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U.S. Securities and Exchange Commission

Litigation Release No. 18237 / July 18, 2003

Securities and Exchange Commission v. William L. Brotherton and International Business Consortium, Inc., Civil Action No. 01-MK-1340 (USDC D. Colo.)

SEC Obtains Judgment Totaling $411,746.03 Against Perpetrators of Internet Offering Fraud Involving Workers' Compensation Insurance Scheme

The Securities and Exchange Commission announced that on June 16, 2003, the Honorable Marcia S. Kreiger, United States District Judge for the District of Colorado, entered a final judgment against Defendants William L. Brotherton, an unlicensed chiropractor and the sole executive officer of Defendant International Business Consortium, Inc. ("IBC"), ordering them to pay disgorgement of $325,144, plus prejudgment interest of $36,602.03, and imposing civil money penalties of $50,000. The judgment provides that Brotherton and IBC are jointly and severally liable for the judgment debt totaling $411,746.03. The Court also resolved other pending motions in favor of the Commission and vacated a trial date previously set by the court. In previous orders, the Court had granted the Commission's motions for a default judgment against IBC and for summary judgment against Brotherton, though the Court denied the Commission's request for injunctive relief against Brotherton

The Commission's complaint, filed July 13, 2001, alleged that Brotherton and IBC raised over $300,000 by selling IBC stock without registration to over 180 investors between January and July of 2001. Holding IBC out as a promising start-up preparing to offer discount workers' compensation insurance, IBC and Brotherton deceived investors about, among other things, IBC's true state of development and operations, a future initial public offering for IBC securities, the use of investment proceeds and the risks and returns associated with the ownership of IBC stock. Brotherton misappropriated at least 25% of the offering proceeds for the personal benefit of himself and some of his relatives. The complaint charged Brotherton and IBC with violations of the registration provisions, Section 5(a), 5(c) of the Securities Act of 1933 ("Securities Act") and the antifraud provisions, Section 17(a) of the Securities Act and Section 10(b) of the Securities Exchange Act of 1934 ("Exchange Act") and Rule 10b-5 thereunder. Some of the proceeds of the defendants' illegal conduct are held in bank accounts that were frozen by the court's order of July 23, 2001, which was entered upon consent in response to the Commission's application for a preliminary injunction, asset freeze and other emergency relief intended to halt the fraud.

See also Litigation Release No. 18034 (March 13, 2003) and Litigation Release No. 17067 (July 16, 2001).



Modified: 07/18/2003