Kenneth Roy Weare, a/k/a Roy Weaver, J&K Global Marketing Corporation, and AAA-Auction.Com, Inc.

Litigation Release No. 17804 / October 24, 2002

Securities and Exchange Commission v. Kenneth Roy Weare, a/k/a Roy Weaver, J&K Global Marketing Corporation, and AAA-Auction.Com, Inc., Civil Action No. 01-K-0645 (D. Colo.)

Commission Seeks Civil Contempt Against Weare and J&K Global Marketing for Violation of Asset Freeze

The Commission announced that on October 21, 2002 it filed a motion seeking entry of a civil contempt order against Kenneth Roy Weare, also known as Roy Weaver, a resident of Littleton, Colorado, and his company, J&K Global Marketing Corporation. The Commission alleged that Weare and J&K have violated orders entered by the United States District Court for the District of Colorado freezing the defendants' assets, requiring the defendants to repatriate funds held in offshore accounts, prepare an accounting of funds raised by the defendants in an investment scheme, and pay disgorgement of over $6.2 million in funds illegally obtained from investors. A hearing on the matter is set for October 29, 2002.

On January 8, 2002 the District Court entered a permanent injunction by default against Weare, J&K and AAA-Auction.com, another Colorado company operated by Weare. The Court found that Weare and J&K violated the anti-fraud and registration provisions of the federal securities laws when they used the Internet to sell $375 investments in a "rent/mortgage free" program that promised investors returns of 600 percent annually from funds that were suppose to be invested offshore. In fact, the defendants operated a Ponzi scheme where funds raised from later investors were used to pay purported returns to earlier investors. An analysis of the company's bank records disclosed no investments.

The Court also found that Weare and AAA-Auction.com had engaged in securities fraud by making false representations to investors in connection with their investments in merchandise resale agreements offered by AAA-Auction, funds from which were to be used to buy merchandise that would be sold through AAA-Auction's live auction website allegedly for a large profit.

The Court permanently enjoined Weare and J&K from violating Sections 5(a) and (c), and 17(a) of the Securities Act of 1933, and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5, and ordered Weare and J&K together to pay disgorgement of $6,278,334.91 and prejudgment interest of $486,848.02. The Court also ordered Weare to pay a civil penalty of $220,000 and J&K to pay a civil penalty of $110,000. The Court permanently enjoined AAA-Auction from violating Section 17(a) of the Securities Act, and Section 10(b) of the Exchange Act and Rule 10b-5, and ordered Weare and AAA-Auction together to pay disgorgement of $623,250.00 and prejudgment interest of $142,724.40. The Court also ordered the defendants' assets frozen until the judgments were satisfied, and ordered the defendants to repatriate funds held in offshore accounts.