U.S. Securities and Exchange Commission
Litigation Release No. 18190 / June 16, 2003
SEC v. Alliance Industries, Peter H. Norman and Donald A. Baillargeon, United States District Court for the Central District of California, Civil Action No. 99-6073 REC DLB. (July 27, 1999)
SEC Settles Claims Against Former Chairman and Chief Executive Officer of Alliance Industries In Manipulation and Fraud Action
On February 10, 2003, United States District Judge Robert E. Coyle entered a Final Judgment by consent against Peter H. Norman ("Norman"), the former Chairman and Chief Executive Officer of Alliance Industries ("Alliance"). The Complaint, which alleged violations of the securities registration and antifraud provisions of the federal securities laws, was filed on July 27, 1999, in the United States District Court for the Central District of California, against Alliance, a Bakersfield, California company, Norman and Donald A. Baillargeon ("Baillargeon"), Alliance's former Vice President of Public Relations and Marketing. (See Litigation Release No. 16223, July 28, 1999). The Commission obtained a default judgment against Alliance on August 24, 2000, for its failure to answer or otherwise respond to the Commission's Complaint, and obtained a Final Judgment by consent against Baillargeon on January 10, 2002.
The Complaint alleged that from January 1, 1996 through November 26, 1996, Norman and Baillargeon engaged in various fraudulent acts that resulted, among other things, in the manipulation of the price of the common stock of Alliance, a financially troubled company engaged in housing development and construction. According to the Complaint, Norman and Baillargeon made false and misleading representations concerning Alliance's cultivation and sale of fast-growing "paulownia" trees, its breeding and selling of live goats and carcasses, and its development of a nationwide chain of chiropractic franchise clinics, among other matters. The Complaint alleged that Norman and Baillargeon disseminated false and misleading projections of Alliance's future revenues and earnings knowing that Alliance was a foundering company that had no paulownia tree business, goat business or chiropractic business. In addition, the Complaint alleged that Norman engaged in transactions designed to make it appear that there was an active market for Alliance's common stock, and he personally sold more than 90,000 shares of his unregistered Alliance common stock directly to members of the public. The Complaint alleged that as a result of the defendants' fraudulent conduct, investors lost more than $1.4 million.
Norman, without admitting or denying the allegations in the Commission's Complaint, consented to the entry of a Final Judgment permanently enjoining him from violating the securities registration and antifraud provisions of the federal securities laws - Sections 5 and 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934, and Exchange Act Rule 10b-5. The Final Judgment also ordered Norman to pay disgorgement of $1,372,572.01, representing profits that he obtained from the fraudulent sale of his personally owned stock to investors, together with prejudgment interest thereon in the amount of $754,088.81, and a civil money penalty of $110,000. In addition, Norman consented to a permanent bar from acting as an officer or director of any reporting or non-reporting public company.
The default judgment against Alliance permanently enjoined Alliance from violating the securities registration and antifraud provisions of the federal securities laws - Sections 5 and 17(a) of the Securities Act, Section 10(b) of the Exchange Act, and Exchange Act Rule 10b-5. Baillargeon, without admitting or denying the allegations in the Commission's Complaint, consented to the entry of a Final Judgment permanently enjoining him from violating the antifraud provisions of the federal securities laws - Section 17(a) of the Securities Act, Section 10(b) of the Exchange Act, and Exchange Act Rule 10b-5, and ordering him to pay a civil money penalty of $10,000.
The enforcement action was part of the Commission's four-pronged approach to attacking microcap fraud: enforcement, inspections, investor education and regulation. For more information about the SEC's response to Microcap fraud and the litigation releases for these cases, visit the SEC's Microcap Fraud Information Center at http://www.sec.gov/divisions/enforce/microcap.htm.
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