Daniel R. Lehl, Robert Schlien, American Capital Network, Inc., Melvin L. Levine, William David Jones, and Philip M. Georgeson

SECURITIES ACT OF 1933
Rel. No. 8102 / May 17, 2002

SECURITIES EXCHANGE ACT OF 1934
Rel. No. 45955 / May 17, 2002

Admin. Proc. File No. 3-9201

In the Matter of

DANIEL R. LEHL,
ROBERT SCHLIEN,
AMERICAN CAPITAL NETWORK, INC.,
MELVIN L. LEVINE,
WILLIAM DAVID JONES, and
PHILIP M. GEORGESON

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ORDER IMPOSING REMEDIAL SANCTIONS

On the basis of the Commission's opinion issued this day, it is,

ORDERED, that Robert Schlien and American Capital Network, Inc. cease and desist from committing or causing any violation or future violation of Sections 17(a) and 17(b) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934, and Rule 10b-5 thereunder; and it is further

ORDERED, that Robert Schlien and American Capital Network, Inc., jointly and severally, disgorge $2,606,729, plus prejudgment interest calculated in accordance with Rule 600(b), 17 C.F.R. § 201.600(b), of the Commission's Rules of Practice, due from July 1, 1995 through the last day of the month preceding the month in which payment of disgorgement is made; and it is further

ORDERED, that Melvin L. Levine cease and desist from committing or causing any violation or future violation of Sections 17(a) and 17(b) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934, and Rule 10b-5 thereunder; and it is further

ORDERED, that Melvin L. Levine disgorge $79,350, plus prejudgment interest calculated in accordance with Rule 600(b), 17 C.F.R. § 201.600(b), of the Commission's Rules of Practice, due fromJuly 1, 1995 through the last day of the month preceding the month in which payment of disgorgement is made; and it is further

ORDERED, that William David Jones cease and desist from committing or causing any violation or future violation of Sections 17(a) and 17(b) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934, and Rule 10b-5 thereunder; and it is further

ORDERED, that William David Jones disgorge $1,951,500, plus prejudgment interest calculated in accordance with Rule 600(b), 17 C.F.R. § 201.600(b), of the Commission's Rules of Practice, due from July 1, 1995 through the last day of the month preceding the month in which payment of disgorgement is made; and it is further

ORDERED, that Philip M. Georgeson cease and desist from committing or causing any violation or future violation of Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934, and Rule 10b-5 thereunder; and it is further

ORDERED, that Philip M. Georgeson disgorge $273,572, plus prejudgment interest calculated in accordance with Rule 600(b), 17 C.F.R. § 201.600(b), of the Commission's Rules of Practice, due from July 1, 1995 through the last day of the month preceding the month in which payment of disgorgement is made; and it is further

ORDERED, that Daniel R. Lehl cease and desist from committing or causing any violation or future violation of Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934, and Rule 10b-5 thereunder; and it is further

ORDERED, that Daniel R. Lehl disgorge $241,167, plus prejudgment interest calculated in accordance with Rule 600(b), 17 C.F.R. § 201.600(b), of the Commission's Rules of Practice, due from October 1, 1994 through the last day of the month preceding the month in which payment of disgorgement is made; and it is further

ORDERED, that Daniel R. Lehl pay a civil penalty of $350,000; and it is further

ORDERED, that Daniel R. Lehl be, and he hereby is, barred from association with any broker, dealer, or member of a registered securities association or of a national stock exchange; and it is further

ORDERED, that payment of the amounts ordered herein shall be made within 30 days from the date of this Order by certified check, U.S. Postal money order, bank cashier's check, or bank money order payable to the Securities and Exchange Commission. The check and a cover letter identifying the respondent and the proceeding designation, Administrative Proceeding File No. 3-9201, should be mailed or delivered by hand to the Comptroller, Securities and Exchange Commission, Operations Center, 6432 General Green Way, Stop0-3, Alexandria, Virginia 22812. A copy of the cover letter should be sent to Robert M. Fusfield, Esquire, Securities and Exchange Commission, 1801 California Street, Suite 4800, Denver, Colorado 80202; and it is further

ORDERED, that the Division of Enforcement, in accordance with Rule 610, 17 C.F.R. § 201.610, of the Commission's Rules of Practice, shall submit a separate proposed disgorgement plan within 60 days of payment of the funds by each respondent.

By the Commission.

Jonathan G. Katz
Secretary

_______________________________

* Oral argument had been scheduled in this proceeding for May 8, 2002, but was waived by the respondents on May 6, 2002.
1 Sky Scientific, Inc., Initial Decision No. 137 (Mar. 5, 1999), 69 SEC Docket 945. Originally, eighteen respondents were charged in this proceeding. The proceeding has become final with respect to twelve respondents: Sky Scientific, Inc.; Walter Arlan Dorow, Jr.; Douglas A. Glaser; Thomas Patrick Meehan; Jerry L. Foster; Gilbert Marshall & Co., Inc.; Michael A. Usher; Strategic Resource Management, Inc.; William A. Moler; Smith, Benton & Hughes, Inc.; Michael Zaman; and George T. Hellen. Respondents Sky Scientific, Dorow and Glaser defaulted during the initial proceeding. See Sky Scientific, Inc., Securities Act Rel. No. 7474 (Nov. 7, 1997), 65 SEC Docket 2579 (entry of default order against Sky); Sky Scientific, Inc.,Securities Act Rel. No. 7471 (Oct. 22, 1997), 65 SEC Docket 2278 (entry of default order against Walter A. Dorow); Sky Scientific, Inc., Securities Act Rel. No. 7412 (Apr. 3, 1997), 64 SEC Docket 0575 (entry of default order against Douglas A. Glaser). Respondents Moler, Strategic Resources, Usher, Gilbert Marshall, and Meehan entered into settlements with the Commission. See Sky Scientific, Inc., Securities Act Rel. No. 7740 (Sept. 22, 1999), 70 SEC Docket 1801 (settlement as to William A. Moler and Strategic Resources Management, Inc.); Sky Scientific, Inc., Securities Act Rel. No. 7724 (Aug. 16, 1999), 70 SEC Docket 1050 (settlement as to Michael A. Usher and Gilbert Marshall & Co., Inc.); Thomas Patrick Meehan, Exchange Act Rel. No. 7435 (Aug. 18, 1997), 65 SEC Docket 0542 (settlement). Respondents Foster, Smith, Benton & Hughes, and Zaman did not appeal the initial decision. Jerry L. Foster, Exchange Act Rel. No. 41364 (May 4, 1999), 69 SEC Docket 2170 (notice that initial decision has become final as to Foster, Smith, Benton & Hughes, Inc., and Michael Zaman). Respondent Hellen defaulted during the appeal of this proceeding. George T. Hellen, Securities Act Rel. No. 7868 (June 15, 2000), 72 SEC Docket 1829 (entry of default and summary affirmance). Our findings here with respect to any former respondent are solely for purposes of this opinion.
2 15 U.S.C. § 77q(a).
3 15 U.S.C. § 78j(b).
4 17 C.F.R. § 240.10b-5.
5 15 U.S.C. §§ 77e(a), 77e(c).
6 15 U.S.C. § 77q(b).
7 The merged company retained the name Winners Circle until November 1993, when it changed its name to Sky Scientific, Inc.
8 Market capitalization is calculated by multiplying a corporation's "number of outstanding shares by the current market price of a share" in order to determine the value of the corporation. Barron's Dictionary of Finance and Investment Terms 349 (5th ed. 1998).
9 Sky's daily trading volume at the time of the merger rarely exceeded 4,000 shares and the high bid for its stock fluctuated between $.75 and $.82 per share.
10 In addition to obtaining from Sky copies of its press releases, the Division retrieved virtually verbatim copies from Dow Jones News Service and its Business Wire Service, a database service that publishes financial information worldwide.
11 Sky represented that it held mining rights located in either Nevada or California. These properties were commonly referred to by Sky as the Berry, Evergreen, Tallulah, Danner, and Bowerman mines. All of these properties were located on public property owned by the United States and were subject to the jurisdiction of both the United States Forest Service (management of public land) and the Bureau of Land Management ("BLM") (management of mineral estates).

In its annual report on Form 10-K for the period ended February 28, 1994, filed with the Commission on June 15, 1994, Sky disclosed that it would take one to three years for the Forest Service to complete a watershed assessment in order to approve a plan of operations allowing Sky to begin mining production at the Evergreen mine. Testimony at the hearing established that Sky would have to complete, at a minimum, environmental assessments for the Berry and Tallulah mines prior to engaging in production, and that this process would take at least one and possibly two to three years in order to obtain BLM approval. BLM had no record of Sky filing any of the necessary documents in order to engage in such production at the Berry, Tallulah, or Danner mines.

12 Sky's Form 10-KSB for its fiscal year ended February 28, 1995discloses that, because of safety regulation violations, all exploration at the Tallulah mine ceased in March 1994 -- a month prior to Sky's April 1994 press release claiming full-time operation at the mine. The 1995 Form 10-KSB further discloses that, due to a dispute with the "third party" that owned the milling equipment used at the Tallulah site, Sky subsequently lost the use of the equipment and had its lease of water rights canceled. These events were additional impediments to Sky's operation of the mine.
13 The evidence demonstrates that the Russian CDs were counterfeit. Moreover, an accountant testified that the terms of this transaction, whereby the Russian bank was to pay interest on the Russian CDs at 11.25% in return for preferred Sky stock bearing a coupon rate dividend of 4.25%, made no economic sense.
14 This auditor subsequently resigned, and Sky engaged yet another auditor, for a total of six within a two-year period.
15 In his investigative testimony, Schlien described himself as a financial advisor to individuals and companies on how to "grow" their businesses.
16 Schlien, ACN, and Sky entered into a series of additional "consulting agreements" and addenda expanding the scope of Schlien's and ACN's duties. Among other things, Schlien and ACN agreed to prepare "proofs of brochures, advertising materials and other literature" for dissemination through "appropriate informational channels and networks." The last addendum was executed by Sky and Schlien in February 1996.
17 Schlien, like most of the other respondents in this proceeding, asserted his right under the Fifth Amendment of the United States Constitution not to testify before the law judge. U.S. Const. amend. V (privilege against self-incrimination). As such, references to his testimony, as well as to the testimony of Levine, Jones, and Lehl, refer to the investigative testimony given by these respondents and admitted into evidence by the law judge.
18 As an example of a source for leads, Jones, without identifying the types of firms, stated that he would purchase lists of customers of firms that had gone out of business. These lists in turn became the "leads" that Jones sold through BBL.
19 Georgeson subsequently executed a consulting agreement with Sky for the express purpose of maximizing the dissemination of information about Sky to brokers and dealers and of preparing proofs of brochures, advertising materials and other literature.
20 Schlien's contributions came from ACN's bank account and securities accounts at Canaccord Capital Corporation controlled by Schlien.
21 The record demonstrates that the picture of the mine was a stock photo purchased from WSW's printer.
22 A copy of WSW sent by a salesperson directly to an investor bears the facsimile number of the executive suites where Schlien maintained his office.
23 A Form S-8 registration statement is used to register securities "offered pursuant to any employment benefit plan." See Fed. Sec. L. Rep. (CCH) ¶ 8141.

Georgeson did not meet or negotiate with anyone at Sky regarding his employment. He dealt exclusively with Schlien, who caused Sky to send to Georgeson a consulting contract which was executed in December 1994. Similarly, Levine testified that he never negotiated his compensation with Sky; rather, Schlien conducted such negotiations on Levine's behalf.

24 These "consultants" further testified that they did not negotiate their agreements with Sky. Rather, negotiations regarding compensation were conducted only with Levine and/or Schlien. Two consultants never spoke with anyone at Sky.
25 More than 28 million shares of Sky stock were sold through the Canaccord accounts and more than 8.5 million Sky shares were purchased through the Canaccord accounts.
26 See supra note 1.
27 Respondent Meehan (see supra note 1) was identified by numerous witnesses as having contacted brokers prior to Schlien selling discounted Sky stock.
28 In late 1994, Georgeson agreed with Schlien to expand Georgeson's promotional activities for the sale of Sky stock. To finance these activities, Schlien suggested that Georgeson be engaged as a Sky consultant and receive stock pursuant to Form S-8 registration statements. As part of this arrangement, Schlien told Georgeson that there was "no free ride" and that Georgeson couldn't "get something for nothing." Schlien instructed that Sky stock would be issued to Georgeson pursuant to Form S-8, that Georgeson was to liquidate the stock, open up separate bank accounts, wire the stock proceeds into these accounts, make cash withdrawals from each account in increments of less than $10,000, and give the cash to Schlien. Georgeson stated that he was told by Schlien that the reason for withdrawing the cash in less than $10,000 increments was to avoid cash reporting requirements under federal law. Georgeson confirmed that he also had these cash payment discussions with Jones.

Georgeson testified that he was uncomfortable with this arrangement and attempted to unwind a large stock distribution he received by sending $100,000 of proceeds back to Schlien. This constituted Georgeson's last dealing with Schlien.

29 At the time, Sky's revenue consisted of income from the wind-down of Winners Circle's clothing business and the sale of equipment used to embroider clothing.
30 Lehl's new operations for Gilbert Marshall remained at the same physical location as his Strategic branch office, with the same personnel.
31 At the time that Lehl left Gilbert Marshall in September, he sold his interest to Douglas Glaser, another original respondent in this proceeding. Glaser continued to run the branch through at least November 1994.
32 Pursuant to Section 17(a)(1), it is unlawful "to employ any device, scheme, or artifice to defraud." Section 17(a)(2) proscribes obtaining money or property by means of any untrue statement or omission of material fact. Section 17(a)(3) makes it illegal "to engage in any transaction, practice, or course of business which operates or would operate as a fraud or deceit upon" a securities purchaser.
33 At the hearing, Schlien, Levine, Jones, and Lehl, among others, refused to answer questions when called to testify. See supra note 17. Relying on Supreme Court precedent, the law judge concluded that it was permissible to draw adverse inferences from the refusal by these respondents to testify. See Baxter v. Palmigiano, 425 U.S. 308, 319 (1976); LiButti v. United States, 107 F.3d 110, 121 (2d Cir. 1997). Respondents object to this ruling. A trier of fact in a civil proceeding may draw adverse inferences from a respondent's refusal to testify. Baxter, supra. Accordingly, where appropriate, we draw such inferences. See, e.g., John Kilpatrick, 48 S.E.C. 481, 486 & n.18 (1986) ("In light of the evidence in the record, we deem it appropriate to draw such an [adverse] inference in connection with our findings of violation herein.").

Schlien, ACN, Levine, and Jones challenge the law judge's admission into evidence of only one transcript, investigative testimony given by Glaser. We have not relied upon Glaser's testimony in reaching our decision herein. However, since no respondent has challenged the use of investigative testimony other than Glaser's, we have used all other such testimony against all of the respondents.

34 Thus, although Schlien and the other Promoter Respondents arguethat Sky was responsible for disseminating false information, it is clear that the Promoter Respondents were actively involved in preparing the statements for which they now disclaim any responsibility.
35 See, e.g., Rubin v. Schottenstein, Zox & Dunn, 143 F.3d 263, 268 (6th Cir. 1998) (an attorney representing a seller in a securities transaction "assumes a duty to provide complete and nonmisleading information with respect to subjects on which he undertakes to speak"); Ackerman v. Schwartz, 947 F.2d 841, 846 (7th Cir. 1991) ("Federal law requires persons to tell the truth about material facts once they commence speaking, but with rare exceptions does not obligate them to start speaking.").
36 Levine further testified that he had an "arrangement" with Schlien whereby Schlien would obtain cash for Levine and "would take care of the stock," i.e., Schlien would convert Levine's Sky stock distributions into cash and remit the proceeds to Levine.
37 Although Jones testified during his first investigative interview that he worked with Schlien to generate leads, when Jones was asked during his second interview whether he collected or distributed leads generated specifically by WSW, he refused to answer and asserted his Fifth Amendment privilege against self-incrimination.
38 R.B. Webster Inv., Inc., 51 S.E.C. 1269, 1271 (1994) (citing Ernst & Ernst v. Hochfelder, 425 U.S. 185, 199 (1976); Pagel, Inc., 48 S.E.C. 223, 226 (1985), aff'd, 803 F.2d 942 (8th Cir. 1986)).
39 L.C. Wegard & Co., 53 S.E.C. 607, 613 (1998) (quoting Pagel, Inc., 48 S.E.C. 223, 226 (1985), aff'd, 803 F.2d 942 (8th Cir. 1986)), aff'd, 189 F.3d 461 (2d Cir. 1999) (Table).
40 Webster, 51 S.E.C. at 1271 (citations omitted).
41 SEC v. Kimmes, 799 F. Supp. 852, 859 (N.D. Ill. 1992), aff'd, 997 F.2d 287 (7th Cir. 1993).
42 15 U.S.C. § 77q(b).
43 SEC v. Liberty Capital Group, Inc., 75 F. Supp. 2d 1160, 1163 (D. W.D. Wash. 1999) ("plain meaning of Section 17(b) excludes an element of intent" to violate its terms).
44 United States v. Amick, 439 F.2d 351, 365 (7th Cir. 1971) (quoting H.R. Rep. No. 73-85, at 24 (1933)).
45 These respondents do not address the CFS newsletters.
46 These wire transfers represented proceeds from the liquidation of Sky stock.
47 WSW disclosed that "affiliates of the publisher may from time to time...receive compensation for the dissemination of information on the company."
48 Accord, SEC v. Liberty Capital Group, Inc., 75 F. Supp. 2d 1160, 1162 (W.D. Wash. 1999) (Securities Act Section 17(b) is violated "when the facts show that, in substance, there was a quid pro quo" for publisher providing publicity about a publicly-traded company).
49 See Amick, 439 F.2d at 364 (newsletter publication of information about a company without disclosing payment by the company constitutes willful violation of Section 17(b)).
50 The respondents also appeal the law judge's conclusion that each violated Securities Act Sections 5(a) and 5(c) by offering and selling Sky stock to the public without a registration statement filed or in effect as to the public sale of those securities. The respondents' contentions in this regard include objections that the relevant law was insufficiently clear and cite to various Commission precedent. Although we do not concur in respondents' contentions, we do not consider it necessary to affirm the law judge's conclusions regarding these violations and we will determine the public interest in imposing sanctions against each respondent based solely upon the other violations we have found.
51 Lehl further testified that the only other due diligence he performed consisted of obtaining from "a friend of a friend" an "independent mining report" purportedly showing that Sky had reserves at one or two of its mining locations. When asked for more detail about this report, Lehl was unable to identify the source of the report or any specific information, stating only that he did not "know exactly what type of report it was, but it was something separate from [Sky] and everything."
52 As noted in Section II.C. supra, by the time Sky filed its 1994 Form 10-K, Sky had been sued by the Bowerman mine owners for breach of contract. Sky disclosed in its 1994 Form 10-K that, for accounting purposes, it had rescinded its purchase of the Bowerman mines, and the transaction did not appear on Sky's balance sheet.
53 A comparison of many of Sky's press releases with its Commission filings during this period demonstrates inconsistencies that raise "red flags" regarding the accuracy of the disclosures. For example, a press release from April 1993 indicates that Sky had started production at the Starr-King mine and estimated gross revenue over the next 12-month period "in excess of $5 million." Sky's August 31, 1993 10-Q, however, reflects that Sky had generated no revenue from this mine as of that date. Similarly, the unaudited asset values disclosed by Sky in a June 24, 1993 press release are contradicted by the asset values disclosed in Sky's August 31, 1993 10-Q.

In this regard, we are persuaded by the testimony of Leslie Patten, a certified public accountant who testified as an expert witness in accounting, fraud examination, and business valuation, that the positive nature of Sky's press releases, when compared with the actual results reflected in Sky's financial statements, raised a red flag that "should have alerted the reader of the financial statements that more investigation and due diligence with respect to the company was warranted."

54 Cf., Feeney v. SEC, 564 F.2d 260, 262 (8th Cir. 1977) (registered securities dealer has "a direct obligation to the public to investigate the relative value of securities" and "to apprise the public of material facts respecting the value of such securities"; where representative makes representations about securities with "no adequate reason to believe such representations to be true," this violates Securities Act Section 17(a)); Hanly v. SEC, 415 F.2d 589, 597 (2d Cir. 1969) (representative violates Securities Act Section 17(a) by recommending a security without an adequate and reasonable basis for doing so). See also SEC v. Blavin, 760 F.2d 706, 711 (6th Cir. 1985) (investment adviser "acted recklessly by relying, without thorough investigation, upon the information that corporate representatives provided him.").
55 As discussed above, Lehl instructed a customer to ignore the auditor's qualified opinion.
56 See e.g., Meadows v. SEC, 119 F.3d 1219, 1226 (5th Cir. 1997) (respondent acted with scienter and violated antifraud securities laws by soliciting investors with materially false and misleading claims and failing to disclose material facts); Joseph J. Barbato, 53 S.E.C. 1259, 1274 (1999) ("Where a registered representative omits to disclose material information necessary to make his statements not misleading to customersabout an investment he is recommending, including known risk factors and negative information about the stock, the representative violates the antifraud provisions.").
57 SEC v. First City Fin. Corp., 890 F.2d 1215, 1230, 1232 n. 24 (D.C. Cir. 1989).
58 Id.
59 Id. at 1231 (citing Elkind v. Liggett & Myers, Inc., 635 F.2d 156, 171 (2d Cir. 1980)).
60 Id. at 1232 (citing CFTC v. British Am. Commodity Options Corp., 788 F.2d 92 (2d Cir. 1986)).
61 Schlien does not contest that the disgorgement amount represents a reasonable approximation of the funds that he and ACN received as a result of their involvement with Sky.
62 When questioned about what he did with records when he received them, Schlien stated "I usually throw them in the garbage" and "I don't keep anything."
63 Upon further questioning, Schlien stated that he could not remember why he shifted from consulting for Sky through ACN to consulting for Sky as an individual.
64 SEC v. Great Lakes Equities Co., 775 F. Supp. 211, 213 (E.D. Mich. 1991) (finding activities of an individual and his corporation "inextricably linked")(citing Bucyrus-Erie Co. v.General Products, 643 F.2d 413, 418 (6th Cir. 1981)), aff'd, 12 F.3d 214 (6th Cir. 1993) (Table).
65 SEC v. First Pacific Bancorp, 142 F.3d 1186, 1191 (9th Cir. 1998) (citing SEC v. Hughes Capital Corp., 124 F.3d 449, 455 (3d Cir. 1997); SEC v. First Jersey Sec., Inc., 101 F.3d 1450, 1475 (2d Cir. 1996); Hateley v. SEC, 8 F.3d 653, 656 (9th Cir. 1993)).
66 Schlien's history of securities law violations began in August 1989 when he entered into a settlement with the Commission barring him for an 18-month period, with a right thereafter to reapply, from association with any broker-dealer, municipal securities dealer, investment adviser, or investment company based on allegations of his willful violations of the antifraud provisions of the Securities Act and Exchange Act. Profile Invs. Corp., Exchange Act Rel. No. 27134 (Aug. 11, 1989), 44 SEC Docket 535. In February 1990, based on allegations of violations of antifraud and registration provisions of Florida securities laws, Schlien consented to a fine of $25,000 and a permanent bar from association with any state dealer or investment adviser or acting as an officer, director, owner, control person, affiliate or promoter for any dealer or investment adviser located or registered to do business in Florida. Profile Invs. Corp., Admin. Proc. No. 890-S-6/88 (Fla. Dep't Banking and Fin. Feb. 14, 1990). In August 1992, in an action initiated against Schlien, Jones, and others, the United States District Court for the District of Florida permanently enjoined Schlien from committing violations of the antifraud provisions of the Securities Act and Exchange Act. SEC v. Schlien, No. 90-227-CIV (S.D. Fla. Aug. 13, 1992). In September 1992, Schlien settled yet another Commission proceeding by agreeing to a bar from associating with any broker-dealer, municipal securities dealer, investment adviser, or investment company based on allegations of violations of the antifraud provisions of the securities laws. Robert Schlien, Exchange ActRel. No. 31147 (Sept. 3, 1992), 52 SEC Docket 1650. When asked about his lengthy disciplinary history, Schlien stated in his investigative testimony that he thought that he was a party to one Commission action in 1990 or 1989 but could not remember the results of that action.
67 See First City, 890 F.2d at 1231 ("disgorgement need only be a reasonable approximation of profits causally connected to the violation").
68 See SEC v. Lorin, 76 F.3d 458, 462 (2d Cir. 1996) (calculation of disgorgement lies within discretion of trial court and where calculation cannot be exact, burden shifts to wrongdoer todemonstrate error in amount); SEC v. Patel, 61 F.3d 137, 140 (2d Cir. 1995) ("risk of uncertainty [in calculating disgorgement] should fall on the wrongdoer whose illegal conduct created that uncertainty) (quoting First City Fin. Corp., 890 F.2d 1215, 1232 (D.C. Cir. 1989)).
69 Cf., e.g., Laborer's Pension Trust Fund v. Sidney Weinberger Homes, Inc., 872 F.2d 702 (6th Cir. 1988) (factors to be considered in determining whether to pierce corporate veilinclude undercapitalization of corporation, maintenance of separate books, separation of corporate and individual finances, use of corporation to support fraud or illegality, honoring of corporate formalities, and whether corporation is mere sham).
70 Jones was the signatory that authorized all of the transfers from BBL's account to himself or to "Sharon Jones." Of the $1,951,500 transferred from BBL's account, Jones transferred $1,845,500 to himself and $106,000 to Sharon Jones.
71 Jones' history of securities law violations began in April 1989, when the National Association of Securities Dealers, Inc. ("NASD") censured and fined Jones $1,000 for effecting an unauthorized transaction in a customer account. William David Jones, No. ATL-1020 (NASD Apr. 14, 1989). As a result, the State of Florida, in September 1989, imposed significant restrictions on Jones' business activities. William David Jones, Order No. 89.226.DOS (Fla. Dep't Banking and Fin. Sept. 22, 1989). In May 1993, Jones entered into a settlement with the Commission barring him for a two-year period from acting in a supervisory capacity based upon allegations of failure reasonably to supervise and violations of securities law antifraud provisions. David Jones, Exchange Act Rel. No. 32293 (May 11, 1993), 54 SEC Docket 142. In May 1998, Jones was criminally convicted in the United States District Court for the District of Nevada of conspiracy, securities fraud and wire fraud in connection with the sale of more than three million dollars in stock to unsuspecting investors. United States v. Cozzolino, No. CR-S-96-287-LDG(LRL) (D. Nev. May 14, 1998).

Although Jones argues that the law judge's consideration of Jones' prior violations is "misguided" because such violations relate to his activity as a broker, not a "leads" salesman, we find such argument to be without merit. It is entirelyappropriate to consider Jones' history of securities law violations in determining appropriate sanctions. See, e.g., Krull v. SEC, 248 F.3d 907, 915 & n.10 (9th Cir. 2001) (in determining an appropriate sanction, considering a respondent's disciplinary history is consistent with the Exchange Act's purpose to protect the public interest by insuring stability of the markets and integrity of representation by its participants).

72 In September 1989, Georgeson consented to an NASD censure and fine of $7,500. Philip M. Georgeson, No. DEN-879 (NASD Sept. 12, 1989). In July 1990, Georgeson consented to a Commission bar from association with any broker, dealer, investment adviser, investment company, municipal securities dealer or broker, or government securities dealer or broker, with a right to reapply in one year. Philip M. Georgeson, Exchange Act Rel. No. 28180 (July 5, 1990), 46 SEC Docket 1108. Simultaneously, Georgeson also consented to the entry by the United States District Court for the District of Columbia of a permanent injunction prohibiting Georgeson from violating Exchange Act Section 15(b), 15 U.S.C. § 78o. SEC v.Georgeson, Civ. Action No. 90-1563 (D. D.C. July 5, 1990).
73 Pursuant to Rule 410(c), 17 C.F.R. § 201.410(c), of the Commission's Rules of Practice, a petitioner seeking review of an initial decision claiming an inability to pay either disgorgement, interest, or a penalty shall file with the opening brief a sworn financial disclosure statement evidencing the respondent's financial ability.
74 Accord, Baxter v. Palmigiano, 425 U.S. 308, 320 (1976) ("permitting an adverse inference to be drawn from an inmate's silence at his disciplinary proceedings is not, on its face, an invalid practice").
75 We note that in Joseph Barbato, 53 S.E.C. 1259, 1280 n.30 (1997), we indicated that the "failure to assert an inability to pay disgorgement before the law judge can constitute a waiver precluding the Commission's consideration of inability to pay on appeal." The respondents in this case, although represented by the same counsel who also represented Barbato, did not raise their inability to pay defense with the law judge. Such failure further demonstrates that extending the time for the respondents to provide financial information is unwarranted.
76 15 U.S.C. § 78u-2.
77 New Allied Dev. Corp., 52 S.E.C. 1119, 1129-30 (1996). In determining the public interest, subsection (c) of Section 21B provides factors to be considered, including whether the act or omission upon which the penalty is based involved fraud, deceit, manipulation, or deliberate or reckless disregard of a regulatory requirement, the resulting harm to other persons, the extent to which any person was unjustly enriched, whether the person previously has been found to have violated securities laws or rules, and the need to deter the commission of such acts or omissions. Subsection (b) provides for three penalty levels or tiers, increasing in amount depending upon the egregiousness of the act or omission.
78 According to Lehl, the rule of lenity applies in a criminal context and requires that, where the wording of a statute is subject to two possible meanings, a court must apply a policy of lenity and adopt the less harsh meaning.
79 522 U.S. 93 (1997). Lehl claims that his penalty is akin to a criminal penalty within the purview of the Double Jeopardy Clause of the United States Constitution.
80 Hudson, 522 U.S. at 100 (quoting United States v. Ward, 448 U.S. 242, 249 (1980)).
81 Id. at 104.
82 See Lehl v. SEC 90 F.3d 1483 (10th Cir. 1996) (affirming Commission's decision upholding imposition of sanctions by the NASD against Lehl); see also Daniel R. Lehl, No. C3A950072(National Ass'n Sec. Dealers Regulation, Inc. Nov. 14, 1996) (censure and fine in connection with the practices Lehl used in selling Sky's stock).
83 In determining to order a bar against Lehl, we apply the factors cited by the court in Steadman v. SEC, 603 F.2d 1126, 1140 (5th Cir. 1979), aff'd, 450 U.S. 91 (1980).
84 Although Lehl has not raised this issue, the Division, in its reply brief, expressly requested that the bar imposed by the law judge against Lehl be modified. In light of the decision in Teicher v. SEC, 177 F.3d 1016, 1021-22 (D.C. Cir. 1999), cert. denied, 529 U.S. 1003 (2000), we impose a bar on Lehl more narrow in scope than that imposed by the law judge.
85 We have considered all of the parties' contentions. We have rejected or sustained these contentions to the extent that they are inconsistent or in accord with the views expressed in this opinion.