SECURITIES AND EXCHANGE COMMISSION
LITIGATION RELEASE NO. 16752 /October 4, 2000
SEC Charges Cellular Video Car Alarms, Inc. and Its President with Fraud
SECURITIES AND EXCHANGE COMMISSION v. Carl Robinson and Cellular Video Car Alarms, Inc.(United States District Court for the Southern District of New York, Civ. No. 00-Civ. 7452 (RMB))
Today the Commission announced that on October 3, 2000 it filed a complaint and obtained an ex parte temporary restraining order in the U.S. District Court for the Southern District of New York against Carl Robinson of Hagerstown, Maryland, and his company, Cellular Video Car Alarms, Inc. In the order, the Court, inter alia, restrains the Defendants from further violations of the securities laws and temporarily freezes the Defendants' assets pending a hearing. The Commission's complaint alleges that between September 1999 and the present, defendants Carl Robinson and Cellular Video Car Alarms, Inc., defrauded investors of more than $400,000 by offering and selling unregistered shares of the company's stock based on false, deceptive and misleading statements made on Cellular Video's Internet web site, and in the print media. Cellular Video purportedly makes a car alarm system that transmits images and sounds from a camera connected to a cell phone inside an automobile to either a video phone or any other receiver the owner may choose. Cellular Video does not have even a working prototype of the product, but has, nonetheless, raised at least $400,000 from investors by claiming it does. The defendants have also falsely claimed, at various times, to have co-marketing agreements with "AT&T" and "Nokia." In addition, Cellular Video raised money from investors by making unsubstantiated optimistic financial projections about the potential sales and profitability of the company.
Specifically, the Complaint alleges that Defendants Robinson and Cellular Video claimed they would have sales of "$30 billion over the next four years;" "annual sales of $4.97 billion by 2002;" "new activation services of $11.97 billion by 2002;" and "a secondary revenue stream of $6 billion in hardware sales and $7.18 billion in wireless activation services" for preventing automobile burglaries and break-ins. Beyond not having a product, there was no basis for these projections beyond speculation.
The Complaint further alleges that the sale of Cellular Video stock was neither registered nor qualified for an exemption under Regulation D. Thereafter, in violation of the restrictions on private placements, defendants engaged in a general solicitation of investors on the company's web site, in dozens of newspapers, and through the use of a roadside billboard.
As a result of the conduct described in the Complaint, the Commission has charged the defendants with violations of Section 10(b) of the Securities Exchange Act of 1934 ("Exchange Act") and Exchange Act Rule 10b-5, Section 17(a) of the Securities Act of 1933 ("Securities Act")(antifraud provisions), and Sections 5(a) and 5(c) of the Securities Act (registration provisions). The Commission's Complaint seeks injunctive relief, disgorgement plus prejudgment interest, an officer and director bar, and civil penalties.
In coordination with the Commission's action, the Attorneys General of two states also commenced actions against the defendants. The Attorney General of New York brought an action against the same defendants seeking and obtaining an injunction preventing the company from using the Internet to solicit New York investors. The Attorney General of Maryland brought an administrative proceeding against the same defendants alleging violations of the Maryland securities laws, including fraud in connection with the sale of securities.
For more information about Internet fraud, visit http://www.sec.gov/complaint.shtml. For a description of other SEC enforcement actions involving the Internet, visit http://www.sec.gov/news/headlines/intmm.htm