LITIGATION RELEASE NO. 17056 \ July 2, 2001
CONNECTICUT STOCK PROMOTER SENTENCED IN CONNECTION WITH MARCORP, INC. MARKET MANIPULATION; OTHERS SETTLE SEC CHARGES
SEC v. Douglas G. McCaskey, Neal E. Fitzpatrick, Jr., Hope D. Trowbridge and Marcorp, Inc., 98 civ. 6153 (SWK) (S.D.N.Y.)
United States v. Douglas G. McCaskey, 00 cr. 219 (SRU) (D. CT)
The Securities and Exchange Commission today announced that a Connecticut stock promoter, Douglas G. McCaskey, was sentenced on April 30, 2001 in the U.S. District Court for the District of Connecticut. The U.S. Attorney for the District of Connecticut charged McCaskey with manipulating the market for Marcorp, Inc. stock from May to December 1994. On October 13, 2000, McCaskey pleaded guilty to criminal charges that he violated Section 10(b) of the Securities Exchange Act of 1934 ("Exchange Act") and Rule 10b-5 thereunder, and waived his right to indictment by a federal grand jury. He was sentenced to five years probation and ordered to pay a fine of $30,000.
McCaskey remains a defendant in a separate SEC civil action pending in the U.S. District Court for the Southern District of New York concerning the manipulation of the market for Marcorp stock during 1994. See Litigation Release No. 15865 (September 1, 1998). The SEC's complaint alleges that McCaskey, an undisclosed principal of Marcorp, artificially increased Marcorp's share price and volume by purchasing and selling millions of shares of Marcorp stock among 20 accounts at 14 brokerage firms in the U.S. and Canada, obtaining proceeds in excess of $5.2 million. The complaint alleges that two of Marcorp's officers and directors, Neal E. Fitzpatrick, Jr. and Hope D. Trowbridge, caused Marcorp to make false SEC filings, concealed McCaskey's control of Marcorp, opened nominee trading accounts for McCaskey, and surreptitiously transferred Marcorp shares to McCaskey for use in the manipulation. The complaint further alleges that McCaskey, Fitzpatrick, and Trowbridge obtained illegal profits by selling restricted and unregistered shares before and during the manipulation.
The SEC settled its claims against Fitzpatrick, Trowbridge and Marcorp on April 16, 2001. Without admitting or denying the substantive allegations of the complaint, Fitzpatrick consented to an order permanently enjoining him from violating Sections 10(b), 13(d), and 16(a) of the Exchange Act and Rules 10b-5, 13d-1, 16a-2, and 16a-3 thereunder, and Sections 5(a), 5(c), and 17(a) of the Securities Act of 1933 ("Securities Act"), and ordering him to disgorge $41,131 plus prejudgment interest, and waiving the payment of disgorgement based upon Fitzpatrick's demonstrated inability to pay. Trowbridge consented, without admitting or denying the substantive allegations of the complaint, to an order permanently enjoining her from violating Sections 10(b) and 16(a) of the Exchange Act and Rules 10b-5, 16a-2, and 16a-3 thereunder, and Sections 5(a), 5(c), and 17(a) of the Securities Act, and ordering her to pay disgorgement and prejudgment interest in the amount of $12,966, and to pay a civil money penalty of $7,543. Marcorp consented, without admitting or denying the substantive allegations of the complaint, to an order permanently enjoining it from violating Section 13(a) of the Exchange Act and Rules 12b-20, 13a-1, 13a-11, and 13a-13 thereunder.