Litigation Release No. 18228 / July 11, 2003
SEC v. Robert Snyder, AlphaCom, Inc., James Stamp, and Gary Kendron, Civil Action No. 1;03CV1349 (U.S.D.C. N.D. Ohio, filed July 10, 2003)
On July 10, 2003, the U.S. Securities and Exchange Commission filed a Complaint in the United States District Court for the Northern District of Ohio, against AlphaCom, Inc., Robert Snyder, AlphaCom's President, and James Stamp, an accountant, for their alleged fraudulent sales of AlphaCom securities, and against Gary Kendron as a relief defendant. Snyder, AlphaCom, Stamp and Kendron are located in the Akron, Ohio area.
The Complaint alleges that, from September 1997 through October 2000, Snyder, AlphaCom and Stamp raised $8.9 million from the sale of AlphaCom securities to over 1000 investors. The Complaint alleges that the defendants raised these funds by falsely representing that AlphaCom owned exclusive rights to novel Internet technologies, Network Utilities (NU) and Very Minimal Shift Keying (VMSK), that were supposed to increase Internet downloading speeds and the speed of access to the Internet. The Complaint alleges that, contrary to the representations, AlphaCom did not own the technologies. The Complaint further alleges that AlphaCom had merely entered into contingent agreements to acquire the technologies, but failed to fulfill the agreements because it did not pay a total of $4 million required under the agreements. The Complaint also alleges that Snyder falsely represented that AlphaCom owned the exclusive rights to sell the Insat Wireless Modem, a modem that provides wireless access to the Internet, when, in reality, he had failed to acquire those rights.
The Complaint also alleges that Snyder and AlphaCom misrepresented that investors' funds would be used for AlphaCom's business. The Complaint alleges that Snyder misused $451,000 of the AlphaCom offering proceeds to buy a home and $500,000 to make a loan to Kendron, who did not repay the loan. The Complaint further alleges that Kendron does not have a legitimate claim to the funds.
The Complaint alleges that the defendants offered and sold AlphaCom securities in transactions that were not registered with the Commission. In addition, the Complaint alleges that Snyder and Stamp acted as broker-dealers without registering with the Commission.
The Complaint also alleges that AlphaCom, aided and abetted by Snyder, filed a Form 10-K for 2000 without audited financial statements and failed to file required periodic reports with the Commission since April 2001.
The Complaint alleges that Snyder, AlphaCom and Stamp violated the securities registration and anti-fraud 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 ("Exchange Act") and Rule 10b-5 thereunder. The Complaint also alleges that Snyder and Stamp violated the broker-dealer registration and anti-fraud provisions, Sections 15(a) and 15(c) of the Exchange Act. The Complaint further alleges that AlphaCom violated and Snyder aided and abetted in AlphaCom's violation of reporting provisions, Section 15(d) of the Exchange Act and Rules 15d-1 and 15d-13 thereunder.
The Complaint seeks injunctive relief, civil penalties, an officer and director bar, and disgorgement from Snyder; injunctive relief, civil penalties, and disgorgement from AlphaCom; and injunctive relief and civil penalties against James Stamp. The Complaint also seeks disgorgement of the money Kendron received from AlphaCom.
The Commission thanks the Akron Police Department and the Ohio Division of Securities for their assistance and cooperation in this matter.
