UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 17462 / April 8, 2002
SEC Files Settled Action Charging Desert Winds Entertainment Corp. and its Principals with Securities Fraud
Securities and Exchange Commission v. Michael Paloma, Matthew Bardasian and Desert Winds Entertainment Corp. (United States District Court for the District of Columbia C.A. No. 1:02CV00645)
On April 8, 2002 the Securities and Exchange Commission filed a settled civil injunctive action in the United States District Court for the District of Columbia against Desert Winds Entertainment Corp. a production entertainment company, and its principals, Michael Paloma and Matthew Bardasian. The Commission's complaint alleges that the defendants committed securities fraud when they issued numerous press releases falsely claiming that Desert Winds had signed a $25,000,000 contract with Warner Bros. Television. The Desert Winds' principals also filed a registration statement with the Commission on Form 10-12G, making the same false claim and recognized a receivable from the alleged contract as an asset of the Company. No such contract existed. The complaint further alleges that Paloma and Bardasian profited from their involvement with the company by illegally selling restricted shares of Desert Winds stock.
The Commission's complaint charges all defendants with violations of the registration and antifraud provisions of the securities laws: 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 ("Exchange Act"), and Rule 10b-5 thereunder. The Commission's complaint seeks judgments permanently enjoining all defendants from violating the above provisions of the securities laws, permanently barring Paloma and Bardasian from acting as officers or directors of any public company, and ordering Paloma to pay disgorgement and civil monetary penalties.
Without admitting or denying the allegations in the complaint, the defendants consented to the entry of final judgments permanently enjoining each of them from violating Sections 5(a), 5(c), and 17(a) of the Securities Act, Section 10(b) of the Exchange Act, and Rule 10b-5 thereunder. Paloma and Bardasian also agreed to judgments permanently barring each of them from acting as an officer or director of a public company. Paloma also consented to a judgment requiring him to pay $442,319 in disgorgement and $27,070.64 in pre-judgment interest thereon, and a $65,000 civil penalty. Because of Bardasian's financial circumstances, including his monetary liability arising from his guilty plea in an unrelated pending criminal matter, the Commission did not seek disgorgement or civil money penalties from him.