UNITED STATES SECURITIES AND EXCHANGE COMMISSION
LITIGATION RELEASE NO. 17070 \ July 18, 2001
SECURITIES AND EXCHANGE COMMISSION V. STADTT MEDIA, L.L.C., ANTHONY B. BENAVIDES, ROBERT M. MARTINEZ, JEFFERSON F. SANTOS, AND LANA M. ST. MARTIN (DEFENDANT SOLELY FOR PURPOSES OF EQUITABLE RELIEF)Civil Action No. 3-00CV1489-P (N.D. Texas, Dallas Division)
The Securities and Exchange Commission announced today the settlement of all claims against the defendants in this action filed in the United States District Court for the Northern District of Texas on July 12, 2000. The defendants are:
The SEC's complaint alleged that, from February to July 2000, Stadtt Media sold units of membership interest ("Units") to investors purportedly for the development of an Internet website called C-Magazines.com. The company claimed in its offering materials that C-Magazines.com would enable users to read digitally-reproduced, mainstream magazines online and to translate those magazines into 25 languages. The company promised that the website would be operational in the near future. Stadtt Media raised over $900,000 from approximately 50 investors.
According to the SEC's complaint, Stadtt Media, Benavides, Martinez, and Santos made materially false representations to investors in connection with the sale of the Units. According to the complaint, the defendants claimed (1) that Stadtt Media owned patents or patents-pending on Internet-related inventions, (2) that a major investment banking firm was committed to underwriting a $100 million initial public offering ("IPO") for the company, which would result in a 16,000% return on an investment in the company's pre-IPO offering, and (3) that Stadtt Media would use the proceeds from the pre-IPO offering for working capital and for the development of C-Magazines.com. The SEC's complaint alleged that, in fact, Stadtt Media owned no patents or patents-pending, that it had never made arrangements with an investment banker to conduct an IPO, and that Benavides and Martinez converted investor funds to their own use.
Without admitting or denying the allegations in the complaint, Stadtt Media, Benavides, Martinez, and Santos consented to final judgments that impose permanent injunctions and other equitable relief against them. The final judgments permanently enjoin them from committing future violations the antifraud provisions of the federal securities laws found in Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934, and Rule 10b-5 thereunder. The final judgments further require Benavides, Martinez, and Santos to disgorge gains and interest totaling $774,814. Civil penalties were not imposed and payment of disgorgement was waived based on their demonstrated inability to pay.
See prior litigation release at http://www.sec.gov/litigation/litreleases/lr16626.htm.
For tips on how to avoid Internet "pump-and-dump" stock manipulation schemes, visit http://www.sec.gov/investor/online/pump.htm. For more information about Internet fraud, visit http://www.sec.gov/divisions/enforce/internetenforce.htm. To report suspicious activity involving possible Internet fraud, visit http://www.sec.gov/complaint.shtml.