UNITED STATES SECURITIES AND EXCHANGE COMMISSION
LITIGATION RELEASE NO. 16660 / August 21, 2000
Securities and Exchange Commission v. Internet Telecommunications Albany System SMR, et al., Civil Action No. 1:99CV00539 (CKK) (D.D.C.)
COURT ENTERS FINAL JUDGMENTS BY DEFAULT AGAINST THREE DEFENDANTS IN SPECIALIZED MOBILE RADIO FRAUD
The Securities and Exchange Commission announced that on July 31, 2000, the Honorable Colleen Kollar-Kotelly, United States District Court Judge for the District of Columbia, granted the Commission's application for default judgments against defendants John Larson, Commonwealth Communications Group (CCG) and Marjet Corp. (Marjet). The final judgements ordered the defendants to pay the following sums: (1) Larson and CCG, jointly and severally, $385,648 disgorgement, $145,052 prejudgment interest and $385,648 penalty; and (2) Marjet $206,615 disgorgement, $77,706 prejudgment interest and $206,615 penalty. The judgment against Marjet holds Marjet jointly and severally liable with other defendants previously enjoined in the case and held liable for Marjet's amounts of disgorgement, interest and penalty. The Court found that the disgorgement amounts represented the amount of investor funds received by the defendants as a result of their unlawful conduct.
According to the complaint, which was filed on March 2, 1999, these three defendants and other defendants engaged in fraud in connection with the offer and sale to the public of securities designated as partnership units in three general partnerships formed to develop specialized mobile radio systems in Albany, New York, Reno, Nevada and Anchorage, Alaska. The complaint alleges that Marjet and other defendants controlled the specialized mobile radio licenses. These defendants failed to disclose this control and Marjet's sale of the licenses to the partnerships at enormously excessive prices. The complaint further alleges that Larson and CCG, his wholly controlled company, among others, functioned as brokers in selling the securities without first having registered as such as required by applicable securities laws. Further, Larson and CCG used a variety of false and misleading sales literature, correspondence and telephone statements to sell the securities. These defendants failed to answer, plead or otherwise respond to the Commission's complaint. The Court enjoined each of these three defendants from violating the antifraud provisions of Section 17(a) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder. The Court also enjoined Larson and CCG from violating the securities registration provisions of Sections 5(a) and (c) of the Securities Act. Further, the Court enjoined defendants Larson and CCG from violating the broker-dealer registration provisions of Section 15(a) of the Exchange Act.
See also Lit. Rel. No. 16073 and 16592.