United States Securities and Exchange Commission
Litigation Release No. 17174, October 5, 2001
Securities and Exchange Commission v. The Balancer Company, Inc., Mark Miclette and Toni Bonar Miclette. Civil Action No. No. 3:01-CV-1975-P (N.D. Tex., Dallas Division)
The Securities and Exchange Commission announced today that it filed a complaint in the United States District Court for the Northern District of Texas for securities fraud and registration violations of the federal securities laws against The Balancer Company, Inc. ("TBC") as well as TBC's founders and principal officers, Mark Miclette ("M. Miclette") and Toni Bonar Miclette ("T. Miclette"), both of Dexter, Maine. According to the Commission's complaint, TBC ostensibly developed and marketed a single product known as the Spin Cycle Balancer ("Balancer"), a washing machine device that purportedly would automatically balance a laundry load during the spin cycle. From February 2000 through April 2001, defendants raised at least $750,000 from approximately 90 investors located nationwide, in Canada and in the British West Indies. Investment funds were solicited through various means, including the company's Internet website, www.spincyclebalancer.com.
The Commission complaint alleged in the course of offering and selling the unregistered common stock of TBC, defendants engaged in numerous material misrepresentations and omissions concerning, among other matters, the expected rate of return on the investment, the status of the Balancer's development, TBC's business operations, and the use of investor funds. The defendants represented that TBC was poised to provide immediate and substantial profits to investors. In fact, however, TBC never developed a finished prototype of its product, nor did it achieve any sales or agreements to sell its product in the future. Additionally, defendants stated that investor funds would be used to develop and market the Balancer, while, in fact, only a fraction of investor funds were used for legitimate purposes. Instead, defendants M. Miclette and T. Miclette diverted a large portion of investor funds for unauthorized personal and business expenditures. Specifically, defendants misappropriated as much as $400,000.00 to pay for personal expenses, such as mortgage and car payments and tuition for the Miclette children's private school, and for wire transfers to persons unrelated to TBC or persons affiliated with TBC who were owed no compensation by the company.
The Commission alleges that, by engaging in the conduct described in the complaint, defendants violated Sections 5(a), 5(c) and 17(a) of the Securities Act of 1933 ("Securities Act") and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10(b)-5 thereunder. The Commission requests that the court permanently enjoin defendants from violating the securities registration and antifraud provisions of the federal securities laws, impose a civil money penalty against them, and order them to account for and disgorge all monies derived from their fraud, plus pay prejudgment interest on that amount. The Commission further requests that the Court issue an order barring M. Miclette and T. Miclette from acting as officer or directors pursuant to Section 20(e) of the Securities Act.
For tips on how to avoid Internet investment schemes, visit http://www.sec.gov/investor/pubs/cyberfraud.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.