U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 19234 / May 20, 2005
SEC v. George A. Todt, Sutra Management Corporation, Jeffrey H., Jetco, LLC, Ray Slaback, Tempo Financial, Inc., STB Chip Corporation, SutraTel Kiosk Corporation (f/k/a Urban Transfer Systems, Inc.), Lonisson Communications Corporation and PTFS, LLC, U.S. District Court for the Central District of California, Civil Action 05-3697 (Anderson, P.)
On May 18, the Commission obtained a Temporary Restraining Order (TRO) from the United Stated District Court for the Central District of California, temporarily restraining: (1) George A. Todt of Malibu, California; Sutra Management Corporation; Jeffrey H. Evans of Napa, California; Jetco, LLC; Ray Slaback of Dakota, Minnesota; Tempo Financial, Inc.; STB Chip Company; SutraTel Kiosk Corporation (f/k/a Urban Transfer Systems, Inc.); and Lonisson Communications Corporation from violating Section 5(a) and (c) 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; (2) Sutra Group, LLC from violating Section 10(b) of the Exchange and Rule 10b-5 thereunder; and (3) PageOne Business Productions, LLC from violating Section 5(a) and (c) of the Securities Act. As part of the TRO, the Court also entered orders freezing the assets of Todt, Sutra Management, Sutra Group, PageOne, Evans, Jetco, Slaback and Tempo, temporarily prohibiting Todt, Sutra Management, Sutra Group, PageOne, Evans, Jetco and Slaback from participating in penny stock offerings and prohibiting all defendants from destroying documents.
The Commission's Complaint alleged that Todt has orchestrated two fraudulent schemes, one of which was ongoing at the time the Complaint was filed. In the first scheme, as alleged in the Complaint, Todt and others inflated the price for the stock of Quality of Life Health Corporation ("QLHC") from March 2003 until at least October 2004 by issuing press releases falsely claiming that QLHC owned approximately $60 million worth of assisted living facilities and repeating those claims on its website. Todt and others profited from the inflated price for QLHC stock, with Todt making at least $800,000 in ill-gotten gains by trading through a nominee account and by splitting profits with traders that received their QLHC stock through Todt. Todt's latest scheme, which lasted from at least November 2004 until the filing of the emergency action, involved a scheme to evade the registration requirements and issue unregistered securities of four penny stock companies quoted on the Pink Sheets website. These companies are: Tempo Financial, Inc., STB Chip Co., SutraTel Kiosk Corp. (f/k/a Urban Transfer Systems, Inc.) and Lonisson Communications Corp. (collectively, the "penny stock companies"). Todt's latest scheme also involved the dissemination of false and misleading information about the penny stock companies and the manipulation of the market in the stock of three of those companies. On March 28, 2005, the Commission entered orders suspending trading in the four penny stock companies' securities for a ten-day period.
As part of the TRO, the Court directed that defendants Todt, Sutra Management, Sutra Group, PageOne, Evans, Jetco, Slaback, Tempo Financial, STB Chip, SutraTel Kiosk, and Lonisson Communications appear on May 31, 2005 at 1:30 p.m. PDT to show cause why an order for preliminary injunction and other relief should not be granted pending a trial.