock issued by Maid Aide, Inc. ("MDAN"). The Defendants gained control of a shell company, set up two boiler room operations, and directed unlicensed brokers to sell more than 475,000 unregistered MDAN shares to investors at artificially inflated prices using high-pressure sales tactics in exchange for undisclosed kickbacks. The Defendants also executed manipulative public market trades and posted artificially high price quotations concerning MDAN common stock on the NASD's Over-The-Counter Bulletin Board ("OTC-BB"). Through this scheme, the Defendants defrauded hundreds of innocent investors of more than $3.7 million.

2. The Defendants, directly or indirectly, have engaged in transactions, acts, practices and courses of business which constitute violations of Section 17(a) of the Securities Act of 1933 ("Securities Act") [15 U.S.C. § 77q(a)], and Section 10(b) of the Securities Exchange Act of 1934 ("Exchange Act") [15 U.S.C. § 78j(b)], and Rule 10b-5 thereunder [17 C.F.R. § 240.10b-5]. In addition, Defendants Boston, Evans, Ruggiero, Sheyfer, Tanner, Taylor, and Zalmenenko, directly or indirectly, also have engaged in violations of Sections 5(a) and 5(c) of the Securities Act [15 U.S.C. §§ 77e(a), 77e(c)]. Finally, Defendants Sheyfer and Zalmenenko, directly of indirectly, also have engaged in violations of Section 15(a) of the Exchange Act [15 U.S.C. § 78o(a)].

3. Unless restrained and enjoined by this Court, the Defendants will continue to engage in the transactions, acts, practices, and courses of business described herein, and in transactions, acts, practices, and courses of business of a similar type and object. By this action, the Commission seeks permanent injunctive relief, disgorgement, civil money penalties, officer and director bars, and an award of civil penalties.

JURISDICTION AND VENUE

4. The Commission brings this action pursuant to Sections 20(b), 20(d) and 20(e) of the Securities Act [15 U.S.C. §§ 77t(b), 77t(d), and 77t(e)] and Sections 21(d) and 21(e) of the Exchange Act [ 15 U.S.C. §§ 78u(d) and 78u(e)].

5. This Court has jurisdiction of this action pursuant to Sections 20(d)(1) and 22(a) of the Securities Act [15 U.S.C. §§ 77t(d)(1) and 77v(a)] and Sections 21(d)(3)(A), 21(e) and 27 of the Exchange Act [15 U.S.C. §§ 78u(d)(3)(A), 78u(e), and 78aa].

6. In connection with the transactions, acts, practices, and courses of business described in this complaint, each of the Defendants, directly or indirectly, has made use of the means and instrumentalities of interstate commerce, or of the mails, or of the facilities of a national securities exchange. Certain of the transactions, acts, practices, and courses of business alleged herein occurred within this District, and venue is proper pursuant to Section 22(a) of the Securities Act and Section 27 of the Exchange Act.

DEFENDANTS

7. Boston, age 28, resides in Woodside, New York. From November 1997 through January 1999, Boston was a registered representative and supervisor at the New York branch office of Baxter, Banks, & Smith Ltd. ("BBS"), then a broker-dealer registered with the Commission. From March through December 1998, Boston supervised a New York branch office of BBS, along with Ruggiero. This BBS branch office was one of two boiler rooms that solicited investors to purchase MDAN common stock during the course of the fraudulent scheme.

8. Evans resides in Las Vegas, Nevada. Evans and Tanner incorporated MDAN in September 1997. On November 19, 2001, a federal jury found Evans guilty of, among other things, conspiracy to commit securities fraud based on his participation in the MDAN scheme.

9. Kirkpatrick, age 40, is a registered representative, equity trader, and securities principal associated with Olsen Payne & Company ("OLIE"), a broker-dealer registered with the Commission. From March 1998 through March 1999, Kirkpatrick made a market in MDAN securities on behalf of OLIE.

10. Kurtz, age 33, is a stock promoter and resident of Salt Lake City, Utah. On September 19, 2000, a federal grand jury indicted Kurtz for, among other things, violating certain securities laws and regulations in connection with the trading in MDAN stock. In connection with the criminal indictment, Kurtz pled guilty on September 20, 2001 to one count of filing a false income tax return.

11. Ruggiero, age 32, resides in Lyndhurst, New Jersey. From March 1998 through December 1998, Ruggiero, then a registered representative and principal, supervised a New York branch office of BBS that was one of two boiler rooms that solicited investors to purchase MDAN common stock during the course of the fraudulent scheme. During 1998 and 1999, Ruggiero controlled Chios Investments Ltd. ("Chios"), an entity that maintained a brokerage account with a Canadian broker-dealer. On April 16, 2001, Ruggiero pled guilty to conspiracy to commit securities fraud based upon his participation in the MDAN scheme.

12. Sheyfer resides in Staten Island, New York. He supervised one of the BBS boiler rooms that solicited investors to purchase MDAN stock.

13. Tanner, age 54, resides in Las Vegas, Nevada. Tanner and Evans incorporated MDAN in September 1996. Tanner, who holds a M.B.A., a J.D., and a master of laws degree, was MDAN's original director and principal shareholder. Tanner also controlled Delta Financial Resources, Inc. ("Delta"), an offshore Cayman Islands corporation that maintained brokerage accounts and bank accounts in the Cayman Islands and Canada. On November 19, 2001, a federal jury found Tanner guilty of, among other things, federal securities fraud based on his participation in the MDAN schme.

14. Taylor, age 45, resides in Tampa, Florida. From July 1998 through March 1999, Taylor was a registered representative and a principal of G.L. Barrett & Associates Securities Inc., a broker-dealer registered with the Commission. Taylor was a paid consultant who arranged a merger of MDAN with another company. He also controlled Gold Coast Investments, an offshore entity. On November 21, 2000, Taylor pled guilty to conspiracy to commit federal securities fraud based on his participation in the MDAN scheme.

15. Zalmenenko, age 32, resides in New York state. He supervised one of the BBS boiler rooms that solicited investors to purchase MDAN stock.

RELEVANT ENTITIES

16. Maid Aide, Inc., a former Nevada corporation, maintained its principal place of business in Las Vegas, Nevada. MDAN purportedly provided residential maid services; however, MDAN never actually conducted any such business. On March 2, 1998, market makers began posting price quotations for MDAN's common stock on the OTC-BB, a securities market maintained by the NASD, that uses computers, telephones and other instruments of communication in interstate commerce and the mails to effectuate purchases and sales of stock. MDAN's stock was not registered with the Commission. On July 31, 1998, MDAN completed a business combination with CFE Trucking Inc. ("CFE Trucking"), resulting in a new, publicly-traded entity, CFE Enterprises Inc. ("CFE"). The surviving entity began trading under its own symbol, CFEN, on September 21, 1998.

17. CFE Enterprises Inc. is a Nevada corporation with its principal office in Brooksville, Florida. Its common stock is not registered with the Commission, but it is quoted on the OTC-BB. CFE is a holding company for its only subsidiary, CFE Trucking, which hauls gravel for use in building and road construction. Neither CFE nor CFE Trucking was publicly-traded prior to the MDAN merger.

18. Baxter, Banks & Smith Ltd. was a broker-dealer registered with the Commission pursuant to Section 15(b) of the Exchange Act during all times relevant to this action. During 1998 and 1999, BBS, a Delaware corporation, maintained its principal office in Tampa, Florida and two branch offices in New York, New York. From March 1998 through December 1998, both New York offices, one supervised by Ruggiero and Boston and the other supervised by Sheyfer and Zalmenenko, employed unregistered telemarketers who used boiler-room tactics to sell a substantial amount of MDAN stock to the investing public. On April 28, 2000, BBS ceased all operations after its broker-dealer license was permanently revoked by the State of Florida Department of Banking and Finance.

FACTS

A. Evans and Tanner Set Up MDAN as a Shell Company Controlled by Them

19. Evans and Tanner incorporated MDAN in Nevada in September 1996, listing Tanner as MDAN's sole director and listing the address of Tanner's law office as MDAN's principal place of business. Although MDAN purported to be a commercial and residential cleaning services company, it was in fact a shell corporation with no real operations.

20. Tanner resigned as MDAN's director in September 1996, but he and Evans continued to maintain control over MDAN's affairs. On or about September 30, 1996, Tanner and Evans elected Evans' housecleaner to replace Tanner as MDAN's sole director. Her appointment was merely a front to conceal Tanner's and Evans' control over MDAN. In fact, she did not know about MDAN's business affairs and had minimal involvement with it beyond signing documents from time to time at the direction of Evans.

21. During the fall of 1996, MDAN sold common stock to the public without filing a registration statement with the Commission. MDAN purportedly relied on Rule 504 of Regulation D of the Securities Act, which exempts certain private securities offerings from the registration provisions of the federal securities laws. To accomplish this private sale, Tanner and Evans caused MDAN to file a Form D with the Commission and to distribute an offering circular to investors. Among other things, this circular instructed investors to direct any legal questions concerning the offering to Tanner. By November 1996, Tanner and Evans had placed 1,076,000 shares of MDAN common stock with forty-four investors, raising $10,760 in capital. The new MDAN shareholders included, among others, Tanner's son, Evans' niece, and Evans' father-in-law.

22. Within less than one year, Tanner and Evans effectively gained control of MDAN's outstanding stock. On or around September 23, 1997, forty-two of the original forty-four investors sold their 676,000 MDAN shares to Tanner at $.02 per share. As a result of these transactions, Tanner controlled, either directly or indirectly, at least 976,000, or 90%, of the 1,076,000 MDAN shares then outstanding. During the spring of 1998, Evans acquired at least 60,000 of the 976,000 MDAN shares formerly controlled by Tanner.

B. Kurtz, Ruggiero, Taylor and Tanner Issued a Materially Misleading Press Release Concerning MDAN's Merger with CFE

23. As Tanner and Evan were gaining control of MDAN's public float, Taylor began consulting with CFE and CFE's counsel about the possibility of establishing CFE as a public entity. Taylor introduced CFE to Ruggiero, Kurtz, and Tanner. Shortly thereafter, CFE and Tanner, acting as MDAN's counsel and representative, began merger negotiations.

24. As negotiations between MDAN and CFE progressed, Kurtz, Ruggiero, Tanner and Taylor ("the group") began to discuss the process through which they would manipulate the market of MDAN stock. Ultimately, the group decided to memorialize certain aspects of their plan in writing. In January 1998, the group entered into a written agreement ("the Agreement") whereby: (i) Tanner would oversee the sale of 100,000 MDAN shares into the open market; (ii) Tanner would receive $150,000 from the sale of such shares; and (iii) upon Tanner's receipt of $150,000, Tanner would distribute 100,000 MDAN shares each to Ruggiero, Taylor, and Kurtz.

25. The group also agreed that "telemarketers," working through BBS boiler rooms, would market Tanner's MDAN shares to the public and would ensure that Tanner would receive at least $1.50 per share for the sale of his 100,000 shares. Because Ruggiero was associated with BBS, this arrangement allowed him to have greater control over the market for MDAN shares. The group further agreed that Tanner would distribute any amount of proceeds received in excess of $1.50 per share to the telemarketers as compensation for marketing his shares to the public.

26. The group agreed that as soon as Tanner received $150,000 in payment for the shell, the telemarketers would begin selling the other group members' MDAN shares in addition to Tanner's remaining shares. The group agreed to distribute proceeds received from the sale of these shares as follows: (i) each member of the group would receive 30% of the sale proceeds from the sale of their respective shares; (ii) approximately 5% of all proceeds would flow to Ruggiero in exchange for his role in coordinating the sales and supervising the telemarketers; and (iii) the remaining 65% would flow to the respective group of telemarketers responsible for placing the sale. Additionally, an arrangement was made between the group and Boston whereby Boston was to receive 5% of the total proceeds from MDAN sales made through a boiler room he supervised.

27. MDAN and CFE agreed upon the terms of the merger, and on February 25, 1998, CFE and MDAN signed a letter of intent. On or about February 27, 1998, the group drafted a press release on behalf of, but without authorization from, CFE. The release highlighted the proposed merger between MDAN and CFE and stated that the merger "with [CFE], with its asset base including 100 owned and leased trucks and an agreement to purchase a lime rock quarry, is expected to enhance shareholder value." The release was materially misleading because it did not disclose that MDAN was controlled by Tanner and that Tanner and the rest of the group intended to engage in an illegal offering of MDAN stock to the public. The group issued the release on March 1, 1998, the day before MDAN began trading.

C. MDAN Began Public Trading and BBS Boiler Room Operations Touted MDAN Stock Using False Statements

28. MDAN started trading publicly on the morning of March 2, 1998, when Tanner sold 100 shares to Kirkpatrick at OLIE for $6.00 per share. This transaction was a prearranged matched order designed to start MDAN trading with an arbitrary opening price. The telemarketers in the BBS boiler rooms began soliciting investors to purchase the stock the same day, selling 2,000 shares that first day to investors at the artificially inflated price of $6.00 per share.

29. On or about March 2, 1998, telemarketers operating from the two separate BBS boiler rooms began touting MDAN. Boston and Ruggiero supervised one boiler room, and Sheyfer and Zalmenenko supervised the other.

30. The telemarketers routinely misled and deceived the investing public. The telemarketers concealed their true identities and the fact that they were not registered with the Commission or licensed by the NASD by posing as Ruggiero and Boston. In exchange for allowing the telemarketers to assume their identities, Ruggiero and Boston received kickbacks equal to 5% of the total MDAN sales proceeds generated by the telemarketers who used their names.

31. The telemarketers solicited purchasers of MDAN stock by making "cold calls" and using high-pressure sales tactics. They misrepresented facts concerning the market for MDAN shares and the proposed merger between MDAN and CFE. For example, several telemarketers made baseless price predictions, guaranteeing that MDAN's stock price would "go through the roof" and "double in six months." Furthermore, the telemarketers never disclosed to investors that they received kickbacks in connection with the sale of MDAN stock.

32. At the direction of Ruggiero, Boston, Sheyfer, and/or Zalmenenko, the telemarketers sold more than 550,000 shares of MDAN stock to investors. The telemarketers were paid more than $570,000 in undisclosed kickbacks for their involvement in the scheme.

D. Kirkpatrick Participated in the Fraud Through His Position as a Market Maker for MDAN Stock

33. Kurtz and Ruggiero recruited Kirkpatrick to act as a market maker in MDAN stock. At their direction, Kirkpatrick executed prearranged matched orders with various members of the group and posted increasingly higher quotations concerning MDAN on the OTC-BB. In return for his cooperation, Kirkpatrick and Ruggiero agreed that Kirkpatrick would received a pre-arranged "spread" of $.13 and $.25 per share between Kirkpatrick's purchase and sale prices for each matched trade he executed involving MDAN. This benefited Kirkpatrick by ensuring that Kirkpatrick always profited when he traded MDAN. In this manner, Kirkpatrick generated profits of over $92,000 in OLIE's firm trading account during the course of the scheme.

34. From March and November 1998, Ruggiero and Kirkpatrick communicated regularly in order to coordinate their efforts to manipulate the stock price of MDAN. Ruggiero often called Kirkpatrick before the market opened and discussed MDAN trades that he anticipated executing during the course of the day. Kirkpatrick and Ruggiero also had regular discussions concerning the sales made through the BBS boiler rooms and coordinated Kirkpatrick's purchases and sales so that transactions were prearranged and executed at artificially inflated prices.

35. To keep up with the purchase orders that came in from the BBS boiler rooms, Kirkpatrick often executed short sales, knowing that Tanner and his co-conspirators would provide stock to "cover" these transactions. As a result, Kirkpatrick often maintained unusually high short positions at the end of the trading day. Between March and September 1998, Kirkpatrick often maintained a negative balance in excess of 2,000 shares and occasionally held negative positions in excess of 25,000 shares. Kirkpatrick obtained all of the stock he sold to BBS by purchasing blocks of MDAN shares from brokerage accounts controlled by Tanner and members of his group. Ruggiero and Kirkpatrick coordinated most of these purchases.

36. Kirkpatrick consistently posted increasing bids to purchase MDAN stock throughout most of 1998. In fact, beginning from March through August 1998, Kirkpatrick steadily increased the bids he quoted on MDAN from $5.00 to $8.50 per share. During this period, Kirkpatrick quoted bids that were greater than or equal to the highest prevailing bids posted by other market makers on approximately 88% of the occasions when he quoted MDAN. On many occasions, Kirkpatrick's quoted bids were as much as $1.50 greater than the prevailing quotations by other market makers for MDAN stock.

E. The Defendants Profited Illegally from the Fraudulent MDAN Sales

37. In October 1996, Tanner opened a Canadian brokerage account under the name Delta, into which he deposited his initial 100,000 MDAN shares to enter the open market. At Ruggiero's instruction, Tanner sold blocks of MDAN shares from the Delta account to Kirkpatrick. For each of these sales, Ruggiero instructed Tanner on the price at which to sell the stock. As of March 15, 1999, Tanner had sold more than 300,000 shares through the Delta account. Proceeds from these sales exceeded $2.1 million. Tanner paid the telemarketers' commissions directly to Ruggiero, who then distributed the funds in accordance with the group's arrangement. As of July 1998, Tanner had wired at least $1.1 million in commission proceeds to accounts maintained by Ruggiero. On certain occasions, Tanner also wired funds directly to Sheyfer and Zalmenenko. Between March and July 1993, Tanner wired $127,000 to accounts controlled by Sheyfer and Zalmenenko.

38. In return for his participation in the scheme, Taylor was paid 125,000 MDAN shares, which, as of July 1998, Taylor held in a brokerage account under the name Gold Coast. Although Taylor controlled the Gold Coast brokerage account, Ruggiero instructed Taylor as to when to sell his MDAN shares. As of October 1998, Taylor had sold at least 125,000 MDAN shares through the Gold Coast account, yielding trading proceeds of $992,000. Taylor earned thirty percent of the proceeds for each sale of MDAN stock taken from the Gold Coast account. The remaining proceeds were distributed pursuant to the kickback agreement. During 1998, Taylor wired at least $630,000 to various bank accounts controlled by members of the group and Boston, Sheyfer, and Zalmenenko.

39. As of September 1998, Ruggiero held 125,000 MDAN shares in an account at Canadian brokerage firm under the name of Chios. From November 1998 through June 1999, Ruggiero sold all 125,000 shares through this account at prices ranging from $3.625 per share to $.13 per share. Ruggiero coordinated most of these sales through Kirkpatrick, acting as an intermediary, and the BBS telemarketers. Proceeds from those sales totaled more than $329,000. Ruggiero distributed money to Boston, Sheyfer and Zalmenenko through offshore and domestic bank accounts controlled by Ruggiero. In return for his efforts in facilitating the scheme, Ruggiero also received kickbacks from the other group members totaling more than $527,000.

40. From July through September 1998, Tanner and Taylor sent approximately $149,800 in proceeds from their MDAN stock sales to various accounts controlled by Kurtz. These transfers were made in accordance with the Agreement.

41. Evans sold 14,500 MDAN shares from April through November 1998 at prices ranging from $7.00 to $1.25 per share. Evans also coordinated the sale of an additional 2,000 shares through a relative's account. As a result of such sales, Evans realized over $112,000 in proceeds.

42. Boston received, through various offshore accounts, over $446,000 between June and August of 1998 in connection with the MDAN scheme. In addition, Ruggiero transferred more than $13,000 into a domestic bank account controlled by Boston.

43. Sheyfer and Zalmenenko received cash kickbacks, as well as kickbacks in the form of stock. During the course of the scheme, they received more than $1,275,000 in connection with their boiler room operation. Sheyfer and Zalmenenko also received commissions in the form of 17,700 MDAN shares during the fall of 1998. Between September and October 1998, they sold these shares for more than $130,000.

F. The Market for MDAN Stock Collapsed After the Defendants Stopped Supporting the Price

44. From March through much of September 1998, MDAN stock traded at prices ranging between $5.00 and $9.35. As the Defendants began to withdraw from the scheme in the fall of 1998, MDAN's share price began to plummet. When the Defendants ceased to engage in manipulative conduct designed to support the stock price, the market for MDAN stock collapsed in or around December 1998, when MDAN traded at $.13 per share.

FIRST CLAIM

(Fraud in the Offer and Sale of Securities in Violation of
Section 17(a) of the Securities Act)
(All Defendants)

45. Paragraphs 1 through 44 are hereby realleged and incorporated by reference.

46. Defendants Tanner, Evans, Taylor, Kirkpatrick, Kurtz, Ruggiero, Boston, Sheyfer, and Zalmenenko, and each of them, directly and indirectly, singly or in concert, in the offer or sale of MDAN securities, by use of the means or instruments of transportation or communication in interstate commerce or by use of the mails, knowingly or recklessly, have: (a) employed devices, schemes or artifices to defraud; (b) obtained money or property by means of untrue statements of material fact and omissions 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 transactions, acts, practices and courses of business which operated or would operate as a fraud or deceit upon purchasers of MDAN securities.

47. As part and in furtherance of this violative conduct, Defendants Tanner, Evans, Taylor, Kirkpatrick, Kurtz, Ruggiero, Boston, Sheyfer, and Zalmenenko, and each of them, knowingly or recklessly engaged in some or all of the manipulative transactions, acts, practices, and courses of business described above, including: undisclosed domination and control of the market for MDAN stock, bribery of telemarketers to sell MDAN stock to the public through high-pressure sales tactics, pre-arranged matched orders and rigged prices, and selling MDAN stock to the public at artificially inflated prices. These transactions, acts, practices, and courses of business operated as a fraud or deceit upon investors who purchased MDAN securities.

48. By reason of the foregoing, Defendants Tanner, Evans, Taylor, Kirkpatrick, Kurtz, Ruggiero, Boston, Sheyfer, and Zalmenenko, and each of them, have violated, and, unless enjoined, will again violate Section 17(a) of the Securities Act [15 U.S.C. § 77q(a)].

SECOND CLAIM

(Fraud in Connection With the Purchase and Sale of Securities in
Violation of Section 10(b) of the Exchange Act and Rule 10b-5 Thereunder)
(All Defendants)

49. Paragraphs 1 through 48 are hereby realleged and incorporated by reference.

50. Defendants Tanner, Evans, Taylor, Kirkpatrick, Kurtz, Ruggiero, Boston, Sheyfer, and Zalmenenko, and each of them, directly and indirectly, singly and in concert, by use of the means and instrumentalities of interstate commerce, or of the mails, or of the facilities of a national securities exchange, in connection with the purchase and sale of MDAN securities, knowingly or recklessly, have: (a) employed devices, schemes or artifices to defraud; (b) made untrue statements of material facts or omissions 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 transactions, acts, practices and courses of business which operated or would operate as a fraud or deceit upon purchasers of MDAN securities.

51. As part of and in furtherance of this violative conduct, Defendants Tanner, Evans, Taylor, Kirkpatrick, Kurtz, Ruggiero, Boston, Sheyfer, and Zalmenenko, and each of them, knowingly or recklessly engaged in some or all of the manipulative transactions, acts, practices, and courses of business described above, including: undisclosed domination and control of the market for MDAN stock, bribery of telemarketers to sell MDAN stock to the public through high-pressure sales tactics, pre-arranged matched orders and rigged prices, and selling MDAN stock to the public at artificially inflated prices. These transactions, acts, practices, and courses of business operated as a fraud or deceit upon the investors who purchased MDAN securities.

52. By reason of the foregoing, Defendants Tanner, Evans, Taylor, Kirkpatrick, Kurtz, Ruggiero, Boston, Sheyfer, and Zalmenenko, and each of them, have violated, and, unless enjoined, will again 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.

THIRD CLAIM

(Offer and Sale of Unregistered Securities in Violation
of Sections 5(a) and 5(c) of the Securities Act)
(Tanner, Evans, Taylor, Ruggiero, Boston, Sheyfer, and Zalmenenko)

53. Paragraphs 1 through 52 are hereby realleged and incorporated by reference.

54. Defendants Tanner, Evans, Taylor, Ruggiero, Boston, Sheyfer, and Zalmenenko, and each of them, directly or indirectly, singly or in concert, have made use of the means or instruments of transportation or communication in interstate commerce or of the mails to offer and sell securities through the use or medium of a prospectus or otherwise when no registration statement had been filed or was in effect as to such securities and when no exemption from registration was available.

55. As part of and in furtherance of this violative conduct, Defendants Tanner, Evans, Taylor, Ruggiero, Boston, Sheyfer, and Zalmenenko, and each of them, as more fully described above, participated in the sale of unregistered MDAN shares. The MDAN stock sold by the Defendants was not exempt from registration, and therefore should have been registered with the Commission.

56. By reason of the foregoing, Defendants Tanner, Evans, Taylor, Ruggiero, Boston, Sheyfer, and Zalmenenko, and each of them, have violated and, unless enjoined, will again violate Sections 5(a) and 5(c) of the Securities Act [15 U.S.C. §§77e(a) and 77e(c)].

FOURTH CLAIM

(Activities as Unregistered Brokers in Violation of
Section 15(a) of the Exchange Act)
(Sheyfer and Zalmenenko)

57. Paragraphs 1 through 56 are hereby realleged and incorporated by reference.

58. Defendants Sheyfer and Zalmenenko, and each of them, directly and indirectly, by use of the means and instrumentalities of interstate commerce, or of the mails, or the facilities of a national securities exchange, have, without being registered with the Commission, effected transactions in, and induced or attempted to induce, the purchase or sale of securities.

59. As part of and in furtherance of this violative conduct, Defendants Sheyfer and Zalmenenko, and each of them, as more fully described above, actively supervised and directed telemarketers who offered and sold MDAN stock to investors and who effected these transactions. Sheyfer and Zalemenko received compensation for their efforts through commissions on these transactions. Sheyfer and Zalemenko were not registered with the Commission.

60. By reason of the foregoing, Defendants Sheyfer and Zalmenenko, and each of them, have violated and, unless enjoined will again violate, Section 15(a) of the Exchange Act [15 U.S.C. § 78o(a)].

RELIEF REQUESTED

WHEREFORE, the Commission respectfully requests that this Court:

I.

Enter a Final Judgment of Permanent Injunction permanently restricting and enjoining Tanner, Evans, Taylor, Kirkpatrick, Kurtz, Ruggiero, Boston, Sheyfer, and Zalmenenko, and each of them, and their agents, servants, employees, attorneys, attorneys in fact, and those persons in active concert or participation with them who receive actual notice of the Final Judgment by personal service or otherwise from violating, directly or indirectly, 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] thereunder.

II.

Enter a Final Judgment of Permanent Injunction permanently restricting and enjoining Tanner, Evans, Taylor, Ruggiero, Boston, Sheyfer, and Zalmenenko, and each of them, and their agents, servants, employees, attorneys, attorneys in fact, and those persons in active concert or participation with them who receive actual notice of the Final Judgment by personal service or otherwise from violating, directly or indirectly, Sections 5(a) and 5(c) of the Securities Act [15 U.S.C. §§ 77e(a) and 77e(c)].

III.

Enter a Final Judgment of Permanent Injunction permanently restricting and enjoining Sheyfer and Zalmenenko, and each of them, and their agents, servants, employees, attorneys, attorneys in fact, and those persons in active concert or participation with them who receive actual notice of Final Judgment by personal service or otherwise from violating Section 15(a) of the Exchange Act [15 U.S.C. § 78o(a)].

IV.

Enter a Final Judgment ordering Tanner, Evans, Taylor, Kirkpatrick, Kurtz, Ruggiero, Boston, Sheyfer, and Zalmenenko to disgorge an amount equal to the funds and benefits they obtained illegally as a result of the violations alleged herein, plus prejudgment interest on that amount.

V.

Enter a Final Judgment ordering Tanner, Evans, Taylor, Kirkpatrick, Kurtz, Ruggiero, Boston, Sheyfer, and Zalmenenko to pay civil money penalties pursuant to Section 20(d) of the Securities Act [15 U.S.C. § 77t(d)] and Section 21(d)(3)(A) of the Exchange Act [15 U.S.C. § 78u(d)(3)(A)].

VI.

Enter a Final Judgment pursuant to Section 20(e) of the Securities Act [15 U.S.C. §77t(e)] and Section 21(d)(2) of the Exchange Act [15 U.S.C. §78u(d)(2)] permanently prohibiting Evans and Tanner, and each of them, from serving as an officer or director of any issuer that has a class of securities registered with the Commission pursuant to Section 12 of the Exchange Act [15 U.S.C. §78l] or that is required to file reports with the Commission pursuant to Section 15(d) of the Exchange Act [15 U.S.C. §78o(d)].

VII.

Grant such other and further relief as the Court may deem just and appropriate.

Dated:  

January ___, 2002

New York, New York

 
  

__________________________
WAYNE M. CARLIN (WC-2114)
Attorney for Plaintiff
SECURITIES AND EXCHANGE COMMISSION
Northeast Regional Office
233 Broadway
New York, New York 10279
(646) 428-1510
Of Counsel: 
  Edwin H. Nordlinger
Mark K. Schonfeld
Caren N. Pennington
Michael A. Asaro
John P. Nowak
 


http://www.sec.gov/litigation/complaints/complr17305.htm

Modified: 01/14/2002