LITIGATION RELEASE NO. 17659 / August 6, 2002

SECURITIES AND EXCHANGE COMMISSION v. INTRACOM CORPORATION, HYPERBARIC SYSTEMS, INC., SURGICA CORPORATION, ALFRED BRAUNBERGER, HARRY MASUDA, LOUIS MATSON, LARRY BRYANT, COMCO, INC. AND PAUL MAROTTA, 02 Civ. 4367 (LDW) (U.S.D.C., E.D.N.Y.)

The Securities and Exchange Commission today charged nine individuals and entities in connection with the fraudulent offer and sale of securities in three companies that develop medical devices and software for health care professionals. The defendants conducted these offerings between 1997 and 2000 and raised over $13 million from approximately 670 investors throughout the United States. The offerings were fraudulent because the defendants falsely stated that the funds would be used for business purposes when in fact a substantial portion of the offering proceeds went for undisclosed cash commissions to the persons who organized and conducted the offerings. The defendants include the three issuers and their chief executive officers, an unregistered broker who sold the issuers securities through a boiler room that he established and operated, and an attorney who aided and abetted the fraudulent schemes.

Named in the Commission's Complaint filed in the United States District Court for the Eastern District of New York are:

  • Intracom Corporation ("Intracom"), a Delaware corporation headquartered in Thousand Oaks, California, that is in the business of providing software and internet solutions for medical professionals to improve their communications and information management.

  • Hyperbaric Systems, Inc. ("Hyperbaric"), a California corporation headquartered in Palo Alto, California, that is in the business of developing hyperbaric chambers and solutions to preserve organs and blood plasma.

  • Surgica Corporation ("Surgica"), a Delaware corporation headquartered in El Dorado Hills, California, that is in the business of developing technology to enhance the success of surgical implants such as stents, shunts and valves.

  • Alfred Braunberger ("Braunberger"), age 48 and a resident of Thousand Oaks, California, was the President and CEO of Intracom

  • Harry Masuda ("Masuda"), age 57 and a resident of Palo Alto, California, is the President and CEO of Hyperbaric.

  • Louis Matson ("Matson"), age 54 and a resident of El Dorado Hills, California, is Surgica's President and Chief Executive Officer.

  • Larry Bryant ("Bryant"), 57, of Costa Mesa, California.

  • Comco, Inc. ("Comco"), a Nevada Corporation formed in July 1998 and having its principal place of business in Costa Mesa, California, that is owned and controlled by Bryant.

  • Paul Marotta ("Marotta"), age 44 and a resident of Burlingame, California, is an attorney admitted to the California Bar. Marotta is the managing partner of a law firm in Burlingame, California called The Corporate Law Group.

As alleged in the Complaint, the particular defendants involved in each offering made material misrepresentations to investors about the anticipated use of offering proceeds. The offering materials provided to investors each state that the particular issuer will pay approximately 12% in sales commissions to brokers selling the securities and that the remaining funds will be used for corporate purposes. According to the Complaint, however, each of the three issuers paid Bryant, an unregistered securities broker who coordinated the offerings, a commission of 25% to 30%, thereby substantially reducing the amount of funds available for the corporation's business.

All of the defendants, except Marotta, are charged with violations of Sections 5(a), 5(c) and 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. Marotta is charged with aiding and abetting violations of Section 10(b) of the Exchange Act and Rule 10b-5. Bryant is also charged with violations of Section 15(a) of the Exchange Act.

The Complaint seeks a final judgment (i) enjoining the defendants from future violations of the above-cited provisions; (ii) requiring Bryant, Comco, Braunberger, Matson, Masuda and Marotta to disgorge their illegal profits, plus pre-judgment interest; (iii) assessing civil penalties on all of the defendants except Intracom, Hyperbaric and Surgica, and (iv) barring Matson, Masuda and Braunberger from acting as an officer or director of any publicly traded company.

*  SEC Complaint in this matter.