SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 16865 / January 19, 2001
Securities and Exchange Commission v. David Morgenstern, Fred Morgenstern, Bernadette Stevens, and Amquest International, Ltd. Civil Action No. 98-7044-CIV-Seitz (S.D. Fla.)
The Securities and Exchange Commission ("SEC") announced today that on January 16, 2001, the Honorable Patricia A. Seitz of the U.S. District Court for the Southern District of Florida entered an order of permanent injunction and other relief against Bernadette Stevens ("Stevens") for violations of Section 17 of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5. Stevens engaged in an offering fraud and an attempted "pump and dump" scheme throughout 1996 when she was a sales manager at Amquest International, Ltd. ("Amquest"), a Fort Lauderdale, Florida "financial services" firm. The Court ordered that Stevens disgorge $143,684 in ill-gotten gains but waived payment of disgorgement and pre-judgment interest in excess of $10,000 and declined to impose a civil penalty based upon Stevens' demonstrated inability to pay. Stevens consented to the entry of the order without admitting or denying the allegations of the Commission's complaint.
The Commission alleged in its complaint that Amquest, David Morgenstern ("D. Morgenstern"), Fred Morgenstern ("F. Morgenstern") and Stevens engaged in securities fraud in connection with a private offering of common stock by Amquest, which resulted in approximately $4.1 million in losses to investors. The other three defendants were previously enjoined and ordered to pay disgorgment. In its complaint, the Commission alleged that, in the offer and sale of Amquest's securities, Amquest, D. Morgenstern, F. Morgenstern and Stevens used fraudulent offering documents calculated to deceive prospective investors through misleading representations and omissions. According to the SEC's complaint, Amquest's offering documents contained the following misrepresentations:
The SEC further charged in its suit that D. Morgenstern, F. Morgenstern and Stevens misappropriated the bulk of the Amquest offering proceeds, including approximately $700,000 in proceeds from a related offering of stock issued by SleepSource International, Ltd. As alleged in the Commission's complaint, D. Morgenstern and F. Morgenstern used the offering proceeds to fund an attempted scheme to inflate artificially the price of Amquest stock by engaging in pre-arranged trades in nominee brokerage accounts.