U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 19251 / June 8, 2005
SECURITIES AND EXCHANGE COMMISSION V. UNCOMMON MEDIA GROUP, INC., ET AL. AND LAWRENCE GALLO, Case No. 04-80272-CIV-Hurley/Hopkins (S.D. Fla., filed March 23, 2004)
SEC SUES UNCOMMON MEDIA GROUP, INC., LAWRENCE GALLO, TIMOTHY RAFFERTY, AND FREDERICK B. HORNICK, JR. FOR $1.4 MILLION FRAUD
The Securities and Exchange Commission (SEC) announced that on March 23, 2004, it filed an emergency action to halt an unregistered offering of Uncommon Media Group, Inc. ("UMDA") and its subsidiary, 3rd Dimension ("3D") by its principal, Lawrence Gallo ("Gallo"), and sales agents and promoters Timothy Rafferty ("Rafferty") and Frederick B. Hornick, Jr. ("Hornick"). On that same day, Judge Daniel T.K. Hurley, U.S. District Judge for the Southern District of Florida, issued various emergency orders against the defendants, including temporary restraining orders, asset freezes, and other emergency relief. According to allegations of the SEC's complaint, the defendants have swindled more than 200 investors out of at least $1.4 million. The Complaint further alleges that the fraud has been ongoing since at least August 2002, when UMDA and Gallo were sued by the SEC and indicted by the United States Attorney's Office for the Southern District of Florida for securities fraud.
The SEC's Complaint alleges that Gallo, Rafferty, and Hornick raised funds, through UMDA and 3D, by offering promissory notes and common stock. The defendants recruited investors by word of mouth and during seminars held at various locations throughout the country. According to the SEC's Complaint, Gallo told investors that 3D had the technology to meet current demands of the music, movie, and cellular telephone industries. Gallo and Rafferty touted UMDA and 3D as having many valuable contracts with expected revenue in the hundreds of millions of dollars when, according to the SEC's Complaint, UMDA reported a net loss of over $1.4 million in its last quarterly report. The SEC's Complaint alleges that 3D has never generated any revenues whatsoever. The SEC's Complaint also alleges that Hornick made misrepresentations to investors or potential investors.
The SEC's complaint charges UMDA, 3D, Gallo, Rafferty, and Hornick with violating Sections 5(a), 5(c) and 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 ("Exchange Act") and Rule 10b-5 thereunder, and Hornick with violating Section 15(a)(1) of the Exchange Act. Those sections and rules prohibit certain transactions in securities not registered with the Commission, prohibit fraud in the offer and sale, and in connection with the purchase and sale, of securities, and prohibit sales of securities by unlicensed brokers or dealers.