Litigation Release No. 16237/ August 2, 1999
SECURITIES AND EXCHANGE COMMISSION v. EDWARD A. DURANTE (aka EDWARD DURANT), FIRST NEW HAVEN CORPORATION, BURTON G. VISHNO, THOMAS J. DONAHUE, INVESTMENT RESOURCES, INC., DANIEL C. SANDERS, THOMAS G. SCALZO, JR., TIMOTHY J. PINCHIN, SHAREHOLDER COMMUNICATIONS GROUP, LLC., PACIFIC CORPORATE EQUITIES, LLC., JACKSON L. MORRIS, MARK E. GOULD, THOMAS K. WILLIAMS, SYNCOM, INTERNATIONAL, INC., and WORLD INTERNATIONAL MARKETING, INC., Defendants, and JANICE SHEELEY DURANTE, STANLEY T. DECK, SR., AND WALTER J. ZINK, Relief Defendants, United States District Court for the Northern District of California, Civil Action No.: .
SEC Charges Fifteen Individuals and Entities in a Fraudulent Microcap Offering and Stock Manipulation Scheme
On August 2, 1999, the United States Securities and Exchange Commission ("Commission") filed a Complaint in federal district court against fifteen individuals and entities for their roles in a fraudulent offering and market manipulation of a microcap stock, Los Angeles-based PSA, Inc. ("PSA"). The complaint alleges that the fraud, which occurred between December 1997 and September 1998, caused the price of PSA stock to rise artificially from approximately $.50 per share to $5.00 per share in less than two weeks, before the price plummeted to a few pennies a share. Defendants reaped over $1 million in illegal profits by secretly controlling the supply of PSA stock, making false representations about PSA, and selling their supply of stock at inflated prices. The Complaint seeks disgorgement of these illegal profits, monetary penalties, and permanent injunctions prohibiting future violations of the securities laws.
In particular, the complaint alleges the following:
As a result of the conduct alleged in the Complaint, Durante, Vishno, Donahue, Sanders, First New Haven, and Investment Resources (a corporation controlled by Donahue) are alleged to have violated Sections 5(a), 5(c), and 17(a) of the Securities of 1933 ("Securities Act"), Section 10(b) of the Exchange Act of 1934 ("Exchange Act") and Rule 10b-5 thereunder, Sections 15(a) and 15(g) of the Exchange Act and Rules 15g-2 through 15g-6 thereunder, and Rule 101 of Regulation M. The complaint also charges that World International Marketing, a corporation controlled by Durante and his wife, relief Defendant Janice Sheeley Durante, violated Sections 5(a), 5(c) and 17(a) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder. In addition, the complaint alleges that Pinchin violated Sections 5(a), 5(c), and 17(b) of the Securities Act and Section 15(a) of the Exchange Act. Shareholder Communications Group is alleged to have violated Sections 5(a), 5(c) and 17(b) of the Securities Act, and Pacific Corporate Equities is charged with violations of Sections 5(a) and 5(c) of the Securities Act and Section 15(a) of the Exchange Act. The complaint also alleges that Morris, Gould, Williams, and SynCom violated Sections 5(a) and 5(c) of the Securities Act. In addition to the remedies noted above, the Commission's Complaint seeks the return of proceeds from the illegal scheme from relief defendants Walter Zink, Stanley Deck, and Janice Sheeley Durante.
Simultaneous with the filing of the Complaint, Scalzo consented, without admitting or denying the allegations, to the issuance of a final judgment permanently enjoining him from committing future violations of Sections 15(a) and 10(b) of the Exchange Act and Rule 10b-5 thereunder. Scalzo also consented to the issuance of an order in a related administrative proceeding to be filed by the Commission that suspends him from association with any broker or dealer for twelve months.http://www.sec.gov/litigation/litreleases/lr16237.htm