In the Matter of Mark G. Meyer
On August 11, the Commission issued an Order Instituting Administrative Proceedings Pursuant to Section 15(b) of the Securities Exchange Act of 1934, Making Findings, and Imposing Remedial Sanctions (Order) against Mark G. Meyer (Meyer). The Order finds that on July 28, 2008, an order of permanent injunction was entered by consent against Meyer, permanently enjoining him from future violations of Sections 5(a), 5(c) and 17(a) of the Securities Act of 1933, Section 10(b) of the Exchange Act of 1934 and Rules 10b-5 and 10b-10 thereunder and from aiding and abetting violations of Exchange Act Rule 10b-10, in the civil action entitled SEC v. Michael E. Kelly, et al., Civil Action Number 07-cv-4979, in the United States District Court for the Northern District of Illinois. The Commission's complaint alleged that Meyer and his business, Mark Meyer & Associates, Inc, participated in a massive fraud orchestrated by Michael E. Kelly that victimized thousands of investors across the United States by raising at least $428 million through the offer and sale of fraudulent and unregistered securities called Universal Leases. Universal Leases were securities in the form of investment contracts that were structured as timeshares in several hotels in Cancun, Mexico, coupled with pre-arranged servicing agreements with a purportedly independent leasing agent that promised investors a safe investment and guaranteed returns. The complaint alleged that Meyer offered and sold Universal Leases to investors and recruited others to do so. The complaint further alleged, among other things, that Meyer made false and misleading statements about the safety of the Universal Leases and about the purportedly independent leasing agent, and also failed to make required disclosures about the commissions he was being paid for his Universal Lease sales.
Based on the above, the Order bars Meyer from association with any broker or dealer. Meyer consented to the issuance of the Order without admitting or denying any of the findings in the Order except as to the entry of the order of permanent injunction against him. (Rel. 34-58339; File No. 3-13126)
Court Permanently Enjoins Cedar Park, Texas Resident Warren Todd Chambers and His Company Century Estate Planning, Inc. from Violating Certain Antifraud and Registration Provisions
The Commission announced that on Aug. 6, 2008, Judge Elaine Bucklo of the United States District Court for the Northern District of Illinois entered an order permanently enjoining Warren Todd Chambers (Chambers) of Cedar Park, Texas and Century Estate Planning, Inc. (Century Estate Planning), Chambers' business, from violating certain of the antifraud and registration provisions of the federal securities laws. The order, entered with Chambers and Century Estate Planning's consent, permanently enjoins them from violating Sections 5(a), 5(c) and 17(a) of the Securities Act of 1933, Sections 10(b) and 15(a) of the Securities Exchange Act of 1934, and Rules 10b-5 and 10b-10 promulgated thereunder, and enjoins Chambers from aiding and abetting violations of Rule 10b-10 of the Exchange Act.
The SEC's complaint in this matter charges that Michael E. Kelly and 25 other defendants, including Chambers and Century Estate Planning, participated in a massive fraud on U.S. investors that involved the offer and sale of securities in the form of Universal Lease investments. Universal Leases were structured as timeshares in several hotels in Cancun, Mexico, coupled with a pre-arranged rental agreement that promised investors a high, fixed rate of return. The SEC's complaint alleges that from 1999 until 2005, Kelly and others, including Chambers and Century Estate Planning, raised at least $428 million through the Universal Lease scheme from investors throughout the United States, with more than $136 million of the funds invested coming from IRA accounts. The SEC further alleges that a nationwide network of unregistered salespeople who sold the Universal Leases, including Chambers and Century Estate Planning, collected undisclosed commissions totaling more than $72 million. The SEC also alleges that Kelly and others ran the scheme from Cancun, Mexico, through a number of foreign entities in Mexico and Panama. According to the SEC's complaint, Kelly and others told investors that Universal Leases would generate guaranteed income through the leasing of investor timeshares by a large, independent leasing agent. In fact, the complaint alleges the leasing agent was a small Panamanian travel agency controlled by Kelly and for most of the scheme its payments to investors came from accounts funded by money raised from new investors. Further, the complaint alleges that Kelly and others, including Chambers and Century Estate Planning, failed to disclose key facts about the Universal Lease investments, including the risks of the investments and that more than $72 million in investor funds were used to pay commissions as high as 27% to the selling brokers. The SEC continues to pursue its claims against Chambers and Century Estate Planning for disgorgement and civil penalties. The SEC's action against the remaining defendants is also pending.
For additional information, see Litigation Release Nos. 20267 (Sept. 5, 2007), 20573 (May 14, 2008), 20578 (May 15, 2008), 20579 (May 15, 2008) and 20664 (July 31, 2008) [SEC v. Michael E. Kelly, et al., Civil Action No. 07-cv-4979 (N.D. Ill.)] (LR-20679)
SEC Resolves Sun Communications Litigation
The Commission announced that it has resolved its litigation against certain officers and employees of Sun Communities, Inc., a publicly-traded company headquartered in Michigan which owns and operates manufactured housing and mobile home communities. Without admitting or denying the findings therein, Sun's former Chief Financial Officer, Jeffrey P. Jorissen, consented to an administrative order suspending him from appearing or practicing before the Commission as an accountant with a right to apply for reinstatement after two years. Without admitting or denying the allegations of the Commission's complaint, which was filed in the United States District Court for the Eastern District of Michigan, Jorissen consented to the entry of a final judgment enjoining him from violations of Rule 13b2-1 of Securities Exchange Act of 1934 and from aiding and abetting violations of Section 13(a), 13(b)(2)(A) and 13(b)(2)(B) of the Exchange Act and Rules 12b-20, 13a-1 and 13a-13 thereunder and imposing a civil penalty of $25,000. The SEC agreed to dismiss its claims against the company's Chief Executive Officer, Gary A. Shiffman, and former Controller, Mary A. Petrella. For more information, see LR-19580 (Feb. 27, 2006) and LR-20680 (August 12, 2008). [SEC v. Jeffrey P. Jorissen, Gary A. Shiffman and Mary A. Petrella, Civil Action No. 2:06-CV-10845 (E.D. Mich. filed Feb. 27, 2006) (Feikens, J.)] (LR-20680; AAE Rel. 2861); Administrative Proceeding - (Rel. 34-58348; AAE Rel. 2862; File No. 3-13127)
SEC Files Suit Against David B. Stocker Alleging Corporate Identity Theft
On August 11, the Commission filed a civil complaint against David B. Stocker, a Phoenix, Arizona attorney, and his wholly-owned corporation, Carrera Capital, Inc. The Commission's complaint alleges that Stocker perpetrated multiple instances of corporate identity theft. Beginning in early 2006, Stocker allegedly found several public companies that had become defunct corporations. Stocker then allegedly caused stock in the old companies to be exchanged for stock in the new companies under the false pretense that the old company was undergoing a reverse stock split. Stocker thereafter allegedly caused the new companies to issue large blocks of stock to Carrera Capital, Inc., or to other persons. Through this scheme, Stocker was allegedly able to gain control of public shells, which he then sold for cash.
The Commission alleges that Stocker violated Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and that both defendants violated Sections 5(a) and (c) of the Securities Act. The Commission's complaint seeks permanent injunctions, orders to provide an accounting, disgorgement plus prejudgment interest, third tier civil penalties, and penny stock bars against each defendant. [SEC v. David B. Stocker and Carrera Capital, Inc., Civil Action No. 2:08-CV-01475 D. Arizona] (LR-20681)
SEC v. Kay Services, LLC, et al.
The Commission announced today that it filed a civil injunctive action against Kay Services, LLC, and its sole owner and officer, Marcia Sladich, alleging that they orchestrated a Ponzi scheme raising more than $10 million from at least 1,000 victims, many of whom were members of the Family Federation for World Peace, formerly known as the Unification Church.
The complaint alleges that Sladich repeatedly told investors that their money would be invested in domestic and international real estate that would generate substantial returns. Indeed, Sladich promised investors 50-100% guaranteed return on their investment in one year. She also promised investors additional payments for every investor they referred.
Sladich's representations to investors were simply false. Throughout the scheme, Kay Services had no revenue-generating business or assets. Instead of investing in real estate, Sladich used investor money: (1) to pay Kay Services' obligations to existing investors; (2) to pay Sladich's personal expenses; and (3) to purchase real property and other assets for Sladich and her relatives. Sladich never disclosed any of these facts to investors.
The complaint charges the defendants with violating Sections 5(a), 5(c) and 17(a) of the Securities Act of 1933, and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. In its enforcement action, the Commission is seeking an order permanently enjoining the defendants from committing future violations of the foregoing federal securities laws and a final judgment ordering the individual defendants to disgorge their ill-gotten gains and to pay civil penalties. [SEC v. Kay Services, LLC, et al., Civil Action No. 08-Civ-4016 (SDW) (D.N.J.)] (LR-20682)
Proposed Rule Changes
A proposed rule change (SR-NYSE-2008-74) was filed by the New York Stock Exchange to enable the Exchange to waive annual listing fees for securities transferring from the Amex or NYSE Arca, pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934. Publication is expected in the Federal Register during the week of August 11. (Rel. 34-58311)
NYSE Arca, through its wholly owned subsidiary, NYSE Arca Equities, Inc., filed a proposed rule change (SR-NYSEArca-2008-51) and Amendment No. 1 thereto pursuant to Rule 19b-4 under the Securities Exchange Act of 1934 to adopt generic listing and trading rules for Commodity Based Trust Shares, Currency Trust Shares and Commodity Index Trust Shares. Publication is expected in the Federal Register during the week of August 11. (Rel. 34-58332)
The Commission issued notice of a proposed rule change (SR-FINRA-2008-032) submitted by the Financial Industry Regulatory Authority, pursuant to Rule 19b-4 under the Securities Exchange Act of 1934, to adopt FINRA Rules 2350 through 2359 (regarding trading in index warrants, currency index warrants, and currency warrants), FINRA Rule 2360 (options), and FINRA Rule 2370 (security futures) in the Consolidated FINRA Rulebook. Publication is expected in the Federal Register during the week of August 11. (Rel. 34-58333)
Immediate Effectiveness of Proposed Rule Changes
A proposed rule change filed by Chicago Board Options Exchange to amend its rules related to the Hybrid Agency Liaison and the Complex Order RFQ Auction (SR-CBOE-2008-82) has become effective pursuant to Section 19(b)(3)(A) of the Securities Exchange Act of 1934. Publication is expected in the Federal Register during the week of August 11. (Rel. 34-58326)
A proposed rule change filed by the Philadelphia Stock Exchange relating to changes in its equity option fees (SR-Phlx-2008-59) has become effective under Section 19(b)(3)(A) of the Securities Exchange Act of 1934. Publication is expected in the Federal Register during the week of August 11. (Rel. 34-58334)
Accelerated Approval of Proposed Rule Change
The Commission published notice of filing of Amendment No. 2 and granted accelerated approval to a proposed rule change (SR-CBOE-2008-09), as modified by Amendment No. 2 thereto, submitted by Chicago Board Options Exchange pursuant to Rule 19b-4 under the Securities Exchange Act of 1934 relating to voluntary professional designation. Publication is expected in the Federal Register during the week of August 11. (Rel. 34-58327)
Approval of Proposed Rule Change
The Commission approved a proposed rule change (SR-FINRA-2008-016), submitted under Section 19(b)(1) of the Securities Exchange Act of 1934, by the Financial Industry Regulatory Authority to align the reporting requirements and dissemination protocols for OTC equity transactions involving foreign securities with all other OTC Equity Securities. Publication is expected in the Federal Register during the week of August 11. (Rel. 34-58331)
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