LITIGATION RELEASE NO. 18342 / September 11, 2003
UNITED STATES v. TIMOTHY A. McMURRAY, BRADLEY D. WOY, ET AL.
No. 3:03-CR-0270-N, USDC, NDTX (Dallas Division)
SECURITIES AND EXCHANGE COMMISSION V. SMART-MART, INC., TIMOTHY A. McMURRAY AND BRADLEY D. WOY, No. 01-CV-0392-M, USDC, NDTX (Dallas Division)
Timothy A. McMurray and Bradley D. Woy, former officers of defunct Smart-Mart, Inc., were indicted on July 23, 2003 by a federal grand jury for securities fraud and related offenses in connection with their operation of the Dallas-based company. The defendants' conduct was the subject of a successful enforcement action brought by the Securities and Exhange Commission in 2001.
The 49-count indictment, obtained by the United States Attorney for the Northern District of Texas (Dallas Division), alleges that McMurray, Woy and three additional defendants fraudulently raised approximately $2.4 million from more than 700 investors by soliciting them to invest money and purchase stock in the Internet-based retailer company, falsely representing that the funds would be used for company operations and business development.
As a result of its lawsuit, the Commission, in October 2002, succeeded in obtaining permanent injunctions against McMurray, Woy and Smart-Mart, which enjoin each defendant from future violations of 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. Further, McMurray was ordered to pay disgorgement and prejudgment interest of $261,438 and barred from serving as an officer or director of a public company, and Woy was ordered to pay disgorgement of $25,000.
The Commission's civil action alleged that from March 1998 through February 1999, Smart-Mart raised approximately $2.4 million from approximately 720 investors located nationwide and in Canada through the sale of common stock, and that Smart-Mart, McMurray and Woy made false and misleading statements to investors regarding an impending initial public offering ("IPO"), the business prospects of the company, the use of investor funds, and the liquidity and return on investment. Moreover, the Commission charged that Smart-Mart never took any significant steps to conduct an IPO and, in fact, had minimal business operations. Additionally, the Commission alleged that McMurray and Woy used a large portion of investor funds for unauthorized business and personal expenses.