SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 17576 / June 20, 2002
SECURITIES AND EXCHANGE COMMISSION v. MILLENNIUM FINANCIAL, LTD., and NEWPONT FIDUCIARIES & NOMINEES, S.A., Civil Action No. 02 CV 3901 (MBM) (S.D.N.Y.) (filed May 22, 2002)
SEC OBTAINS PRELIMINARY INJUNCTION AGAINST MILLENNIUM FINANCIAL, LTD. FOR RUNNING AN
INTERNATIONAL BOILER ROOM OPERATION
OVER $1.6 MILLION IN U.S. AND OFFSHORE ACCOUNTS FROZEN
The Securities and Exchange Commission announced today that on June 19, 2002, the United States District Court for the Southern District of New York entered a preliminary injunction prohibiting Millennium Financial, Ltd. ("Millennium") from engaging in the fraudulent offer and sale of securities. The Court previously issued a temporary restraining order against Millennium on May 22, 2002. (See Litigation Release No. 17528 (May 22, 2002)). The Court's June 19, 2002 Order directs the continuation of certain relief pending trial, including a freeze of Millennium's assets and an order directing Millennium to provide an accounting and to repatriate assets held offshore. Over $300,000 has been frozen in the United States pursuant to the Court's Order. Also, in cooperation with the U.S. Department of Justice, the U.S. Attorney's Office for the Southern District of New York, and the Federation of St. Kitts and Nevis, over $1.3 million in offshore assets have been frozen to date.
The Commission's Complaint alleges that Millennium has been running an ongoing international boiler room operation that has defrauded at least 150 investors from over 20 countries out of more than $2 million. The Commission also sued Newpont Fiduciaries & Nominees, S.A. as a relief defendant. The Complaint alleges that Millennium made a number of fraudulent statements to investors in connection with the offer and sale of the so-called pre-initial public offering (or "pre-IPO") stocks of at least three U.S. companies - Key Card Communications, Inc., kNutek Holdings, Inc. and Sonic Garden, Inc. The Complaint alleges that through unsolicited telephone calls and mass mailings, Millennium made fraudulent statements concerning:
- whether and when a U.S. company was going to have an IPO;
- whether investors could profitably resell their pre-IPO shares before the IPO;
- the price at which the stock would be offered in the IPO itself; and
- the price at which the stock would trade shortly after the IPO.
Documents filed in support of the Commission's Complaint allege that Millennium also employed "bait and switch" tactics by first offering investors the opportunity to buy well-known publicly-traded securities at a "discount." Millennium then allegedly persuaded investors to shift their investments and sometimes increase them to purchase pre-IPO stock.
The Commission's supporting documents also allege that Millennium has engaged in sophisticated tactics to avoid detection and prosecution. For example, the Commission has alleged that Millennium has rerouted mail, telephone calls, and facsimiles from one country to another. In addition, Millennium has utilized multiple nominee accounts located in no fewer than six countries in the names of several other corporate entities, including Relief Defendant Newpont Fiduciaries.
The majority of the known investors are from the United Kingdom and Ireland. Other investors are from Australia, Belgium, Denmark, France, Germany, Greece, Guernsey, Indonesia, Italy, Luxembourg, Malaysia, The Netherlands, New Zealand, Portugal, Saudi Arabia, Singapore, Sri Lanka, Sweden, Switzerland, the United States, and the United Arab Emirates.
The Court's Order preliminarily enjoins Millennium, during the pendency of this action, from violating the antifraud provisions of the federal securities laws, Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder.
Persons who have purchased securities through Millennium may contact the Commission by sending an e-mail to email@example.com. A form to assist in providing information is available at the SEC Home Page www.sec.gov/complaint.shtml. Investors can also mail information to the SEC's Enforcement Complaint Center, Mail Stop 8-4, 450 Fifth Street, N.W., Washington, D.C. 20549.
In order to assist investors, the SEC has released an online brochure on pre-IPO fraud. Entitled "Risky Business: Pre-IPO Investing," the brochure advises investors about the consequences of investing at the pre-IPO stage and provides key questions investors should ask. The brochure is available at http://www.sec.gov/investor/pubs/preipo.htm.
The Commission is continuing its investigation in this matter.