The Securities and Exchange Commission ("Commission") announced that on September 9, 2004, the Honorable Jeffrey T. Miller, United States District Judge for the Southern District of California, issued a temporary restraining order halting an ongoing securities fraud by Vince Dory ("Dory") and Joshua Adams ("Adams"), ages and residences unknown, and four entities with which they are affiliated: Global Health, Global Clearing, Global Strategies and Goldman Quintero & Associates ("Goldman"). The court (1) granted the Commission's application for a temporary restraining order; (2) placed a freeze on the defendants' assets; (3) ordered the repatriation of funds; (4) prohibited the destruction of documents by the defendants; (5) ordered accountings from the defendants; and (6) granted expedited discovery.
Global Health purports to be a biotechnology company engaged in the development of a cancer treatment, although it does not appear to be organized or registered as any form of business in any state. The other entities and individuals operate as unregistered brokers.
The Commission's complaint, filed today in United States District Court in San Diego, alleges that, since early 2003, the brokers have cold called prospective investors and solicited investments in Global Health, which, they represent, has developed a cancer treatment that is on the verge of FDA approval and, subsequently, has obtained FDA approval. To convince prospective investors to invest in Global Health, or to induce existing investors to add to their investment, the defendants have disseminated letters on FDA letterhead that state that Global Health's cancer treatment has been approved by the FDA and that Global Health can soon begin marketing its product. The defendants instruct investors to send their checks to one of two San Diego-area addresses used by the brokers.
The complaint alleges that the FDA letters are forgeries, and the statements contained therein are false. The letters were not authored by any employee or representative of the FDA and, in fact, the FDA has no record of Global Health or of any product purportedly manufactured by it. Contrary to the representations in the letters, Global Health does not have any cancer treatment or other product that is undergoing the FDA's approval process. Moreover, the addresses for the brokers are merely commercial mail drops from which the proposed defendants take investors' checks across the border to Mexico, where they cash or deposit them in accounts at a Mexican bank in Tijuana.
The Commission obtained an order temporarily restraining Global Clearing, Global Strategies, Goldman, Dory and Adams from committing securities fraud in violation of Section 17(a) of the Securities Act of 1933 ("Securities Act") and Section 10(b) of the Securities Exchange Act of 1934 ("Exchange Act") and Rule 10b-5 thereunder, and from violating the broker-dealer registration provisions of Section 15(a) of the Exchange Act. The order also temporarily restrains all of the defendants from violating the securities registration provisions of Sections 5(a) and 5(c) of the Securities Act.
The Court ordered the temporary restraining order and asset freeze to remain in effect until September 20, 2004, on which date the Court will hold a hearing on the Commission's motion for a preliminary injunction at 8:30 a.m. In addition to the interim relief granted today, the Commission seeks a final judgment against the defendants enjoining them from future violations of the foregoing antifraud, broker-dealer registration and securities registration provisions, ordering them to disgorge all ill-gotten gains, and assessing civil penalties against them.
The Commission would like to acknowledge the assistance of the United States Postal Inspection Service in the investigation of this matter.
