UNITED STATES SECURITIES AND EXCHANGE COMMISSION
LITIGATION RELEASE NO. 17750 / September 26, 2002
SECURITIES AND EXCHANGE COMMISSION v. JEFFREY C. HAYS, MARLEN V. JOHNSON, AND JAMES M. NILSSON., Civil Action No. 3:95-CV-0250-G, (USDC/ND/TX)
On September 24, 2002, United States District Judge A. Joe Fish held defendant Marlen V. Johnson in contempt and ordered his arrest and incarceration in connection with violations of the terms of an Agreed Final Judgment entered by Judge Fish on April 7, 1996. (SEC v. Jeffrey C. Hays, Marlen V. Johnson, and James M. Nilsson, USDC/NDTX [Dallas Division], Civil Action No. 3:02-CV-0250-G) The final judgment, entered in a matter charging Johnson with masterminding a stock-manipulation scheme, barred Johnson from acting as an officer or director of any issuer that has a class of securities registered pursuant to Section 12 or that is required to file reports pursuant to Section 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. §§78l and 78o(d)). The judgment also permanently enjoined Johnson from, among other things, future violations of the antifraud and reporting provisions of the Exchange Act, specifically Sections 10(b) and 13(a) and Rules 10b-5, 13a-1, and 13a-13 thereunder (15 U.S.C. §§ 78j(b), 78m(a) and 17 C.F.R. §§ 240.10b-5, 240.13a-1 and 240.13a-13).
Judge Fish found that Johnson violated the final judgment from at least October 19, 2001, to the present by acting as an officer and director of a company having securities registered pursuant to Section 12 or that are required to file reports pursuant to Section 15(d) of the Exchange Act, including, but not limited to, Voyager Group, Inc., Neoteric, Inc., and R&RX Group, Inc. Judge Fish further found that Johnson violated the antifraud and reporting provisions of the final judgment by causing reports to be filed with the Commission that omitted to disclose material information. Specifically, Forms 10-K and 10-Q that Johnson signed and filed on behalf of Voyager and Neoteric failed to disclose that Johnson, while acting as president, secretary and a director of these companies, was nonetheless subject to the final judgment barring him from acting as an officer or director. Moreover, Johnson failed to disclose any portion of the 1996 final judgment against him.
At the request of the Commission, the Court ordered coercive sanctions against Johnson to compel him to comply with the terms of the final judgment. Specifically, Judge Fish issued a bench warrant requiring the arrest and incarceration of Johnson and ordered the assessment of daily fines beginning at $4,000 and doubling each day, with a maximum daily fine of $128,000, until Johnson is in compliance with the final judgment. The Court also ordered that Johnson would be liable for an additional $100,000 fine if he signed, as a purported officer or director, any future documents filed with the Commission. Finally, the Court required Johnson to pay the Commission attorneys fees for the time expended in seeking to enforce Johnson's compliance with the final judgment.
In addition to awarding sanctions for contempt, the Court found that Johnson's failure to disclose the officer-and-director bar or any information about the 1996 final judgment in 10-Ks and 10-Qs filed with the Commission constituted fresh violations of the antifraud and reporting provisions of the Exchange Act. In connection with these new violations, the Court imposed on Johnson a third-tier civil penalty of $120,000 pursuant to Section 21(d)(3) of the Exchange Act (15 U.S.C. § 78t(d)(3)).
Johnson, age 54, is a resident of Salt Lake City, Utah.
For further information regarding Marlen V. Johnson, see SEC Litigation Release No. 17717/September 10, 2002.