U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 21652 / September 16, 2010
SEC v. Global Materials & Services, Inc., et al, Case No. SACV 08-881 DOC (RNBx) (C.D. Cal.)
Stephen F. Owens, William Woo, Eric Ko, ASMAC Financial, Inc. and Edify Capital Group, Inc. Settle SEC Charges
The Securities and Exchange Commission announced today that, on August 11, 2010, the United States District Court for the Central District of California entered Final Judgments by consent against defendants Stephen F. Owens of Corona, California, William Woo of San Gabriel, California, Eric Ko of Brea, California, ASMAC Financial, Inc. (ASMAC) and Edify Capital Group, Inc. (Edify). The Commission also voluntarily dismissed Flinn Springs Inn, Inc. (Flinn Springs) as a relief defendant in the lawsuit.
In the complaint filed on August 6, 2008, the Commission alleged that Global Materials & Services, Inc. (Global Materials) improperly registered the offer and sale of shares issued under consulting programs on Form S-8 registration statements in order to raise money for the personal benefit of Owens, who at the time controlled Global Materials as its officer and director. Between 2002 and 2005, under the direction of Owens, the company allegedly engaged in two fraudulent schemes under which it issued billions of S-8 shares to sham consultants, including defendants Woo, Ko, ASMAC and Edify (collectively, the Consultant Defendants). The complaint alleges that, contrary to the requirements of Form S-8, the Consultant Defendants did not perform any bona fide consulting services to Global Materials in exchange for the S-8 shares they received. Instead, they sold the S-8 shares and routed over $1.7 million of the sale proceeds back to Owens and entities controlled by Owens, including Flinn Springs.
Without admitting or denying the complaint's allegations, all of the defendants consented to the entry of Final Judgments enjoining them from violating Section 5 of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. Owens also agreed to be enjoined from violating Section 17(a) of the Securities Act, prohibited from acting as an officer or director of an issuer pursuant to Section 20(e) of the Securities Act and Section 21(d)(2) of the Exchange Act, permanently barred from participating in a penny stock offering pursuant to Section 20(g) of the Securities Act and Section 21(d)(6) of the Exchange Act, and ordered to pay $1,738,081 in disgorgement plus $784,458 in prejudgment interest and a civil penalty of $120,000. In addition to the injunction, Woo agreed to pay $327,938 in disgorgement plus $148,709 in prejudgment interest, for a total of $476,647, of which $133,995 will be owed jointly and severally with ASMAC, and a civil penalty of $120,000. Ko also agreed to pay a civil penalty of $20,000, and ASMAC agreed to disgorge $91,361 plus $42,634 in prejudgment interest, for a total of $133,995, for which it will be jointly and severally liable with Woo. With this settlement and the voluntary dismissal of Flinn Springs, the action is fully resolved as to all defendants.
For more information on earlier actions in this case, see LR-20673 (Aug. 7, 2008).