SECURITIES AND EXCHANGE COMMISSION
LITIGATION RELEASE NO. 15600 / December 22, 1997
ACCOUNTING AND AUDITING ENFORCEMENT
RELEASE NO. 998 / December 22, 1997
SECURITIES AND EXCHANGE COMMISSION v. BARCLAY DAVIS and WORLD SYNDICATORS, INC., Civil Action No. 97-CV03056(GK)(D.D.C.)
U.S. v. BARCLAY DAVIS, CR-S-97-201 (D.C. Nev.)
The Securities and Exchange Commission ("Commission") today filed a Complaint against Barclay Davis ("Davis"), a Las Vegas, Nevada based penny stock promoter and serial stock manipulator, and World Syndicators, Inc. ("World Syndicators"), an entity through which Davis conducted his business, in the United States District Court for the District of Columbia. The Complaint alleges that Davis manipulated the market for the securities of three separate publicly traded companies: (1) Systems of Excellence, Inc. ("SOE"); (2) Combined Companies International Corp. ("CCIC"); and (3) Bio-Tech Industries, Inc. ("Bio-Tech") (formerly Twenty First Century Health, Inc.). The Complaint seeks a permanent injunction enjoining Davis and World Syndicators from violations of the securities registration and antifraud provisions of the federal securities laws, a permanent injunction enjoining Davis from violations of the reporting and recordkeeping provisions of the federal securities laws, an accounting, disgorgement, and a permanent and unconditional bar from Davis acting as an officer or director of a public company. The Commissions Complaint alleges the following:
Systems of Excellence
In August 1996, Davis entered an ongoing scheme to manipulate the market for SOE. Through World Syndicators, he was given unregistered shares of SOE stock by Charles O. Huttoe, the former CEO and Chairman of SOE, to facilitate the use of a registered broker-dealer to push SOE stock on the public. Then, when SOEs independent auditor discovered that SOE had distributed unregistered stock, Davis engineered a massive effort to falsify registration statements and periodic filings to create the appearance that SOE was in compliance with the federal securities laws. Davis sold SOE stock he was given for proceeds of approximately $1,128,000.
CCIC and Bio-Tech
Davis controlled both CCIC and Bio-Tech, and used them as vehicles for market manipulations. Davis directed the preparation of financial statements for both issuers that materially overstated the companies assets, and obtained false audit opinions on these financial statements. CCICs materially false financial statements and audit reports were then filed with the Commission, and Bio-Techs were supplied to broker-dealers to induce them to make a market in the stock.
As part of a deliberate effort to increase the price of Bio-Tech stock, Davis also directed the issuance of a series of materially false press releases in which the company claimed an exclusive license to market "breakthrough" medical devices, highly successful efforts to market a new line of nutritional supplements, and the acquisition of what appeared to be a successful and nationally- known tea company. While Davis was manipulating the price of SOE, CCIC, and Bio-Tech stock, Davis and World Syndicators sold substantial amounts of both securities through accounts they controlled in the U.S. and Canada.
The Commission also announced that today Davis pleaded guilty to one count of conspiracy to commit securities fraud and bank fraud, and one count of money laundering, in the United States District Court for the District of Nevada. Davis' plea was in connection with, among other things, a securities fraud scheme involving the manipulation of CCIC.
The Commission previously has made several announcements concerning these matters. See Lit. Rel. 15571 (November 25, 1997);(Lit. Rel. 15490 (September 12, 1997); Lit. Rel. 15286 (March 12, 1997); Securities Exchange Act Rel. No. 38345 (February 27, 1997); Securities Exchange Act Rel. No. 38260 (February 10, 1997); Lit. Rel. 15490 (January 31, 1997); Lit. Rel. 15185 (December 12, 1996); Lit. Rel. 15153 (November 7, 1996); Securities Exchange Act Rel. No. 33791 (October 7, 1996).
The Commission is cooperating with separate investigations in this matter carried on by the United States Attorney's Offices for the District of Nevada and the Eastern District of Virginia, and the Criminal Investigation Division of the Internal Revenue Service.
The Commission's investigation in this matter is continuing.