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U.S. Securities and Exchange Commission

IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF PENNSYLVANIA


SECURITIES AND EXCHANGE COMMISSION

Plaintiff

v.

FINANCIAL WARFARE CLUB, INC. (MD),
FINANCIAL WARFARE, INC.,
FINANCIAL WARFARE CLUB, INC. (NV),
COVENANT ECONET, INC.,
MARCUS D. DUKES, and
TERESA HODGE

Defendants.


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Hon. Anita B. Brody
Civil Action No.: 02-7156 (E.D. PA)

COMPLAINT

Plaintiff Securities and Exchange Commission ( the "Commission") alleges as follows:

SUMMARY

1. From at least September 2000 through September 2001, defendants Marcus D. Dukes ("Dukes") and Teresa Hodge ("Hodge"), and four companies that they controlled, engaged in a scheme to defraud primarily African-American investors through the exploitation of their religious faith and their ethnic pride. The defendants ultimately defrauded at least 1000 investors residing in at least eighteen states of more than $ 1.3 million.

2. Specifically, Dukes and Hodge, and Financial Warfare Club, Inc., a Maryland corporation ("FWC (MD)"), Financial Warfare, Inc., a District of Columbia corporation ("FWC (DC)"), Financial Warfare Club, Inc., a Nevada corporation ("FWC (NV)"), and CovenantEcoNet, Inc. ("Covenant"), acting by and through Dukes and Hodge, sought and found prospective investors through presentations at small churches and through meetings arranged through pastors of those churches. These presentations were open to the general public and frequently were advertised to the congregation during church services on the immediately preceding Sunday. The defendants offered and sold unregistered securities to these prospective investors, inducing investments by misstating and omitting facts important to the prospective investors' investment decisions.

3. Central to their presentations with respect to at least three offerings, which were replete with prayers and quotes from the Bible, Dukes and Hodge focused on the exclusion of African-Americans from investments in initial public offerings due at least in part to Commission regulations requiring a certain income level. They then offered their audience what they presented as the chance to make such lucrative investments by purchasing memberships in entities that would, among other things, provide to them gifts of stock in African-American controlled companies or, in the case of one offering, stock at a nominal price.

4. In fact, investor money did not enable the investors to obtain stock or otherwise benefit members. Rather, much of the money that the defendants collected from investors went to the benefit of the defendants, including approximately $300,000 in salary or payments to, or for the benefit of, Dukes and Hodge; more than $300,000 to public companies for which Dukes and Hodge claim to have performed consulting services; more than $600,000 in intercompany transfers between and among the corporate defendants; approximately $42,000 in payments to hotels, including payments to a luxury hotel located within 15 miles of Dukes' residence; andmore than $92,000 in cash withdrawals.

5. By engaging in the conduct described in this Complaint, defendants Dukes, Hodge, FWC (MD), FWC (DC), and FWC (NV) have violated, and unless restrained and enjoined will continue to violate, Sections 5(a) and 5(c) of the Securities Act of 1933 ("Securities Act"), 15 U.S.C. §§ 77(e)(a) and (c).

6. By knowingly or recklessly engaging in the conduct described in this Complaint, defendants Dukes, Hodge, FWC (MD), FWC (DC), FWC (NV) and Covenant have violated, and unless restrained and enjoined will continue to violate, Section 17(a) of the Securities Act, 15 U.S.C. § 77q(a); 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.

JURISDICTION AND VENUE

7. The Commission brings this action pursuant to the authority conferred upon it by Section 20(b) of the Securities Act, 15 U.S.C. § 77t(b), and Sections 21(d) and (e) of the Exchange Act, 15 U.S.C. §§ 78u(d) and (e), to enjoin such acts, transactions, practices and courses of business, obtain disgorgement and civil penalties, and for other appropriate relief. The Commission also seeks an order barring Dukes and Hodge from acting as an officer or director of any issuer that has a class of securities registered under Section 12 of the Exchange Act, 15 U.S.C. § 78l, or that is required to file reports pursuant to Section 15(d) of the Exchange Act, 15 U.S.C. § 78o(d), pursuant to Section 21(d)(2) of the Exchange Act, 15 U.S.C. § 78u(d)(2).

8. 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.

9. Certain of the acts, transactions, practices and courses of business constituting theviolations alleged herein occurred, and certain of the offers or sales took place, within the Eastern District of Pennsylvania and elsewhere, and were effected, directly or indirectly, by making use of the means and instruments of transportation and communication in interstate commerce, or of the means and instrumentalities of interstate commerce, or of the mails, or of the facilities of a national securities exchange.

DEFENDANTS

10. Marcus D. Dukes is 33 years old and currently resides in Michigan. He is a cofounder of Financial Warfare Club and Covenant. In 1993, Dukes passed the Series 7 (general securities representative) examination administered by the National Association of Securities Dealers, Inc. (the "NASD").

11. Teresa Hodge is 39 years old and currently resides in Maryland. She is a cofounder of Financial Warfare Club and Covenant.

12. Financial Warfare Club, Inc. (Maryland) is a non-profit corporation organized and existing under the laws of the State of Maryland. Hodge incorporated FWC (MD) in August 2000, and both Dukes and Hodge served as directors of FWC (MD). At all relevant times, Dukes and Hodge jointly controlled FWC (MD).

13. Financial Warfare, Inc. is a corporation organized and existing under the laws of the District of Columbia. Dukes incorporated FWC (DC) in March 2001. At all relevant times, Dukes and Hodge were the sole owners and directors of FWC (DC), and, at all relevant times, Dukes and Hodge jointly controlled FWC (DC).

14. Covenant EcoNet, Inc. is a corporation organized and existing under the laws ofthe state of Nevada. Dukes incorporated Covenant in April 2001. Dukes is a director and the chief executive officer of Covenant; Hodge is a director and the vice president, treasurer and secretary. At all relevant times, Dukes and Hodge jointly controlled Covenant and owned at least 87% of the common stock of Covenant. In June 2001, Covenant filed a Form SB-1 registration statement with the Commission for the offer and sale of up to 5,000,000 shares of Covenant common stock to the public at an initial public offering price of $1.00 per share. The registration statement never went into effect and, on information and belief, Covenant never distributed any common stock pursuant to that registration statement.

15. Financial Warfare Club, Inc. (Nevada) is a corporation organized and existing under the laws of the State of Nevada. Dukes incorporated FWC (NV) in April 2001. Covenant owns all of the shares of FWC (NV). Dukes and Hodge are the sole directors of FWC (NV) and, at all relevant times, jointly controlled FWC (NV).

BACKGROUND

16. From May 1993 to June 1994, Dukes was employed in the securities industry as a sales representative in or around Washington, D.C.: first with Tamaron Investments, Inc., and then with First Montauk Securities, Inc.

17. In 1994, the NASD investigated a customer complaint that Dukes had engaged in unauthorized trading in the customer's brokerage account at Tamaron Investments, Inc. Dukes never responded to the NASD inquiry or complaint and, in 1995, the NASD censured him, fined him $25,000 and permanently barred him from employment or other association with any broker-dealer firm that is an NASD member (the "NASD Bar").

18. Hodge has petitioned for bankruptcy four times between 1996 and 1999. Three of those petitions were dismissed by the court. A court granted relief with respect to one petition filed in 1997.

THE SCHEME TO DEFRAUD

19. From at least September 2000 through September 2001, Dukes and Hodge, and the corporate defendants acting by and through Dukes and Hodge, each knowingly or recklessly embarked on a scheme to defraud investors by inducing them to purchase unregistered securities by misstating and omitting facts important to their investment decisions. The defendants fraudulently sold a collective total of more than $1.3 million in securities.

20. Over the course of the scheme, Dukes and Hodge used each of the defendant entities, moving from one defendant entity to the next over time. As set forth in more detail below, they began by offering securities of FWC (MD), misstating and omitting facts in their presentations that were important to investment decisions concerning those securities. When FWC (MD) was ordered by the Maryland Securities Commission to cease and desist operations, Dukes and Hodge simply began offering FWC (DC) securities in lieu of those of FWC (MD), again misrepresenting and omitting important facts. Shortly thereafter, the defendants switched to offering securities through FWC (NV), inducing investments by making many of the same and additional misrepresentations and omissions in connection with the FWC (NV) securities. Concurrently, they began offering the Covenant securities, again through false and misleading information.

21. The purchasers of the offered securities — namely memberships in FWC (MD),FWC (DC) and FWC (NV) (collectively referenced as "Financial Warfare Club") and promissory notes of Covenant — reside in at least eighteen states.

The Securities

22. Dukes, Hodge and FWC (MD), acting by and through Dukes and Hodge, began offering memberships in FWC (MD) (the "FWC (MD) securities") in September 2000.

23. FWC (MD) membership benefits purportedly included financial literacy courses and shares of stock in various companies controlled by African-Americans. Dukes and Hodge told prospective investors that these companies intended to offer and sell shares of their stock to the public through initial public offerings ("IPOs").

24. In particular, Dukes, Hodge and FWC(MD), acting by and through Dukes and Hodge, offered three types of membership in FWC (MD) relevant to this action:

a. "Founders" membership, entitling the purchaser to, among other things, three financial literacy courses and 2,000 shares of stock in each of three companies (Integrated Solutions International, Inc. ("ISI"), GlobalCom InterNetworks, Inc. ("GCi"), and GeNex Inc. ("GeNex")) in return for an initial payment of $2,500 and an annual fee of $50;

b. "Warriors" membership, entitling the purchaser to, among other things, two financial literacy courses and 500 shares of stock in each of three companies (ISI, GCi and GeNex) in return for an initial payment of $1,000 and an annual fee of $50; and

c. "Believers" membership, entitling the purchasers to among other things, one financial literacy course and 250 shares of stock in each of three companies (ISI, GCi and GeNex) in return for an initial payment of $500 and an annual fee of $50.

25. On March 5, 2001, the Maryland Securities Commissioner issued a "Summary Order to Cease and Desist" (the "Maryland Order") against FWC (MD), Dukes and Hodge with respect to the FWC (MD) membership interests. The Maryland Order directed FWC (MD), Dukes and Hodge to stop offering or selling unregistered securities and to stop violating the anti-fraud provisions of the Maryland Securities Act (Corporations and Associations Article, Title 11, Annotated Code of Maryland (1999 Repl. Vol. And 2001 Supp.)).

26. Ultimately, Dukes, Hodge and FWC(MD) settled the Maryland action by consenting to an order of the Circuit Court for Baltimore City dated May 5, 2002 imposing final judgment and a permanent injunction against them, restraining and enjoining them from, among other things, directly or indirectly engaging in the securities or investment advisory business in Maryland.

27. Within one week after receiving the Maryland Order, Dukes and Hodge shifted their operations to the District of Columbia, incorporating FWC (DC) and opening a new bank account in the name of FWC (DC).

a. On March 8, 2001, Dukes, Hodge offered and sold investments in FWC (MD) securities and/or in substantively identical securities of FWC (DC) (the "FWC (DC) securities") at a presentation in New Jersey;

b. On March 13, 2001, Dukes incorporated FWC (DC) and thereafter Dukes, Hodge and FWC (DC) began offering and selling FWC (DC) securities; and

c. On March 13, 2001, Hodge deposited into the FWC (DC) bank account more than $86,000 in checks from investors made out to FWC (MD).

28. By April 2001, Dukes, Hodge, and FWC(MD) and FWC (DC) acting by andthrough Dukes and Hodge, sold at least 267 Founders memberships, 160 Warriors memberships, and 186 Believers memberships.

29. In April 2001, Dukes incorporated Covenant and incorporated FWC (NV) as Covenant's wholly-owned subsidiary and began selling memberships in FWC (NV) (the "FWC (NV) securities").

30. Similar to the FWC (MD) and FWC (DC) offerings, Dukes, Hodge and FWC (NV) acting by and through Dukes and Hodge, offered different types of membership in connection with FWC (NV). Although the names of the membership levels and their prices apparently changed over time, initial membership fees ranged from $99-$650; all levels charged an annual fee of $50; and all levels entitled the purchaser to some type of financial literacy course and the right to purchase shares of Covenant and other companies controlled by African-Americans at $.25 - $1.00 per share before the shares were offered to the public.

31. By September 2001, Dukes, Hodge and FWC (NV) acting by and through Dukes and Hodge, sold approximately 500 memberships in FWC (NV).

32. There is no registration statement filed with the Commission or in effect as to the FWC (MD) securities, the FWC (DC) securities or the FWC (NV) securities (collectively, the "Financial Warfare Club securities") and no exemption from registration is available for these securities.

33. In June 2001 Covenant, acting by and through Dukes and Hodge, filed a Form SB-1 registration statement with the Commission for the offer and sale to the public of up to 5,000,000 shares of common stock of Covenant at a price of $1 a share (the "Registration Statement").

34. The Registration Statement, signed by Dukes and Hodge, listed Dukes and Hodge as directors of the soon-to-be public company.

35. The Registration Statement never went into effect and, on information and belief, Covenant never distributed common stock pursuant to the Registration Statement.

36. In anticipation of the costs associated with the offering set forth on the Registration Statement, Dukes, Hodge and Covenant, acting by and through Dukes and Hodge, offered and sold to investors at least $285,000 in unregistered Covenant subordinate convertible promissory notes (the "Covenant securities").

37. Dukes, Hodge and Covenant, acting by and through Dukes and Hodge, purportedly offered the Covenant securities pursuant to Regulation D, Rule 504, of the Securities Act, 17 C.F.R. § 230.504, which exempts certain securities from the registration requirements of Section 5 of the Securities Act, 15 U.S.C. §77(e).

Misrepresentations and Omissions of Material Facts Common to the Offer and Sale of All of the Financial Warfare Club Securities

38. Dukes, Hodge and FWC (MD), FWC (DC) and FWC (NV), acting by and through Dukes and Hodge, sold the Financial Warfare Club securities primarily through presentations by Dukes and Hodge at small African-American churches. These presentations were open to the general public and frequently were advertised to the congregation during church services on the immediately preceding Sunday.

39. Dukes, Hodge and FWC (MD), FWC (DC) and FWC (NV), acting by and through Dukes and Hodge, typically included in these presentations prayers, citations to scriptures, and other religious references. The crux of the presentations was twofold: (1) that investing in acompany prior to the public offering of its stock was the key to becoming wealthy; and (2) that African-Americans traditionally had been unable to take advantage of such opportunities, in part because of Commission regulations that limited the purchase of pre-IPO shares to accredited investors such as individuals earning at least $200,000 a year.

40. In this context Dukes, Hodge and the Financial Warfare Club defendants ((FWC (MD), FWC (DC) and FWC (NV)), acting by and through Dukes and Hodge, offered to African-Americans what the defendants presented as an opportunity for the prospective investors to obtain pre-IPO shares by purchasing memberships in the Financial Warfare Club.

41. Dukes, Hodge and the Financial Warfare Club defendants, acting by and through Dukes and Hodge, made at least twenty to thirty joint presentations offering Financial Warfare Club securities in ten states and the District of Columbia.

42. Although Dukes and Hodge offered only one Financial Warfare Club security at each presentation, Dukes, Hodge and the respective Financial Warfare Club defendant acting by and through Dukes and Hodge, made at least two misrepresentations of material fact that were central to the presentations made in all three offerings:

a. Dukes, Hodge and the Financial Warfare Club defendants induced investments in Financial Warfare Club by telling prospective investors that they would provide to members shares of stock, or the opportunity to buy shares of stock at nominal cost, in companies that were going to become public within five to eleven months. In fact, no Financial Warfare Club member received, or was given the opportunity to buy at a discount, by virtue of their membership, any shares of stock and Dukes, Hodge and the Financial Warfare Club defendants took no steps to provide pre-IPO stock to any investor.

b. Dukes, Hodge and the Financial Warfare Club defendants further induced investments in Financial Warfare Club by telling prospective investors that they would provide to members financial literacy courses. In fact, Dukes, Hodge and/or the Financial Warfare Club defendants never provided any financial literacy courses and, although Dukes, at one time, estimated that the cost of providing financial literacy courses to members would be about $500,000, none of the defendants ever budgeted or set aside any money to pay for such courses.

43. Moreover, pastors and others, with the knowledge of Dukes, Hodge and the Financial Warfare defendants, repeatedly introduced Dukes and Hodge at presentations as successful African-American business people who wanted to "give something back to the community" by helping African-American churches. In fact, Dukes, Hodge and the Financial Warfare Club defendants were deliberately defrauding African-American churches and the members of their congregations.

Additional Misrepresentations and Omissions of Material Facts Common to the Offer and Sale of FWC (MD) and FWC (DC) Securities

44. In offering the FWC (MD) and FWC (DC) securities, Dukes, Hodge and FWC (MD) and FWC (DC), acting by and through Dukes and Hodge, knowingly or recklessly made several misrepresentations of material facts to prospective investors concerning Financial Warfare Club, ISI, GCi, and GeNex, including statements that:

a. Churches in the Washington, D.C. area who had invested in Financial Warfare Club had made $50,000 in "a couple of months." In fact, this was not true.

b. Two individual congregation members that invested had made $250,000 in five months and had used their profits to buy matching Porsches. In fact, this was not true.

c. ISI, GCi and GeNex were in a position to undertake initial public offerings within a few months and would command initial post-IPO prices of, at least, $4 to $5 per share. In fact, these companies were not so positioned; they were simply shell companies with insignificant revenues, income, assets or employees.

d. ISI was completing efforts to obtain banking licenses and would soon be operating a national African-American bank. In reality, ISI was a shell corporation that had taken no steps toward obtaining banking licenses.

e. GCi had 33 TV stations as affiliates and had recently "signed up" two additional stations. In truth, GCi had no TV station affiliates at the time this statement was made.

45. Dukes and Hodge, and FWC (MD) and FWC (DC), acting by and through Dukes and Hodge, also knowingly or recklessly failed to disclose material facts to prospective investors in FWC (MD) and FWC (DC), including Dukes' 1995 NASD Bar and Hodge's multiple bankruptcy filings.

Additional Misrepresentations of Material Facts in the Offer and Sale of FWC (MD) Securities

46. With respect to presentations in which they offered FWC (MD) securities, Dukes, Hodge, and FWC ( MD), acting by and through Dukes and Hodge, knowingly or recklessly misrepresented and omitted additional material facts. For instance:

a. Dukes falsely claimed that he and Hodge funded "every last piece of " Financial Warfare Club, that they paid for their own hotels and "paid their own way." In fact, a significant amount of investor funds were used to pay for Dukes' and Hodge's travel expenses,including:

(1) $42,000 to hotels, including payments to a luxury hotel located within 15 miles of Dukes' residence;

(2) $32,000 for airline tickets; and

(3) over $1,300 for limousine service.

b. Dukes and Hodge misled investors by claiming that Dukes had extensive experience working on Wall Street. In reality, Dukes' only experience with "Wall Street" was his thirteen month employment as a retail representative for two registered broker-dealers in or around Washington, D.C. Furthermore, his ability to work in the securities industry after 1995 was significantly constrained by the NASD Bar.

c. Dukes falsely claimed that, when he started on Wall Street, most of his clients were worth at least $200 million and that they "took companies public for sport." In fact, most of his clients were worth less than $200 million, he never had any clients that went public through an IPO, and none of his clients ever took any company public for sport.

d. Hodge falsely claimed Dukes had significant experience in assisting companies to go public and that he was part of the team that took Today's Man, Inc. public. In truth, Dukes never assisted in an IPO except to the extent he sold some of the initial shares as a sales representative, and Dukes was not part of the group that assisted Today's Man in going public.

e. Hodge falsely claimed that, together, she and Dukes had invested over $1 million of their own money into Financial Warfare Club. Bank records, however, show no significant investment on the part of either Dukes or Hodge.

f. Dukes falsely claimed that he had met with a representative of Morgan Stanley about investing in Financial Warfare Club and that the representative offered Dukes $7 million "on the spot." In fact, Dukes never discussed Financial Warfare Club with any representative of Morgan Stanley and the described events never occurred.

Additional Misrepresentation of Material Facts in the Offer and Sale of FWC (DC) Securities

47. In presentations in which they offered FWC (DC) securities, Dukes, Hodge and FWC (DC), acting by and through Dukes and Hodge, knowingly or recklessly misrepresented that Dukes and Hodge had each invested $100,000 to $150,000 of their own money into Financial Warfare Club. Bank records, however, show no significant investment by either.

Additional Misrepresentations and Omissions of Material Facts in the Offer and Sale of FWC (NV) Securities

48. With respect to presentations in which they offered FWC (NV) securities, Dukes, Hodge and FWC (NV), acting by and through Dukes and Hodge, knowingly or recklessly misrepresented and omitted additional material facts. For instance:

a. Dukes and Hodge grossly exaggerated Financial Warfare Club's success in its prior offerings, telling investors that, as of April 15, 2001 Financial Warfare Club had sold 1000 Founders memberships. In truth, by the end of April 2001, Financial Warfare Club had sold 267 Founders memberships.

b. Dukes inaccurately claimed to have had extensive experience working on Wall Street.

c. Dukes and Hodge falsely claimed that, together, they had invested over $1.5 million of their own money into Financial Warfare Club. Bank records, however, show nosignificant investment on the part of either.

49. Moreover, Dukes, Hodge and FWC (NV), acting by and through Dukes and Hodge, used an internet website to refer prospective investors to written material that they knew, or were reckless in not knowing, omitted certain material facts about the FWC (NV) offering.

50. Specifically, in connection with Covenant's proposed issue of common stock, Dukes and Hodge, among others, created a preliminary prospectus (the "prospectus"), which they submitted to the Commission in June 2001 as part of the Registration Statement. They then established a "hyperlink" or connection to a computer version of that prospectus on their website, www.financialwarfare.com.

51. Dukes, Hodge and FWC (NV), acting by and through Dukes and Hodge, referred prospective investors to this website through, among other media, handouts at FWC (NV) presentations and on FWC (NV) membership applications. Dukes and Hodge, and FWC (NV) knew, or were reckless in not knowing, when they referred investors to the prospectus, that the prospectus failed to disclose material facts. For instance:

a. The prospectus disclosed the existence of a Maryland Securities Commission investigation into FWC (MD), a "predecessor entity," and the Maryland Order, but failed to disclose that there was no significant difference between the illegal Maryland offering and the Nevada offering. Thus, Dukes, Hodge and FWC (NV), acting by and through Dukes and Hodge, never informed prospective investors of the possibility, if not probability, that the Nevada offering also was illegal. Rather, the prospectus touted the results of another identical offering, that of FWC (DC), claiming that Covenant had "already demonstrated an ability to generate sufficient cash to sustain our operations as shown by [FWC DC's] results from March 13, 2001to April 30, 2001."

b. The prospectus failed to disclose Dukes' 1995 NASD Bar.

Misrepresentations and Omissions of Material Facts In the Offer and Sale of the Covenant Securities

52. As set forth above, Dukes, Hodge and Covenant, acting by and through Dukes and Hodge, offered and sold to investors at least $285,000 in unregistered Covenant subordinate convertible promissory notes, referenced herein as the Covenant securities, in order to fund the anticipated public offering of Covenant common stock.

53. Dukes, Hodge and Covenant primarily offered the Covenant securities through an offering circular that they distributed at presentations in at least two states and in Washington, D.C. (the "offering circular"). Dukes, Hodge and Covenant contacted prospective investors in several different states to invite them to these presentations, and several attended.

54. The offering circular, signed by Dukes, was dated April 12, 2001 and was reviewed prior to distribution by both Dukes and Hodge.

55. Dukes, Hodge and Covenant, acting by and through Dukes and Hodge, distributed the offering circular to prospective investors in Covenant securities knowing or recklessly disregarding the fact that the offering circular omitted material facts and contained representations of material fact that were false and misleading at the time of distribution. For instance:

a. The offering circular disclosed the existence of a Maryland Securities Commission investigation into FWC (MD), a "predecessor" entity, but failed to disclose that that investigation concluded with a determination by the Maryland Securities Commissioner that, inrelevant part, FWC (MD), Dukes and Hodge had violated the anti-fraud and registration provisions of the Maryland securities laws.

b. The offering circular failed to discuss or disclose the impact of the Maryland Order on, among other things, Covenant's subsidiary and primary income source, FWC (NV), which was selling securities substantially similar to those sold by FWC (MD).

c. The offering circular falsely stated that the proceeds of the offering were to be used, in part, "to increase the distribution of educational material through more programs and seminars." At the time, there were no existing programs and seminars, and educational materials had yet to be distributed. In fact, to date, Dukes, Hodge and Covenant have failed to ever provide any programs and seminars or to distribute any educational materials.

d. The offering circular inaccurately represented that Dukes "worked as a stockbroker from 1993 through 1995 for Tamaron Investments and Premiere Financial where he analyzed public and non-public companies for investment banking, mergers and strategic partnership relationships." In fact, Dukes was employed in the securities industry for only 13 months (1993 through 1994) and had no significant investment banking or merger experience, if any at all.

e. The offering circular failed to disclose Dukes' 1995 NASD Bar.

FIRST CLAIM FOR RELIEF

Violations of Section 17(a) of the Securities Act, Section 10(b) of the Exchange Act and Rule 10b-5 thereunder
Dukes, Hodge, FWC (MD)

56. The Commission realleges and incorporates by reference each and everyallegation in Paragraphs 1 through 55.e. above as if the same were fully set forth herein.

57. The referenced memberships in FWC (MD) are securities within the meaning of Section 2(1) of the Securities Act, 15 U.S.C. § 77(b)(1).

58. From at least September 2000 and continuing at least through March 2001, defendants Dukes, Hodge, and FWC (MD) knowingly or recklessly, in connection with the offer, purchase or sale of securities, directly and indirectly, by the use of the means or instruments of transportation or communication in interstate commerce, or the means or instrumentalities of interstate commerce, or of the mails, or of the facilities of a national securities exchange:

(a) employed devices, schemes or artifices to defraud;

(b) obtained money or property by means of, or made, untrue statements of material facts, or omitted to state material facts necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading; and

(c) engaged in acts, transactions, practices, or courses of business which operated as a fraud or deceit upon offerees, purchasers and prospective purchasers of securities.

59. By reason of the foregoing, defendants Dukes, Hodge and FWC (MD) violated Section 17(a) of the Securities Act, 15 U.S.C. § 77q(a) and Section 10(b) of the Exchange Act, 15 U.S.C. § 78j(b) and Rule 10b-5, 17 C.F.R. § 240.10b5 thereunder.

SECOND CLAIM FOR RELIEF

Violations of Section 17(a) of the Securities Act, Section 10(b) of the Exchange Act and Rule 10b-5 thereunder
Dukes, Hodge, FWC (DC)

60. The Commission realleges and incorporates by reference each and everyallegation in Paragraphs 1 through 59 above as if the same were fully set forth herein.

61. The referenced memberships in FWC (DC) are securities within the meaning of Section 2(1) of the Securities Act, 15 U.S.C. § 77(b)(1).

62. From at least March 2001 and continuing through, at least, April 2001, defendants Dukes, Hodge, and FWC (DC) knowingly or recklessly, in connection with the offer, purchase or sale of securities, directly and indirectly, by the use of the means or instruments of transportation or communication in interstate commerce, or the means or instrumentalities of interstate commerce, or of the mails, or of the facilities of a national securities exchange:

(a) employed devices, schemes or artifices to defraud;

(b) obtained money or property by means of, or made, untrue statements of material facts, or omitted to state material facts necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading; and

(c) engaged in acts, transactions, practices, or courses of business which operated as a fraud or deceit upon offerees, purchasers and prospective purchasers of securities.

63. By reason of the foregoing, defendants, Dukes, Hodge, and FWC (DC) violated Section 17(a) of the Securities Act, 15 U.S.C. § 77q(a) and Section 10(b) of the Exchange Act, 15 U.S.C. § 78j(b) and Rule 10b-5, 17 C.F.R. § 240.10b5 thereunder.

THIRD CLAIM FOR RELIEF

Violations of Section 17(a) of the Securities Act, Section 10(b) of the Exchange Act and Rule 10b-5 thereunder
Dukes, Hodge, FWC (NV)

64. The Commission realleges and incorporates by reference each and everyallegation in Paragraphs 1 through 63 above as if the same were fully set forth herein.

65. The referenced memberships in FWC (NV) are securities within the meaning of Section 2(1) of the Securities Act, 15 U.S.C. § 77(b)(1).

66. From at least April 2001 and continuing through at least September 2001, defendants Dukes, Hodge and FWC (NV), knowingly or recklessly, in connection with the offer, purchase or sale of securities, directly and indirectly, by the use of the means or instruments of transportation or communication in interstate commerce, or the means or instrumentalities of interstate commerce, or of the mails, or of the facilities of a national securities exchange:

(a) employed devices, schemes or artifices to defraud;

(b) obtained money or property by means of, or made, untrue statements of material facts, or omitted to state material facts necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading; and

(c) engaged in acts, transactions, practices, or courses of business which operated as a fraud or deceit upon offerees, purchasers and prospective purchasers of securities.

67. By reason of the foregoing, defendants, Dukes, Hodge, and FWC (NV) violated Section 17(a) of the Securities Act, 15 U.S.C. § 77q(a) and Section 10(b) of the Exchange Act, 15 U.S.C. § 78j(b) and Rule 10b-5, 17 C.F.R. § 240.10b5 thereunder.

FOURTH CLAIM FOR RELIEF

Violations of Section 17(a) of the Securities Act, Section 10(b) of the Exchange Act and Rule 10b-5 thereunder
Dukes, Hodge, Covenant

68. The Commission realleges and incorporates by reference each and everyallegation in Paragraphs 1 through 67 above as if the same were fully set forth herein.

69. The Covenant promissory notes are securities within the meaning of Section 2(1) of the Securities Act, 15 U.S.C. § 77(b)(1).

70. From at least April 2001 and continuing through at least September 2001, defendants Dukes, Hodge, and Covenant, knowingly or recklessly, in connection with the offer, purchase or sale of securities, directly and indirectly, by the use of the means or instruments of transportation or communication in interstate commerce, or the means or instrumentalities of interstate commerce, or of the mails, or of the facilities of a national securities exchange:

(a) employed devices, schemes or artifices to defraud;

(b) obtained money or property by means of, or made, untrue statements of material facts, or omitted to state material facts necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading; and

(c) engaged in acts, transactions, practices, or courses of business which operated as a fraud or deceit upon offerees, purchasers and prospective purchasers of securities.

71. By reason of the foregoing, defendants, Dukes, Hodge, and Covenant violated Section 17(a) of the Securities Act, 15 U.S.C. § 77q(a) and Section 10(b) of the Exchange Act, 15 U.S.C. § 78j(b) and Rule 10b-5, 17 C.F.R. § 240.10b5 thereunder.

FIFTH CLAIM FOR RELIEF

Violations of Sections 5(a) and 5(c) of the Securities, Act
Dukes, Hodge, FWC (MD)

72. The Commission realleges and incorporates by reference each and every allegation in Paragraphs 1 through 71 above as if the same were fully set forth herein.

73. FWC (MD) has not filed with the Commission a registration statement pursuant to the provisions of the Securities Act in connection with the offer and sale of securities.

74. From at least September 2000 and continuing through at least March 2001, Dukes, Hodge, and FWC (MD), and each of them, directly and indirectly, 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 any prospectus or otherwise when no registration statement has been filed or was in effect as to such securities and when no exemption from registration was available.

75. By reason of the foregoing, Dukes, Hodge and FWC (MD) violated Sections 5(a) and (c) of the Securities Act, 15 U.S.C. §§ 77e(a) and (c).

SIXTH CLAIM FOR RELIEF

Violations of Sections 5(a) and 5(c) of the Securities Act
Dukes, Hodge, FWC (DC)

76. The Commission realleges and incorporates by reference each and every allegation in Paragraphs 1 through 75 above as if the same were fully set forth herein.

77. FWC (DC) has not filed with the Commission a registration statement pursuant to the provisions of the Securities Act in connection with the offer and sale of securities.

78. From at least March 2001 and continuing through at least April 2001, Dukes, Hodge, and FWC (DC), and each of them, directly and indirectly, 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 any prospectus or otherwise when no registration statement has been filed or was in effect as to such securities and when no exemptionfrom registration was available.

79. By reason of the foregoing, Dukes, Hodge, and FWC (DC) violated Sections 5(a) and (c) of the Securities Act, 15 U.S.C. §§ 77e(a) and (c).

SEVENTH CLAIM FOR RELIEF

Violations of Sections 5(a) and 5(c) of the Securities Act
Dukes, Hodge, FWC (NV)

80. The Commission realleges and incorporates by reference each and every allegation in Paragraphs 1 through 79 above as if the same were fully set forth herein.

81. FWC (NV) has not filed with the Commission a registration statement pursuant to the provisions of the Securities Act in connection with the offer and sale of securities.

82. From at least April 2001 and continuing through at least September 2001, Dukes, Hodge, and FWC (NV), and each of them, directly and indirectly, 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 any prospectus or otherwise when no registration statement has been filed or was in effect as to such securities and when no exemption from registration was available.

83. By reason of the foregoing, Dukes, Hodge, and FWC (NV) violated Sections 5(a) and (c) of the Securities Act, 15 U.S.C. §§ 77e(a) and (c).

JURY DEMAND

The Commission demands a jury in this matter.

WHEREFORE, the Commission respectfully requests that this Court:

I.

Issue an injunction permanently restraining and enjoining defendants Dukes, Hodge, FWC (MD), FWC (DC), FWC (NV) and Covenant, and their agents, officers, servants, employees, attorneys, and those persons in active concert or participation with them, directly or indirectly, singly or in concert, from violations of Section 17(a) of the Securities Act, 15 U.S.C. § 77(q)a; and Section 10(b) of the Exchange Act, 15 U.S.C. § 78j(b) and Rule 10b-5, 17 C.F.R. § 240.10b-5 thereunder;

II.

Issue an injunction permanently restraining and enjoining defendants Dukes, Hodge, FWC (MD), FWC (DC), and FWC (NV), and their agents, officers, servants, employees, attorneys, and those persons in active concert or participation with them, directly or indirectly, singly or in concert, from violating Sections 5(a) and 5(c) of the Securities Act of 1933, 15 U.S.C. § 77e(a) and (c);

III.

Enter an order requiring defendants Dukes, Hodge, FWC (MD), FWC (DC), FWC (NV) and Covenant to disgorge any and all ill-gotten gains, together with prejudgment interest, derived from the activities set forth in this Complaint;

IV.

Enter an order requiring defendants Dukes, Hodge, FWC (MD), FWC (DC), FWC (NV) and Covenant to pay civil penalties pursuant to Section 20(d) of the Securities Act, 15 U.S.C. § 77t(d), and Section 21(d)(3) of the Exchange Act, 15 U.S.C. § 78u(d)(3), in an amount to be determined by the Court;

V.

Enter an order prohibiting Dukes and Hodge permanently and unconditionally from acting as an officer or director of any issuer that has a class of securities registered under Section 12 of the Exchange Act , 15 U.S.C. § 78l, or that is required to file reports pursuant to Section 15(d) of the Exchange Act, 15 U.S.C. § 78o(d), pursuant to Section 21(d)(2) of the Exchange Act, 15 U.S.C. § 78u(d)(2); and

VI.

Enter an order granting such other and further relief as the Court may deem just and appropriate.

Respectfully submitted,

/S/

_________________________________
Merri Jo Gillette, PA Bar No. 37075
Catherine E. Pappas, PA Bar No. 56544
Mark R. Zehner, PA Bar No. 41186

Attorneys for Plaintiff:
SECURITIES AND EXCHANGE COMMISSION
601 Walnut Street, Suite 1120 East
Philadelphia, PA 19106
Telephone: (215) 597-3100
Facsimile No: (215) 597-2740

Dated: September 5, 2002

 

http://www.sec.gov/litigation/complaints/complr17714.htm


Modified: 09/06/2002