UNITED STATES SECURITIES AND EXCHANGE COMMISSION
LITIGATION RELEASE NO. 18083 / April 10, 2003
FEDERAL COURT ORDERS $2.1 MILLION DISGORGEMENT AND $120,000 PENALTIES IN SECURITIES OFFERING FRAUD
Securities and Exchange Commission v. Alexander Naujoks aka Alexander P. Thorn; Exectrek, Inc., a California corporation; ACSports.com, a Delaware corporation; and World Markets Group, Inc., a Delaware corporation, Civil Action No. 02-01073-JFW (VBKx) (C.D. Cal.)
The Securities and Exchange Commission announced today that on March 25, 2003, the Honorable John F. Walters, United States District Judge for the Central District of California, entered a final judgment of disgorgement and penalties in a securities offering fraud case brought against Alexander Naujoks, aka Alexander P. Thorn, of Huntington Beach, California, and his companies, Exectrek, Inc., ACSports.com, and World Markets Group (collectively, "the companies").
On February 5, 2002, the Commission filed its complaint against the defendants, seeking emergency relief to halt the ongoing fraudulent offering of stock in the companies. The Court entered a temporary restraining order that same day, and froze the defendants' assets. On September 23, 2002, Thorn and the companies consented to a judgment of permanent injunction prohibiting them from violating the securities registration and antifraud provisions of the federal securities laws, Sections 5(a), 5(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 thereunder. The Court entered the judgment of permanent injunction on September 26, 2002.
The Court's March 25, 2003 judgment concludes the Commission's action against the defendants. The Court ordered Thorn, Exectrek and ACSports to pay disgorgement of $2.1 million plus prejudgment interest. The Court also ordered Thorn, the creator and chief officer of the companies, to pay a civil penalty of $120,000.
In issuing its judgment, the Court found that the defendants solicited investors nationwide through cold-calls and personal solicitations to finance and operate the companies' purported online business operations. The Court concluded that defendants engaged in an unregistered stock offering, and that no exemption from registration applied to the defendants' offering. The Court also found that the defendants solicited investors to purchase stock in the companies through fraudulent misrepresentations, including that: (1) the companies would be going public via an initial public offering in 30 to 90 days when, in fact, none of the companies was ever close to a public offering; (2) the investment would triple in value immediately once the companies went public, even though the companies had minimal assets and no performance history in any of their purported products, services, or financials; (3) Compaq and Oracle had invested in Exectrek when, in fact, these companies had never made any equity or other kind of investment. The Court found that, through such conduct, defendants raised at least $2.1 million from investors.