U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 19367 / September 8, 2005
Securities and Exchange Commission v. Converge Global, Inc., (United States District Court for the Southern District of Florida, No. 04-80841 (CIV-Middlebrooks) (D. So. Fla.)
JURY RETURNS VERDICT AGAINST DEFENDANT JONATHAN G. FINK IN SEC FRAUD ACTION JUDGMENTS BY CONSENT ENTERED AGAINST OTHER DEFENDANTS
The Securities and Exchange Commission announced that on September 2, 2005, the Commission obtained a jury verdict of securities fraud liability in the United States District Court for the Southern District of Florida against defendant Jonathan G. Fink, of Beverly Hills, California, a former consultant to the now defunct Boca Raton-based holding company Converge Global, Inc. and its subsidiary, TeleWrx, Inc., a Boca Raton-based telecommunications company. After a three-day trial presided over by the Honorable Donald M. Middlebrooks, U.S. District Court Judge, the jury found that Fink violated Section 10(b) of the Securities Exchange Act of 1934 ("Exchange Act") and Rule 10b-5 thereunder.
The Court's determination of appropriate relief against Fink remains pending. The Commission is seeking an order imposing a permanent injunction from any future violations of Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, a civil monetary penalty, a penny-stock bar, and such other relief as the Court deems appropriate.
The Commission's Complaint, filed on September 2, 2004, charged Converge, TeleWrx, CEO Michael P. Brown, of Boca Raton, Florida, and Fink with violations of Section 10(b) of the Exchange Act and Rule 10b-5 thereunder. The Complaint alleged, among other things, that Converge and TeleWrx jointly issued a press release on June 24, 2002 which falsely claimed in its headline that as a result of its recent weekend "national launch," TeleWrx had raised "over $1 million." The Complaint further alleged that Brown and Fink were responsible for drafting and issuing the false press release. Also named as a defendant in the action was Keith B. Laggos, of Homer Glen, Illinois, the owner and publisher of Illinois-based newspaper Money Maker's Monthly, who was charged with violations of Section 17(b) of the Securities Act of 1933. The Complaint alleged that Laggos was compensated by Converge and/or TeleWrx for publishing laudatory press releases concerning TeleWrx on June 10 and June 25, 2002 and a laudatory article concerning TeleWrx in Money Maker's Monthly's July 2002 issue, and failed to disclose said compensation.
Previously, on July 22, 2005, the Court entered final judgments by consent against Defendants Brown, Converge and TeleWrx whereby, without admitting or denying liability, they are permanently enjoined from violating Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, and Brown is subject to a two-year penny stock bar. Additionally, on August 29, 2005, the Court entered a final judgment by consent against Keith B. Laggos, whereby, without admitting or denying liability, Laggos is permanently enjoined from violating Section 17(b) of the Securities Act. Additionally, the final judgment entered against Laggos provides for disgorgement of $11,989.87, plus prejudgment interest in the amount of $1,996.77, for a total of $13,986.64; the imposition of a civil penalty of $19,500; and a five-year penny stock bar.
For further information, please see Litigation Release No. 18887 (September 16, 2004).