-------------------- BEGINNING OF PAGE #1 ------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. LITIGATION RELEASE NO. 14753 / December 13, 1995 SECURITIES AND EXCHANGE COMMISSION v. EXPRESS COMMUNICATIONS, INC., PENDLETON C. WAUGH, AND COMMUNICATIONS MARKETING CONSULTANTS PLUS CORP. (DEFENDANTS) AND PERSONAL COMMUNICATIONS CORP., PCC HOLDINGS CORP., PCC MANAGEMENT CORP., AND NEXT COMMUNICATIONS, INC. (RELIEF DEFENDANTS), Civil Action No. 95-CV02268 (D.D.C.) The Commission today announced the filing of a civil injunctive action against defendants Express Communications, Inc. ("Express"), Pendleton C. Waugh, and Communications Marketing Consultants Plus Corp. ("CMC+") and relief defendants Personal Communications Corp., PCC Holdings Corp., PCC Management Corp., and Next Communications, Inc. The case was filed in the U.S. District Court for the District of Columbia. The Commission alleges that Express, Waugh, and CMC+ violated Sections 5 and 17(a) of the Securities Act, Section 10(b) of the Securities Exchange Act, and Rule 10b-5 thereunder in connection with the offer and sale of interests in specialized mobile radio ("SMR") systems and the purchase and sale of Express stock. The Complaint further alleges that CMC+ violated Section 15(a) of the Securities Exchange Act in connection with these offerings. At all relevant times, Waugh was the president of Express and its affiliate CMC+. The Complaint also alleges that the relief defendants, which were subsidiaries of Express and controlled by Waugh, received investor funds and assets from the defendants and hold these funds and assets in a constructive trust for the benefit of the investors. The Complaint alleges that Express, Waugh, and CMC+ used "boiler room" tactics and materially false and misleading written offering materials in selling securities in the form of investment contracts in Third Mobile, Ltd., and Dallas MobileComm, L.C., two SMR communications offerings established and promoted by Express. For example, according to the Complaint, the offering materials grossly understated the portion of the offering proceeds to be used towards offering expenses. Actual offering expenses consumed over forty percent of the proceeds -- two or more times the amounts disclosed to potential investors. The defendants also allegedly made baseless projections of cash flow and equity value, failed to disclose that substantial additional financing was required in order for the companies to operate, made misleading statements concerning the companies' purported control of existing communications systems and FCC licenses, commingled assets of different issuers, and misappropriated close to $2 million. The defendants also failed to register the securities with the Commission and falsely represented that the investments were not securities. In addition, the Complaint alleges that the defendants purchased and sold Express stock while misrepresenting the resale price to the sellers and falsely stating to potential purchasers that the stock would be listed on Nasdaq in the imminent future. Finally, the Complaint alleges that, in connection with the sale of these investments, CMC+ failed to register as a broker-dealer, as required under the securities laws. In connection with his activities at Express, Waugh has pled guilty to charges related to money laundering, for which he has been sentenced to twenty-one months of incarceration, three years -------------------- BEGINNING OF PAGE #2 ------------------- of supervised release, and $20,000 in fines. He is currently imprisoned at the federal penitentiary at Leavenworth, Kansas. Previously, the Commission filed a civil action against two individuals who sold investments in Third Mobile on behalf of Express. (See Litigation Release No. 14523, Securities and Exchange Commission v. Brian Walsh and Michael McGill, Civil Action No. 95-3698 (RSWL) (C.D.Cal.)) The defendants in that action consented to be permanently enjoined from violating the securities laws, and a final judgment of permanent injunction was entered on June 7, 1995.