U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 17706 / August 30, 2002
SEC CHARGES FIFTH PERSON IN TWO MILLION DOLLAR UNREGISTERED STOCK SWINDLE
Securities and Exchange Commission v. Michael I. Nnebe, Nelson C. Walker, Hildreth J. Fleming, Jr., Steven S. Bocchino, Daniel M. Coyle, Jr., and Luis Colon, Jr., S.D.N.Y., 01 Civ. 5247.
The Securities and Exchange Commission ("Commission") today filed an amended complaint in SEC v. Nnebe, et al., 01 Civ. 5247 (KMW) (S.D.N.Y. June 12, 2001), charging a fifth defendant, Hildreth J. Fleming, Jr. ("Fleming"), in what the Commission alleges was the fraudulent, unregistered offering of shares of Fargo Holdings, Inc. ("Fargo"). Fleming, age 29, resides in Staten Island, New York. The amended complaint ("Complaint") also names each of the defendants -- Michael I. Nnebe ("Nnebe"), Nelson C. Walker ("Walker"), Steven S. Bocchino, and Daniel M. Coyle, Jr. -- and the relief defendant -- Luis Colon, Jr. -- who were charged in the Commission's initial Complaint filed on June 12, 2001. The defendants were charged with violations of the antifraud and registration provisions of the federal securities laws, and the relief defendant was charged with receiving proceeds of the fraud.
According to the Complaint, Fargo, which purported to be a company providing financial services and blue jeans manufacturing, actually engaged in no legitimate operations at all. The Complaint alleges that the defendants induced the investing public to buy shares of Fargo by making a series of false statements, including that Fargo would be conducting an initial public offering ("IPO"). The Complaint alleges that the defendants defrauded at least 118 investors of at least $2 million.
As to Fleming, the Complaint alleges that from November 1998 through November 1999, Fleming cold called investors using the alias "Steve Wilson," and induced investors to purchase Fargo stock by making numerous false or misleading statements about Fargo, including that Fargo: (a) would be imminently conducting an IPO which would allow investors to resell their Fargo stock for a substantial profit; (b) would be listed on the New York Stock Exchange or the National Association of Securities Dealers Automated Quotation system; and (c) manufactured blue jeans at a plant in Honduras. The Complaint alleges that Fleming simply made up these statements to induce investors to purchase Fargo stock.
As a result of the foregoing, the Commission's Complaint charges that Fleming violated Sections 5(a), 5(c), and 17(a) of the Securities Act of 1933, Sections 10(b) and 15(a) of the Securities Exchange Act of 1934, and Rule 10b-5 thereunder, and seeks a final judgment permanently enjoining Fleming from future violations, ordering Fleming to disgorge ill-gotten gains plus prejudgment interest, and imposing civil penalties against Fleming. The Complaint also seeks an order prohibiting all of the defendants from participating in an offering of penny stock.
The litigation, pending in the United States District Court for the Southern District of New York, had been stayed pending the completion of parallel criminal proceedings brought by the United States Attorney's Office for the Southern District of New York against Walker and Nnebe. Following a guilty plea by Walker and a jury trial conviction against Nnebe, the District Court lifted the stay of the Commission's injunctive action on May 24, 2002.
See also: Litigation Release 17034 June 12, 2001.