Julie K. Lutz
Blaine T. Welsh
IN THE UNITED STATES DISTRICT COURT
Plaintiff Securities and Exchange Commission ("Commission"), for its Complaint alleges as follows:
1. Since at least July 1999 and continuing to date, Defendant Larry A. Stockett ("Stockett"), a recidivist securities violator, has engaged in a scheme to defraud the investing public by disseminating false and misleading statements concerning two public companies of which he is the sole officer and director: Hightec, Inc. ("Hightec") and S.I.N.C.L.A.R.E. Group, Inc. ("Sinclare"). Both companies, which are publicly held and have traded in the over-the-counter market, are defunct entities whose corporate charters have been revoked. Neither has had any operations, revenue, assets or legitimate business activities over the last three years. Nevertheless, since 1999 Stockett, has issued a stream of blatantly false statements about both entities in press releases, an Internet website, Internet message boards, television infomercials and offering brochures sent directly to prospective investors. Through these media, Stockett has continuously misrepresented, among other things, the assets, business operations, financial condition and income prospects of the two entities.
2. Stockett has profited from his fraud. While disseminating false statements to investors, Stockett has himself sold at least eight million shares of restricted Hightec stock in unregistered transactions, generating profits of approximately $804,687. At the same time, Stockett has effectively precluded investors from learning about the true state of Hightec and Sinclare by failing since 1996 to file with the SEC periodic and current reports required of public companies under the federal securities laws. In addition, Stockett and Hightec have failed to file required reports disclosing to the investing public their own acquisitions and/or dispositions of Hightec and Sinclare stock.
3. Stockett's ongoing scheme violates the antifraud, securities registration, and reporting provisions of the federal securities laws. Further, the scheme is continuing: between February 1 and 7, 2002, Stockett caused Hightec to issue a new stream of false press releases, and conducted a fraudulent television "infomercial", touting Hightec's most recent illusory business venture, a purported plan to manufacture basalt fiber products utilizing a superior proprietary process. In fact, Stockett and Hightec have no rights to this process. In addition, Hightec's Internet website currently continues to date to disseminate false statements regarding the legal status, business operations and financial condition of Hightec, Hightec's subsidiaries, and Hightec's affiliate, Sinclare. To halt this ongoing fraud, the Commission therefore seeks preliminary injunctive relief by motion filed simultaneously with this complaint.
4. The Commission brings this action pursuant to the following authorities conferred upon it: one, Section 20(d) of the Securities Act of 1933 ("Securities Act") [15 U.S.C. § 77t] and Section 21(d)(3) of the Securities Exchange Act of 1934 ("Exchange Act") [15 U.S.C. § 78u(d)] for civil money penalties; two, Section 20(b) of the Exchange Act [15 U.S.C. § 77t] and Section 21(d)(1) of the Exchange Act [15 U.S.C. § 78u(d)] for an order permanently restraining and enjoining Stockett and granting other equitable relief; and three, Section 20(e) of the Securities Act [15 U.S.C. § 77t] and Section 21(d)(2) of the Exchange Act [15 U.S.C. § 78u(d)] for an officer and director bar.
5. The Commission seeks orders of preliminary and permanent injunction, disgorgement (including prejudgment interest), civil money penalties, and an officer and director bar against Stockett based upon his violations of Sections 5(a) and 5(c) of the Securities Act [15 U.S.C. §§ 77e(a) and 77e(c)], Sections 10(b), 13(d), and 16(a) of the Exchange Act [15 U.S.C. §§ 78j(b), 78m(d), and 78p(a)], and Rules 10b-5, 13d-1, 13d-2, 16a-2, and 16a-3 thereunder [17 C.F.R. 240.10b-5, 240.13d-1, 240.13d-2, 240.16a-2, and 240.16a-3]; for aiding and abetting Hightec's violations of Sections 13(a), 13(d), and 16(a) of the Exchange Act and Rules 12b-25, 13a-1, 13a-11, 13a-13, 13d-1, 16a-2, and 16a-3 thereunder [17 C.F.R. 240.12b-25, 240.13a-1, 240.13a-11, 240.13a-13, 240.13d-1, 240.16a-2, and 240.16a-3]; and for aiding and abetting Sinclare's violations of section 13(a) of the Exchange Act and Rules 12b-25, 13a-1, 13a-11, and 13a-13 thereunder.
II. JURISDICTION AND VENUE
6. This Court has jurisdiction over this action 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]. In connection with the transactions, acts, practices, and courses of business described in this Complaint, defendant Stockett, directly and indirectly, has made use of the means or instrumentalities of interstate commerce, of the mails, and/or of the means and instruments of transportation or communication in interstate commerce.
7. Venue lies in this Court pursuant to Section 22(a) of the Securities Act and Section 27 of the Exchange Act because certain of the transactions, acts, practices and courses of business constituting the violations of law alleged herein occurred within this judicial district. In addition, Stockett resides, and conducts the business of Hightec and Sinclare, in this judicial district.
III. THE DEFENDANT AND RELATED ENTITIES
8. Stockett, age 55, is a Nevada resident. He is the sole officer and director of Hightec and Sinclare, which are, in effect, his alter egos. He is a recidivist securities violator. In 1985, a U.S. District Court enjoined Stockett from violating the antifraud provisions of the federal securities laws in connection with his role in causing a publicly held company to make false and misleading statements in registration statements, a prospectus, and press releases. SEC v. Telemart, Inc. and Larry A. Stockett, Civ. No. 85-0544-A (E. D. Va. October 4, 1985). On March 30, 1999, an SEC administrative law judge ordered Stockett to cease and desist from violating the antifraud and registration provisions of the Securities Act and the Exchange Act, as well as the antifraud, insider trading and record keeping provisions of the Investment Company Act of 1940 and the Investment Advisers Act of 1940, barred Stockett from association with any broker, dealer, municipal securities dealer, investment adviser, or investment company, and ordered him to pay a $50,000 civil penalty. In the Matter of Hudson Investors Fund, Inc. and Larry A. Stockett et al., File No. 3-9374 (March 30, 1999). In 1988, the state of California permanently enjoined Stockett from offering to sell or selling certain securities there, and assessed civil penalties against him. See Bender v. Fibernet Communications Corp. and Larry Stockett, No. SCV-891640 (Cal Super. Ct. July 19, 1989). In 1996, the state of Oregon issued a securities related cease and desist order against Stockett and directed him to pay penalties. In the Matter of Larry Alan Stockett et al., No. O-96-0007 (Ore. Dept. of Consumer & Business Services Apr. 11, 1996). Stockett filed for personal bankruptcy in 1991 and received a discharge in 1992. In the Matter of Larry Alan Stockett, No. 91-38026 (Bankr. D. Oregon Dec. 16, 1991).
9. Hightec is a former Delaware corporation with offices located at Stockett's home in Las Vegas, Nevada. The state of Delaware revoked Hightec's corporate charter on March 1, 1999 because Stockett failed to pay taxes owed. Hightec was legally organized in 1968 under a predecessor name, and claims to operate as a holding company with several privately held subsidiaries, notably U.S. Cement, Inc. ("U.S. Cement"), and Basalt Fiber Industries, Inc. ("Basalt Fiber"). It has continuing reporting obligations laws and its stock is registered under Section 12(g) of the Exchange Act pursuant to an amended securities registration statement that became effective with the Commission in July 1996. Stockett acquired 60% of the outstanding shares of Hightec's common stock in November 1996. Stock of Hightec, which has not filed any reports with the Commission since December 18, 1996, is quoted in the National Quotation Bureau's Pink Sheets.
10. Sinclare is a former Delaware corporation with offices also located at Stockett's home. The state of Delaware revoked Sinclare's corporate charter on March 1, 1999, also due to Stockett's failure to pay taxes owed. The company was formed under a predecessor name in 1990. Stockett assumed control of the company in late 1996. In February 1997, Hightec acquired eight million shares of Sinclare, representing 47% of the 22 million outstanding shares. Sinclare has continuing reporting obligations and its stock is registered under Section 12(g) of the Exchange Act pursuant to an amended registration statement on Form S-18 that became effective in September 1992. Sinclare has not filed any periodic reports with the Commission since November 1996. During the time period relevant to this action, Sinclare stock was quoted in the Pink Sheets.
IV. VIOLATIONS OF THE FEDERAL SECURITIES LAWS
A. Stockett's False and Misleading Statements and Omissions
11. Since at least August 1999, through various media, Stockett has disseminated false and misleading statements concerning Hightec, its subsidiaries, and its affiliate Sinclare. From at least February 2000 to the present, Stockett has created, approved and published a corporate Internet website, www.uscement.com, containing information about these entities. During the same period, Stockett has written and/or reviewed, and caused to be issued over a national wire service, at least 15 press releases concerning the companies. In addition, between September 2000 and March 2001, and again between February 8 and February 10, 2002, Stockett appeared in several different cable television infomercials advertising Hightec disseminated by an entity called Emerging Company Reports ("ECR"). The contents of the most recent infomercial appeared on ECR's Internet website, www.emergingcompany.com until April 2, 2002.
12. Further, beginning in September 2000, Stockett disseminated about 10,000 copies of a promotional brochure regarding U.S. Cement that were mailed to investors who responded to the infomercials. From October 2001 through at least February 2002, Stockett disseminated to investors copies of a promotional business plan relating to an offering of Basalt Fiber stock. Between April 2001 and March 24, 2002, Stockett publicly disseminated numerous statements about Hightec on "Raging Bull", an Internet website devoted to information concerning publicly traded stocks. In addition, press releases issued by Stockett between February 1, and February 22, 2000 were further disseminated in unsolicited e-mail messages (called "spam") sent to individuals nationwide. The statements disseminated by Stockett through these various media are false and misleading , as detailed below.
1. Stockett's False and Misleading Statements Concerning His Experience and Background
13. In promotional materials disseminated to the investing public, Stockett has made numerous false and misleading statements about his background and business experience. In one infomercial, which aired in October 2000, Stockett claimed that he "ran many companies" with "very significant sales and growth," and that he "had a lot of firsts in the industries that [he has] chosen to pursue." In a March 14, 2002 message posted on the Raging Bull website, Stockett claimed, "I have conducted [sic] hundreds of millions in business and have over 2,000 magazine and newspaper articles written about my accomplishments." In another such message dated April 18, 2001, Stockett touted his employment history and accomplishments, including having worked for 18 years as a "$2 billion a year government contractor," and having "started the World's First Paperless Office at the Watergate in Washington D.C." Similarly, a Sinclare press release dated August 30, 1999 described Stockett as a "high tech computer pioneer," and invited investors to visit the U.S. Cement website to obtain more information about his "credentials." The U.S. Cement website includes a long description of Stockett's credentials, including a statement that for years, Stockett has been "considered by the media as the world's leading information authority on Initial Public Offerings" and that he is "a stock market expert."
14. These statements were false and misleading in that they fraudulently inflated Stockett's s business experience, while omitting to disclose that Stockett's background includes the several state and federal judgments for securities law violations referred to above.
2. Stockett's Failure to Disclose the Defunct Legal Status of Hightec and Sinclare
15. During the time period relevant to this action, Stockett has also repeatedly stated or implied that Hightec and/or Sinclare are corporations. These statements are misleading because they fail to disclose that, since March 1999, the corporations have been legally defunct. In a March 24, 2002 message posted on Raging Bull's website, Stockett selectively admitted to the readers of that website that, due to his failure to pay taxes, "[I]t appears that Hightec's corporate charter was not reinstated and may not be able to be reinstated because of the amount of time that it has been suspended." This disclosure was made only after another individual posted a message stating that he had confirmed with the State of Delaware that Hightec's charter had been revoked. Stockett has failed to disclose this information in connection with his public statements in other venues, and has never made a similar disclosure concerning Sinclare's defunct status.
3. Stockett's False and Misleading Statements Concerning Hightec's Access To Financing
16. In various public media, Stockett has repeatedly made false statements about Hightec's access to financing. Stockett wrote and/or reviewed, and disseminated, four press releases issued between February 1 and April 13, 2000, which stated that a United Kingdom entity, Inter Oil Gulf P.L.C. ("Inter Oil") had agreed to provide $30 million in financing. This figure was revised downward in later releases to $10 million. These statements were false and misleading. At the time he publicly disseminated the releases, Stockett had failed to take any steps to conduct due diligence concerning Inter Oil's ability to provide financing, and no financing arrangements were ever consummated.
17. Stockett also falsely claimed in public statements that that he would invest, or had already invested, $500,000 in Hightec's U.S. Cement subsidiary to finance its purported cement operations. Stockett made these claims in an August 23, 2000 press release; a letter to Hightec's shareholders, which was posted on the U.S. Cement website between at least August 17, 2000 and April 16, 2001; in conversations with George Wiens ("Wiens"), an investor who loaned Stockett $500,000; and in messages posted on the Raging Bull website, including messages on April 19, 2001 and August 14, 2001. These statements were false. Although Stockett obtained $500,000 from Wiens, Stockett misappropriated at least $369,505 of the funds by writing checks to cash or for his personal benefit. Among other things, Stockett spent the money on a Jaguar automobile, his personal residence, and a boat.
18. In the August 23, 2000 press release referred to above, Stockett announced that an additional $2 million "investment" was being "finalized." This statement was false. No such investment existed, and Stockett later admitted under oath that, in effect, this statement was fabricated to demonstrate the "bona fides" of Hightec to Wiens to induce him to give Stockett the $500,000 referred to above.
19. On February 1, 2002, Stockett wrote and disseminated a press release stating that "$5 million in equity financing and $15 million in debt financing will be finalized during the next month." Then, on February 7, 2002, Stockett wrote and disseminated a press release stating that Hightec "received financing today that would allow the company to proceed with a commercial feasibility study, site master plan, mining plan, building plans, and financing plans for its proposed futuristic city visitor's center, basalt manufacturing plant, and basalt model home of the future." This statement was false. Hightec had not received either the $5 million or $15 million financing, and at the time had only received a $3,000 investment from an acquaintance of Stockett. This money was insufficient to finance the announced plans, and Stockett had no firm, written agreements for additional financing from any source.
4. Stockett's False and Misleading Statements Concerning Hightec's Business Operations
20. Since August 1999, Stockett has also publicly disseminated numerous false and misleading statements about Hightec's, and its subsidiary U.S. Cement's, business relationships with third parties. Stockett wrote and/or reviewed, and disseminated on February 1, 2000, a press release which stated that Hightec had agreed to acquire a privately held company, Majestic Crushing, Ltd. ("Majestic"), and had issued five million shares of its stock to Majestic's shareholders in payment. Similarly, between at least February 28 and March 10, 2000, U.S. Cement's website published an organization chart which reflected Majestic as a subsidiary of U.S. Cement. These public statements were false because there was never more than a letter of intent between the two entities, which was never consummated.
21. Stockett wrote and/or reviewed, and disseminated, a March 1, 2000 release further stating that Hightec was "in the process of acquiring" three entities and certain cement-related assets. On at least February 28, 2000, U.S. Cement's website published an organizational chart which reflected these entities as subsidiaries. These statements were false because Hightec had nothing more than letters of intent to acquire the entities, and lacked the funds needed to complete such acquisitions. Stockett selectively admitted in an April 19, 2001 message posted on the Raging Bull website that Hightec had merely made "offers to acquire" these entities, but he never disclosed that information generally to investors.
22. Stockett wrote and/or reviewed, and disseminated, three releases which contained false statements about U.S. Cement's relationships with Chinese cement suppliers. A February 1, 2000 release stated that U.S. Cement had "reached an agreement to import 200,000 tons of bagged white cement," which Stockett testified was supposed to come from Chinese firms. A March 13, 2000 release stated that Inter Oil, Hightec's majority owner, had entered into an $18 million "initial [cement] supply contract" for the benefit of U.S. Cement and had "confirmed" $100 million of additional such contracts. An April 13, 2000 release stated that Inter Oil had "signed a 5 year contractual agreement with their [sic] Chinese suppliers [representing cement] with a fair market value . . . in excess of [$900 million]." All of these statements were false. Inter Oil, the purported signatory to the contracts, obtained only one non-binding letter of intent, which was dated April 5, 2000 and which was never finalized. At the time he caused the above false public statements to be made, Stockett himself took no steps to determine whether any of these contracts existed.
23. Stockett also wrote and/or reviewed, and disseminated, false statements about cement distribution agreements involving Hightec and U.S. Cement. The March 13, 2000 release described above stated that U.S. Cement had an "established sales and distribution network in the United States." Similarly, Stockett stated in an infomercial that aired on September 1 to 3, 2000, that "we've established a national distribution network" for cement. These statements were false because U.S. Cement had no sales or distribution network, had merely proposed to distribute cement, and at all relevant times lacked the funds needed to develop such a network.
24. Stockett also made false and misleading statements about having prominent retail customers for Hightec's cement. In one of the infomercials, airing on September 1 to 3, 2000, Stockett stated that cement imported by U.S. Cement, was being sold to prominent retailers The Home Depot, Inc., Home Base, Inc. and Lowe's Cos., Inc. This statement was false because U.S. Cement has had no significant operations, and has never sold any cement to the named retailers or anyone else.
26. Stockett has explicitly or implicitly claimed that Hightec, through either U.S. Cement or its purported majority owner, Inter Oil, currently possesses, imports and sells large quantities of cement. Stockett made these claims in the February 7, 2002 infomercial, the March 13, 2000 press release, April 2001 messages posted on the Raging Bull Internet website, and the U.S. Cement website. For example, between September 2000 and at least May 15, 2001, the U.S. Cement website displayed photographs of Stockett standing next to forklifts and a large ship that was unloading bags of cement. These statements are false. Stockett admitted in testimony that U.S. Cement has never imported, transported, or sold cement, and that the cement and equipment shown in the photographs were owned by other companies.
5. Stockett's False and Misleading Statements Concerning Hightec's Use of Unique Technologies
27. Stockett has issued false and misleading statements concerning Hightec's access to unique technologies in the basalt fiber industry. U.S. Cement's website and Basalt Fiber business plans disseminated by Stockett to prospective investors state that Hightec intends to manufacture basalt fiber products using a "revolutionary" process called the "Volcanic Rock and Roller Process." Stockett states in the February 7, 2002 infomercial that Hightec "invented" a unique process for manufacturing basalt fiber products. These statements are false and misleading, since the process entails proprietary technology, developed by a third party, to which Stockett and Hightec have no rights.
28. Stockett has also falsely claimed to use unique technologies relevant to the cement industry. The home page of the U.S. Cement website currently displays a picture, along with a descriptive caption reading, "A twelve ton `reusable bulk cement bag' is being moved prior to transport." The website further states that the company uses "unique and cost effective `reusable bulk cement bags' that greatly reduce distribution costs." Similarly, the February 7, 2002 infomercial shows pictures of the bags and quotes Stockett as stating that they belong to U.S. Cement. These statements are false because U.S. Cement has never owned or used the bags.
6. Stockett's False and Misleading Claims Concerning Hightec's Assets
29. Stockett has made false statements about the value and location of assets of Sinclare, and, implicitly, Hightec, its disclosed affiliate. The U.S. Cement website currently contains photographs of a railroad station, restaurant and an elegant hotel room. The website states that the depicted assets include a "Train Hotel," purportedly consisting of "exquisitely appointed railroad cars converted into hotel accommodations. In a press release issued by Sinclare on August 30, 1999, Stockett claimed that Sinclare had acquired Street a "railroad entertainment complex" valued at $6.9 million. These statements are false. Although Sinclare had a contract to acquire these assets, it defaulted under the contract in approximately September 2000, and since then, has had no legal claim to the depicted assets.
30. Stockett also has made baseless financial projections. The U.S. Cement website and the Basalt Fiber business plan disseminated by Stockett to prospective investors state that Basalt Fiber will achieve $59.4 million in revenues in 2003, and as much as $200 million in revenues by 2007. These projections are false and misleading because, among other things, they do not disclose that Stockett has no financing or rights to the underlying technology, which is in any event unproven and untested.
31. Stockett wrote and/or reviewed, and disseminated a November 19, 1999 press release which stated that Hightec "projects $15 million in 1999 revenue and over 100 million in the year 2000 with a 25% after tax profit potential." The release stated that these revenues would be achieved based on Hightec's receipt of funding from Inter Oil. Similarly, Stockett stated in two infomercials that Hightec would "make $35 million profit on $100 million of revenues". A U.S. Cement business plan provided to at least one investor in August 2000 projected U.S. Cement revenues of between $97 million in Year 1 and $1.7 billion in Year 5. These statements were false and misleading and lacked a reasonable basis because, among other things, as stated above, the funding from Inter Oil did not exist, and Hightec had no cement contracts or business operations.
B. Price And Volume Movement In Hightec Stock
32. Hightec stock traded in the $.08-$.25 range between December 1999 and mid-February 2000. Starting in late February 2000, while Stockett's false and misleading statements detailed above were being disseminated, the closing price of Hightec increased to as high as $.75 per share on February 23, 2000, and thereafter traded approximately $.35 to $.70 until March 23, 2000, and approximately $.25 in April 2000. Between May 2000 and January 2001, the market was relatively inactive and the stock traded at between $.01 and $.06 per share. In February 2002, when Stockett again started to issue false press releases concerning the purported basalt fiber venture, the closing price of the stock rose to as high as $.11 per share on February 8, 2002. The stock currently is trading at $.012 per share.
33. Immediately following many of Stockett's false statements detailed above, the price and trading volume of Hightec stock increased significantly. Nine of the 15 press releases concerning Hightec were followed by increases in the closing price or trading volume of Hightec. Eight of the releases were followed by increases in the closing price of the stock in amounts between 5% and 66%, averaging 35%. Further, the closing price of Hightec stock increased by 25% on the second day of the e-mail "spams", and trading volume increased by 219%.
C. Stock Sales By Stockett
34. Between January 12, 2000 and at least February 2, 2001, while he was disseminating the false and misleading statements detailed above, Stockett sold through open market transactions at least 4,643,000 shares of Hightec stock, generating profits of at least $597,294. He also sold at least 4 million shares of Hightec stock in private transactions, for profits of at least $221,000. No registration statement was in effect with the SEC as to these transactions.
D. Delinquent Filings And Failure To Report Beneficial Ownership
35. As public companies registered with the SEC pursuant to the provisions of the Exchange Act, Hightec and Sinclare are required to file periodic reports with the SEC. From February 1997 to the present, Hightec has failed to file five annual reports and 16 quarterly reports. From November 1996 to the present, Sinclare has filed one annual report and three quarterly reports late, and failed to file six annual reports and 15 quarterly reports. Hightec and Sinclare have also failed to file reports on Form 8K reporting certain significant current events, as required under the federal securities laws.
36. Hightec and Stockett have also failed to comply with mandatory reporting requirements regarding the acquisition and sale of significant quantities of stock. Hightec has never filed a Schedule 13D disclosing its acquisition of 47% of Sinclare's common stock in February 1997. Stockett has never filed a Schedule 13D disclosing his acquisition of 60% of Hightec's common stock in November 1996. Stockett also failed to report his subsequent sale of Hightec securities in the public market by filing with the Commission amended Schedules 13D and Forms 3 and 4.
V. FIRST CLAIM
37. Paragraphs 1 through 36 are hereby realleged and incorporated by reference.
38. Defendant Stockett, directly and indirectly, with scienter, in the offer or sale and in connection with the purchase or sale of Hightec securities, by use of the means or instrumentalities of interstate commerce or by use of the mails, has employed devices, schemes, or artifices to defraud; has made untrue statements of material fact or omitted to state material facts necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading; or have engaged in acts, practices, or courses of business which have been and are operating as a fraud or deceit upon the purchasers or sellers of such securities.
39. By reason of the foregoing, Defendant Stockett has violated and unless restrained and enjoined will continue to violate Section 17(a) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder.
VI. SECOND CLAIM (VIOLATIONS BY DEFENDANT STOCKETT OF SECTIONS 5(a) AND 5(c) OF THE SECURITIES ACT)
40. Paragraphs 1 through 36 are hereby realleged and incorporated by reference.
42. From at least 1999 through at least March 21, 2001, Stockett, directly and indirectly, made use of the means or instruments of transportation and communication in interstate commerce and of the mails to offer to sell, sell and/or offer to Hightec securities, without filing a registration statement with the SEC as to such securities, in violation of Sections 5(a) and 5(c) of the Securities Act.
43. By reason of the foregoing, Stockett has violated and unless restrained and enjoined will continue to violate Sections 5(a) and 5(c) of the Securities Act.
VII. THIRD CLAIM (VIOLATIONS BY DEFENDANT STOCKETT OF SECTION 13(a) OF THE EXCHANGE ACT AND RULES 12b-25, 13a-1, 13a-11 AND 13a-13 THEREUNDER)
44. Paragraphs 1 through 36 are hereby realleged and incorporated by reference.
45. From November 1996 through the present date, Hightec and Sinclare have failed to file annual, quarterly and other periodic reports with the Commission.
46. By failing to file timely periodic reports, Hightec and Sinclare have violated Section 13(a) of the Exchange Act and Rules 12b-25, 13a-1, 13a-11 and 13a-13 thereunder.
47. Stockett knowingly and substantially assisted Hightec's and Sinclare's violations. By reason of the foregoing, Stockett thus aided and abetted Hightec's violations of Section 13(a) of the Exchange Act and Rules 12b-25, 13a-1, 13a-11 and 13a-13 thereunder and unless enjoined, will continue to violate those provisions.
VIII. FOURTH CLAIM (VIOLATIONS BY DEFENDANT STOCKETT OF SECTION 13(d) OF THE EXCHANGE ACT)
48. Paragraphs 1 through 36 are hereby realleged and incorporated by reference.
49. Between 1996 and the present, Stockett, while directly or indirectly the beneficial owner of more than 5 percent of the securities in Hightec and Sinclare stock, has failed to file with the Commission a statement disclosing such ownership and containing such information as the Commission has, by rules and regulations, prescribed as necessary or appropriate in the public interest or for the protection of investors.
50. By reason of the foregoing, Stockett has violated and unless restrained and enjoined will continue to violate Section 13(d) of the Exchange Act and Rules 13d-1 and 13d-2 thereunder.
IX. FIFTH CLAIM(VIOLATIONS BY DEFENDANT STOCKETT OF SECTION 16(a) OF THE EXCHANGE ACT AND RULES 16a-2 AND 16a-3 THEREUNDER)
51. Paragraphs 1 through 36 are hereby realleged and incorporated by reference.
52. During the time period relevant to his action, Stockett, while an officer, director or holder of more than 10 percent of any class of the securities of Hightec, failed to file reports with the SEC disclosing his purchases and sales of Hightec. Stockett failed to report on Form 3 his acquisition of beneficial ownership of 60% of Hightec's stock. During the same time period, Hightec failed to report its acquisition of beneficial ownership of 47% of Sinclare's stock. Stockett failed to report on Form 4 his subsequent sale of Hightec securities. Stockett and Hightec also failed to report their ownership of Hightec and Sinclare shares on Form 5, requiring annual disclosure of such ownership within 45 days after the end of each fiscal year.
53. By reason of the foregoing, Stockett and Hightec have violated Section 16(a) of the Exchange Act and Rules 16a-2 and 16a-3 thereunder.
54. Stockett also knowingly and substantially assisted Hightec's violations. By reason of the foregoing, Stockett thus aided and abetted Hightec's violations of 16(a) of the Exchange Act and Rules 16a-2 and 162-3 thereunder.
X. PRAYER FOR RELIEF
WHEREFORE, the Commission respectfully requests that the Court:
1. Find that Defendant Stockett committed the violations alleged herein.
2. Enter an injunction, in a form consistent with Rule 65(d) of the Federal Rules of Civil Procedure restraining and enjoining Stockett and persons in active concert or participation with him from violating, directly or indirectly, Sections 5(a) and 5(c) of the Securities Act and Sections 10(b), 13(a), 13(d) and 16(a) of the Exchange Act and Rules 10b-5, 12b-25, 13a-1, 13a-11, 13a-13, 13d-1, 16a-2 and 16a-3 thereunder.
3. Order Stockett to account for, and disgorge, all ill-gotten gains, together with prejudgment and post-judgment interest as provided by law.
4. Determine the proper amount of civil penalties to be assessed against Stockett pursuant to Section 20(d) of the Securities Act.
5. Enter an order barring Stockett from serving as an officer or director of any publicly held company pursuant to Section 21(d)(2) of the Exchange Act and Section 20(e) of the Securities Act and pursuant to the Court's equitable power.
6. Order such further relief, equitable and legal, as the Court may deem just and proper.
DATED: April 25, 2002
Julie K. Lutz