UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 17615 / July 15, 2002
DEFENDANTS IN TEL-ONE, INC. PUMP-AND-DUMP SCHEME AGREE TO PAY MORE THAN $2 MILLION IN DISGORGEMENT AND PENALTIES
Court also Imposes Permanent Injunctions
Securities and Exchange Commission v. Tel-One, Inc., et al., No. 8:02-CV-120-T-30TGW, (M.D. Fla., filed January 22, 2002).
The Securities and Exchange Commission (SEC) announced the settlement of most of its claims arising out of its January 2002 emergency action and trading suspension against Tel-One, Inc. and certain of its principals and promoters. The settlement, which the Court entered on July 12, 2002, imposes more than $2 million in disgorgement and penalties, and permanently enjoins all of the defendants from future violations of the antifraud provisions of the federal securities laws. The SEC also announced that it intends to ask the court to appoint a claims administrator to disburse the defendants' ill-gotten gains to investors who were victimized by the scheme.
The SEC's complaint, filed on January 22, 2002, alleged that Tampa, Florida-based Tel-One, two of its major shareholders, George Carapella (Carapella) and Alan Lipstein (Lipstein), and Tel-One's president, W. Kris Brown (Brown), used a Tampa-based stock promoter, Media Broadcast Solutions, Inc. (Media Broadcast), to place fraudulent advertisements in local and national newspapers, including the January 16, 2002 edition of the Wall Street Journal. The SEC's complaint alleged that defendants Carapella and Lipstein have recent felony convictions, and sold hundreds of thousands of Tel-One shares after they had successfully inflated Tel-One's stock price.
In addition to consenting to the entry of permanent injunctions from future violations of Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, the defendants agreed to the following monetary relief:
In separate administrative proceedings, Carapella, Lipstein and LaFauci also consented to the entry of orders barring them from participating in any offering of a penny stock. As part of the settlement, the Commission agreed to dismiss its claims for disgorgement against Brown, Tel-One and Media Broadcast, and its claims for a civil money penalty against Tel-One. All of the defendants consented to the above relief without admitting or denying the allegations against them.
For more information on earlier actions in this case, see Litigation Release No. 17337 (January 24, 2002), announcing the filing of this matter, and Securities Exchange Act Of 1934 Release No. 45323 (January 23, 2002), announcing the Commission's trading suspension.