SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 17034 \ June 12, 2001
SEC BRINGS CHARGES IN TWO MILLION DOLLAR UNREGISTERED STOCK SWINDLE
The Securities and Exchange Commission today charged four individuals in connection with a fraudulent, unregistered offering of stock of Fargo Holdings, Inc. ("Fargo") -- a company that purported to provide financial services and manufacture blue jeans, but which actually engaged in no legitimate operations at all. The complaint alleges that in selling Fargo stock, the defendants, Michael I. Nnebe ("Nnebe"), Nelson C. Walker ("Walker"), Steven S. Bocchino ("Bocchino"), and Daniel M. Coyle, Jr. ("Coyle") employed a variety of written and oral misrepresentations to raise over $2 million from at least 118 investors. The complaint also alleges that Nnebe diverted the majority of the offering proceeds to his own use, and gave most of the rest to the other defendants and to Luis Colon, Jr. ("Colon"), who is named in the complaint as a relief defendant.
Named as defendants are:
Nnebe, age 40, resides in Orange, New Jersey. Nnebe was Fargo's President, Chief Executive Officer, and principal shareholder.
Walker, age 47, resides in Brooklyn, New York. From approximately October 1998 through November 1999, Walker worked at Fargo, where he cold-called investors to solicit purchases of Fargo stock and supervised a group of cold-callers who also offered and sold Fargo stock. Walker held himself out as Fargo's Senior Portfolio Manager and Underwriting Director.
Bocchino, age 30, resides in East Stroudsburg, Pennsylvania. During the period of the conduct at issue, Bocchino resided in Brooklyn, New York. Bocchino solicited sales of Fargo stock between at least October 1998 and February 1999, while he was a registered representative at Pacific Continental Securities Corp. ("Pacific Continental") and Seaboard Securities, Inc. ("Seaboard").
Coyle, age 27, resides in Brooklyn, New York. Coyle solicited sales of Fargo stock between at least September 1998 and August 1999, while he was a registered representative at Pacific Continental and Seaboard.
From at least July 1997 to at least November 1999, Nnebe conducted a fraudulent, unregistered offering of stock issued by Fargo, a company Nnebe owned and controlled. Nnebe and Walker solicited investors from Fargo's "boiler room" at 80 Wall Street. Bocchino and Coyle solicited investors while working as registered representatives at two broker-dealers. To induce investors to buy Fargo stock, the defendants employed a variety of blatant falsehoods concerning, among other things, the use of investor proceeds, Fargo's business and operations, plans for Fargo to conduct an initial public offering ("IPO") which would allow investors to sell their private placement shares for a substantial profit, and the risk of investing in Fargo. In particular, the defendants falsely told investors that Fargo:
In fact, Fargo never took any steps toward conducting an IPO, had no legitimate business operations, and did not use the offering proceeds to fund its purported businesses. Nnebe misappropriated more than $1.15 million of the offering proceeds and used themfor personal mortgage and credit card payments, international and domestic travel, a Rolls-Royce automobile, and transfers to Nnebe's friends and family in Nigeria. Walker received at least $191,305 from the fraud. Bocchino pocketed commissions totaling at least $14,800, and Coyle received commissions totaling at least $7,000. Colon received at least $153,125 of the offering proceeds. In November 1999, Fargo abruptly closed its offices and left no telephone number or forwarding address.
The Commission alleges that as a result of the foregoing Nnebe, Walker, Bocchino, and Coyle violated Sections 5(a), 5(c), and 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 ("Exchange Act") and Rule 10b-5 thereunder, and that Walker, Coyle, and Bocchino violated Section 15(a) of the Exchange Act. The Commission seeks a final judgment: (a) permanently enjoining Nnebe, Walker, Bocchino, and Coyle from future violations; (b) ordering Nnebe, Walker, Bocchino, and Coyle to disgorge ill-gotten gains, plus prejudgment interest; (c) imposing civil penalties against Nnebe, Walker, Bocchino, and Coyle; (d) ordering Colon to disgorge funds equal to the amount by which he was unjustly enriched; and (e) ordering Nnebe, Walker, Bocchino, Coyle, and Colon to provide verified written accountings.
The litigation is pending in the United States District Court for the Southern District of New York.
The Commission thanks the United States Attorney's Office for the Southern District of New York for its cooperation in this matter.http://www.sec.gov/litigation/litreleases/lr17034.htm