SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 17063 / July 6, 2001
JUDGMENT ENTERED AGAINST HERBERT S. CANNON AND JOHN A. SOLOMON FOR SECURITIES FRAUD
SECURITIES AND EXCHANGE COMMISSION v. ENTERPRISES SOLUTIONS, INC., HERBERT S. CANNON, and DR. JOHN A. SOLOMON, United States District Court for the Southern District of New York, Case No. 00 Civ. 2685 (MGC)
The Securities and Exchange Commission announced today that on July 2, 2001 the Honorable Miriam G. Cedarbaum of the United States District Court for the Southern District of New York entered final judgments against defendants Herbert S. Cannon and John A. Solomon. The judgment against Cannon enjoins him from violating the antifraud provisions of the Securities Exchange Act of 1934, orders him to disgorge $1,000,000 of ill-gotten gains, and requires him to pay civil money penalties of $100,000. The judgment against Solomon orders him to pay civil money penalties of $10,000. The Court declined to enjoin Solomon.
Based upon evidence the Commission presented during a trial in January 2001, Judge Cedarbaum found, among other things, the following:
Several previous Commission releases describe important events leading up to the Court's judgment. To stop the ongoing fraud, the Commission suspended trading in ESI's stock on March 30, 2000. See Exchange Act Rel. No. 42593 (March 30, 2000). One week later, the Commission filed this action and obtained an order which temporarily froze more than $2.3 million in ESI stock sale proceeds being held in the brokerage accounts of the relief defendants. See Litigation Release No. 16506 (April 7, 2000). On May 1, 2000, the Court granted a preliminary injunction extending the freeze pending the outcome of this case. See Litigation Release No. 16543 (May 9, 2000). On October 16, 2000, ESI consented, without admitting or denying the Commission's allegations, to be permanently enjoined from violating Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder and agreed to amend its registration statement. See Litigation Release No. 16778 (October 25, 2000).
The SEC acknowledges the assistance of the National Association of Securities Dealers Regulation, Inc. in investigating and prosecuting this matter.
This enforcement action is part of the Commission's four-pronged approach to attacking microcap fraud: enforcement, inspections, investor education and regulation. For more information about the SEC's response to microcap fraud, visit the SEC's Microcap Fraud Information Center at http://www.sec.gov/news/extra/microcap.htm. Information on trading suspensions is available at http://www.sec.gov/enforce/tsuspend.htm. For tips on how to avoid Internet "pump-and-dump" stock manipulation schemes, visit http://www.sec.gov/investor/online/pump.htm.