U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 17145 / September 20, 2001
SECURITIES AND EXCHANGE COMMISSION v. ALPHA TELCOM, INC., AMERICAN TELECOMMUNICATIONS COMPANY, INC., STRATEGIC PARTNERSHIP ALLIANCE, LLC, SPA MARKETING, LLC, PAUL S. RUBERA, ROBERT A. MCDONALD, ROSS S. RAMBACH and MARK E. KENNISON (D.ORE.) (CV-01-1283 PA)
The United States Securities and Exchange Commission ("Commission") announced that on September 6, 2001, the Honorable Owen M. Panner, United States District Judge for the District of Oregon, issued a preliminary injunction halting a $100 million securities fraud by Paul S. Rubera ("Rubera"), Robert A. McDonald ("McDonald"), Ross S. Rambach ("Rambach"), Mark E. Kennison ("Kennison") and entities controlled by them. The Court: (1) granted the Commission's application for a preliminary injunction (2) continued, as to certain defendants, the asset freeze contained in the temporary restraining order issued by the Court on August 27, 2001, (3) appointed a permanent receiver, (4) prohibited the destruction of documents by the defendants, and, (5) ordered accountings from the defendants. Trial in the case is scheduled for October 29, 2001.
The Commission's complaint alleges that since 1997, Rubera, McDonald, Rambach and Kennison, and entities controlled by them (Alpha Telcom, Inc. ("Alpha"), American Telecommunications Company, Inc. ("ATC"), Strategic Partnership Alliance LLC ("SPA") and SPA Marketing, LLC ("SPA Marketing")) raised at least $100 million from over 7,000 investors nationwide, purportedly for investments in pay telephones, and promising investors a 14% annual return. The complaint alleges that, in fact, Rubera, McDonald, Rambach and Kennison, and the entities controlled by them, are operating a massive Ponzi-like scheme in which Alpha and ATC's payphone operations are losing money, but the defendants are making payments to existing investors with the money that they obtain from new investors. In addition, the complaint alleges that Rambach, Kennison, SPA and SPA Marketing have been acting as unregistered brokers in connection with the offer and sale of investments in the defendants' scheme.
The Commission obtained a preliminary injunction restraining the defendants from committing securities fraud in violation of Section 17(a) of the Securities Act of 1933 ("Securities Act"), Section 10(b) of the Securities Exchange Act of 1934 ("Exchange Act") and Rule 10b-5 thereunder. The Court's injunction also preliminarily enjoins the defendants from committing violations of the securities registration provisions of Sections 5(a) and 5(c) of the Securities Act. The Court's injunction further preliminarily enjoins Rambach, Kennison, SPA and SPA Marketing from committing violations of the broker-dealer registration provisions of Section 15(a) of the Exchange Act. In addition to the preliminary relief granted by the Court, the Commission seeks a final judgment against the defendants enjoining them from future violations of the foregoing securities registration and antifraud provisions, and against Rambach, Kennison, SPA and SPA Marketing enjoining them from future violations of the foregoing broker-dealer registration provisions, and ordering the defendants to disgorge all ill-gotten gains, and assessing civil penalties against them.
The Commission would like to acknowledge the assistance of the State of Oregon Division of Finance and Corporate Securities in the investigation of this matter.