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SECURITIES AND EXCHANGE COMMISSION

Litigation Release No. 17937 / January 16, 2003

SECURITIES AND EXCHANGE COMMISSION V. I-NET PROVIDERS, ET AL., Case No. 8:96-cv-2206-T-23TBM (M.D. Fla., filed October 30, 1996)

The Securities and Exchange Commission (SEC) announced that on December 31, 2002, it filed a notice with the United States District Court for the Middle District of Florida stating that that it will not further pursue its outstanding claims for permanent injunctions, disgorgement of ill-gotten gains, and civil money penalties against defendants I-Net Providers, I-Net Holdings, Inc., Twenty-First Century Connection, Inc., Capital Link Holding, Inc., and Marketing Concepts Group, Inc. (the "corporate defendants"), or its claims for disgorgement against relief defendants Apex Marketing, Inc., Capital Link, Inc., Frontline Consulting, Inc., d/b/a Midland & Associates, and Twenty-First Century Connection LP (the "relief defendants").

The SEC filed this action in 1996, alleging that the corporate defendants and certain individual defendants were engaged in an offering fraud. The SEC also alleged that the relief defendants had obtained investor funds. During this action, the Court appointed a receiver over the corporate defendants and the relief defendants. The Receiver recovered assets and has made distributions to qualified investors. The corporate defendants and the relief defendants are under the control of the court appointed receiver.

The SEC obtained substantial relief against all of the individual defendants that it had alleged engaged in the offering fraud:

  • Michael Coyne: On June 30, 1999, the Court entered a Final Judgment of Permanent Injunction and Other Relief by consent against Coyne. The judgment enjoined Coyne from violating Sections 5(a), 5(c) and 17(a) of the Securities Act of 1933 ("Securities Act"), and Section 10(b) of the Securities Exchange Act of 1934 ("Exchange Act") and Rule 10b-5 thereunder. The judgment also ordered Coyne to pay disgorgement of $70,002, plus prejudgment interest, but waived payment of that amount and did not impose a civil money penalty based on Coyne's demonstrated financial inability to pay.

  • Gary Mariarossi: On July 21, 1999, upon motion by the Commission, the Court entered a Final Judgment of Permanent Injunction and Other Relief against Mariarossi. The judgment enjoined Mariarossi from violating Sections 5(a), 5(c) and 17(a) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder. The judgment also ordered Mariarossi to disgorge his ill-gotten gains of $273,597, plus prejudgment interest, and to pay a civil money penalty of $50,000.

  • Robert H. Shields: Also on July 21, 1999, upon motion by the Commission, the Court entered a Final Judgment of Permanent Injunction and Other Relief against Shields. The judgment enjoined Shields from violating Sections 5(a), 5(c) and 17(a) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder. The judgment also ordered Shields to disgorge his ill-gotten gains of $782,416, plus prejudgment interest, and to pay a civil money penalty of $50,000.

    The United States Attorney's Office for the Middle District of Florida also brought charges against both Coyne and Mariarossi for their roles in the fraud that formed the basis of the SEC's action. Coyne pled guilty and, in December 1999, was sentenced to five year's probation and ordered to pay restitution of $70,000. Mariarossi pled guilty and, in November 1999, was sentenced to five year's probation and ordered to pay restitution of $456,995.

For further information, see Litigation Release No.15219 (Jan. 17, 1997)

 

http://www.sec.gov/litigation/litreleases/lr17937.htm

Modified: 01/17/2003