SEC NEWS DIGEST Issue 2003-171 September 5, 2003 ENFORCEMENT PROCEEDINGS SEC INSTITUTES SETTLED CEASE-AND-DESIST PROCEEDINGS AGAINST WILLIAM FRANKLIN On September 4, the Commission instituted settled cease-and-desist proceedings against William L. Franklin, a former officer and director of Wulf International Ltd. (WIL). In the Order, the Commission found that, between January and June 2001, Franklin made false and misleading statements in four press releases concerning: (1) WIL's receipt of financing commitments for low-income housing projects in the Philippines and Pakistan; (2) its receipt of approval from the Philippines government for one such housing project; and (3) related earnings projections. The Commission found that Franklin violated Section 10(b) of the Securities Exchange Act of 1934 (Exchange Act) and Rule 10b-5 thereunder and ordered that Franklin cease and desist from committing or causing any violations and any future violations of those provisions. (Rel. 34- 48440; File No. 3-11243) SEC INSTITUTES SETTLED CEASE-AND-DESIST PROCEEDINGS AGAINST MALIK FIROZE On September 4, the Commission instituted settled cease-and-desist proceedings against Malik Firoze, a former officer and director of Wulf International Ltd. (WIL). In the Order, the Commission found that, between January 2001 and January 2002, Firoze made false and misleading statements in five press releases concerning: (1) WIL's receipt of financing commitments for low-income housing projects in the Philippines and Pakistan; (2) its receipt of approval from the Philippines government for one such housing project; and (3) related earnings projections. The Commission found that Firoze violated Section 10(b) of the Securities Exchange Act of 1934 (Exchange Act) and Rule 10b-5 thereunder and ordered that Firoze cease and desist from committing or causing any violations and any future violations of those provisions. (Rel. 34- 48441; File No. 3-11244) COMMISSION DECLARES DECISION AS TO MAYER DALLAL FINAL The decision of an administrative law judge with respect to Dallal Mayer has become final. Dallal was associated with J. W. Barclay & Co., Inc., a registered broker and dealer. The law judge sanctioned Dallal based on findings that Dallal willfully violated Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934, and Exchange Act Rule 10b-5. The law judge found that Dallal engaged in unauthorized trading, unsuitable trading and churning in the accounts of three customers. The law judge ordered that Dallal cease and desist from committing or causing any violations or any future violations of the provisions that Dallal violated. The law judge also barred Dallal from association with any broker or dealer, and ordered him to pay disgorgement in the amount of $93,119, plus prejudgment interest of $47,592.75, post-judgment interest on all funds owed, and a civil penalty of $30,000. (Rels. 33- 8279; 34-48443; File No. 3-10765) SEC BARS RAYMOND MOHR FROM ASSOCIATING WITH ANY BROKER, DEALER OR INVESTMENT ADVISER On September 4, the Commission issued an order which bars Raymond C. Mohr, an unregistered Pennsylvania investment adviser, from associating with any broker, dealer or investment adviser. The Order Instituting Administrative Proceedings Pursuant to Section 15(b) of the Securities Exchange Act of 1934 and Section 203(f) of the Investment Advisers Act of 1940, Making Findings, and Imposing Remedial Sanctions, which is in accord with Mohr's Offer of Settlement in this matter, is based upon Mohr's willful violations of the federal securities laws, as well as the entry of an injunction by the U.S. District Court for the Eastern District of Pennsylvania on August 13, 2003. The final judgment in that civil action, entitled SEC v. Raymond C. Mohr, Civil Action No. 03-CV- 4540 (CG)(E.D.Pa.), enjoined Mohr from future violations 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 Sections 206(1) and 206(2) of the Investment Advisers Act of 1940. See Litigation Release No. 18273 (August 6, 2003). The Commission's complaint in the civil action alleged that, from at least June 1993 until the Fall of 2001, Mohr knowingly engaged in a ponzi scheme in which he obtained approximately $9.6 million from 87 investors. As detailed in the complaint, Mohr misappropriated the funds for his personal use and to fund payments of principal and purported profits to clients who had invested at earlier points in time. Over the course of the eight years during which Mohr operated the Ponzi scheme, Mohr paid approximately $7.9 million in principal and purported profits to investors and used the remaining $1.7 million for his own personal use. Ultimately, Mohr's fraudulent scheme resulted in client losses of approximately $3.1 million. (Rel. 34-48445; IA-2167; File No. 3-11245) ADMINISTRATIVE AND CEASE-AND-DESIST PROCEEDINGS INSTITUTED AGAINST JON PATRICK PIERCE, GARY WINN, AND FOUR COMPANIES On September 4, the Commission instituted public administrative and cease-and-desist proceedings against Jon Patrick Pierce, Gary L. Winn, and four companies based in Omaha, Nebraska. Pierce controls three of the companies, including a registered broker-dealer, Freedom Financial, Inc., and two holding companies, Freedom Track, Inc. and Freedom Financial Group, Inc. Winn is president of the fourth company, Associated Investment Management, Inc., a state-registered investment adviser formerly registered with the Commission, and Pierce is the former president of AIM. The Division of Enforcement alleges that the respondents perpetrated two fraudulent schemes. In the first scheme, Pierce and the companies he controls made false and misleading statements in two stock offerings. The statements concerned the completeness and usefulness of software that the companies were exploiting and the financial condition of the companies. In the second scheme, AIM through Pierce and Winn fraudulently induced clients to sign up for a program that purported to guarantee that clients could invest in mutual funds without losing money. An insurance policy purportedly backed the guarantee, but AIM failed to disclose that it was not complying with terms of the policy, which ultimately caused the policy to be canceled. A hearing will be scheduled before an administrative law judge to determine whether the allegations contained in the Order are true, to provide Freedom Financial, Freedom Track, FFG, AIM, Pierce, and Winn an opportunity to dispute these allegations, and to determine what sanctions, if any, are appropriate and in the public interest. (Rels. 33-8280; 34-48446; IA-2168; File No. 3-11246) COMMISSION INSTITUTES ADMINISTRATIVE AND CEASE-AND-DESIST PROCEEDINGS AGAINST CEO OF TOYMAKER AND A NEW JERSEY STOCK PROMOTER FOR ENGAGING IN ONGOING PUMP AND DUMP SCHEME On September 5, the Commission instituted public administrative and cease-and-desist proceedings, pursuant to Section 8A of the Securities Act of 1933 (Securities Act) and Sections 15(b) and 21C of the Securities Exchange Act of 1934 (Exchange Act), against Steven Wise (Wise), the Chief Executive Officer and sole director of Marx Toys & Entertainment Corp. (MRXT), a Sebring, Ohio, penny stock issuer, and Larry Vindman (Vindman), a New Jersey stock promoter. In the Order Instituting Proceedings, the Division of Enforcement (Division) alleges that, from in or about August 2003 through the present, Wise and Vindman have engaged in fraudulent and manipulative practices to inflate artificially the demand for, and the share price of, MRXT common stock so that they, as well as associates of them who hold MRXT common stock, can profit by selling their own shares of MRXT stock at inflated prices. The Division further alleges that, as part of this conduct, Wise and Vindman offered to pay-and in fact did pay-two registered representatives of a New York registered broker-dealer a kickback, consisting of 100,000 purportedly free trading shares of MRXT common stock, to induce the registered representatives to make a market in MRXT common stock and solicit their brokerage clients to purchase and hold shares of MRXT common stock at inflated prices. The Division also alleges that Wise and Vindman offered further kickbacks to the two registered representatives dependent upon the registered representatives selling certain specified quantities of MRXT shares to their brokerage customers, while knowing or recklessly disregarding the fact that the kickbacks that they paid to the two registered representatives would not be disclosed to the registered representatives' brokerage customers. The Division alleges that Wise and Vindman also engaged in other conduct to manipulate the demand for, and share price of, MRXT common stock, including paying undisclosed kickbacks to registered representatives of at least one other registered broker-dealer as compensation for those registered representatives selling shares of MRXT common stock to their retail customers. While Vindman and Wise were engaged in this conduct, MRXT filed, on August 29, 2003, a Form S-8, registering 8,000,000 shares of common stock issuable under its 1998 Incentive and Non-qualified Stock Option Plan. The Order alleges that Respondents willfully violated, and committed or caused the 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. A hearing will be scheduled before an administrative law judge to determine whether the allegations contained in the Order Instituting Proceedings are true, to provide Respondents an opportunity to dispute these allegations, and to determine what, if any, remedial sanctions should be imposed against Respondents. (Rels. 33-8281; 34-48451; File No. 3-11247) SEC CHARGES MOHAMAD ELZEIN, HUSSEIN EL ZEIN AND DARIN KNEE WITH CONDUCTING A FRAUDULENT, UNREGISTERED OFFERING OF SECURITIES The Commission announced that on September 2 it filed a complaint in the U.S. District Court for the District of South Carolina against Mohamad Elzein, individually and d/b/a/ Focus Mentors Elzein Management; Hussein El Zein; and Darin Knee. The complaint alleges that from approximately July through October 2001, the defendants raised approximately $541,000 from investors in a fraudulent, unregistered offering of securities. At the time of the conduct alleged in the complaint, Mohamad Elzein and Hussein El Zein were residents of Columbia, South Carolina. Knee is a resident of Winter Park, Florida. The Commission's complaint alleges that the defendants offered and sold securities to investors in the form of investment contracts. According to the complaint, no registration statement was filed with the Commission in connection with the offers and sales, and no exemption from registration exists. The complaint alleges that the offering documents used, variously, all of the following names in describing the entity that was sponsoring the investment: Focus Mentors Elzein Management, FMEM and FMEM International, Inc. (collectively referred to as "Focus Mentors"), as well as FEME Focus Enterprises, Inc. According to the complaint, the defendants made materially false and misleading statements and omissions in connection with the offers and sales of the investment contracts including, among other things, false historical returns, and promised returns without a reasonable basis therefore. Also, according to the complaint, the private placement memorandum utilized by the defendants falsely stated that Focus Mentors was fully insured by Allstate Insurance Company, such that the assets of Focus Mentors were protected in the unlikely case that Focus Mentors or its executives were to declare bankruptcy. The complaint further alleges that the private placement memorandum falsely stated that each client's principal investment was protected in the case of acts of dishonesty. According to the complaint, these statements were false because Focus Mentors did not have such insurance. The complaint also alleges that Knee promoted Focus Mentors on his MoneyJoe.com website and in his related electronic newsletter called "Insiders Club." Among other things, the complaint alleges that Knee's website described Focus Mentors as a "secure opportunity" with "107% plus principal guaranteed" even though Knee had no reasonable basis for such statements. The complaint also alleges that in some of newsletters, Knee referred to investments in Focus Mentors as a "zero risk opportunity." In other newsletters, according to the complaint, Knee falsely stated that Focus Mentors investors were guaranteed the same security that they could find at a bank. The complaint alleges that by their conduct, the defendants violated 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. The Commission seeks, with respect to each defendant, permanent injunctions, accountings, disgorgement, prejudgment interest and civil penalties. [SEC v. Mohamad Wael Ibrahim Elzein, individually and d/b/a Focus Mentors Elzein Management; Hussein Hassan El Zein; and Darin Raymond Knee, Civil Action File No. 3:03-2843-10, D. S.C.] (LR-18324) INVESTMENT COMPANY ACT RELEASES THE MATRIX CAPITAL GROUP, INC., ET AL. A notice has been issued giving interested persons until September 29 to request a hearing on an application filed by Matrix Capital Group, et al., for an order under Section 6(c) of the Investment Company Act for an exemption from sections 12(d)(1)(A), (B), and (C) of the Act and under sections 6(c) and 17(b) of the Act for an exemption from section 17(a) of the Act. The order would permit certain registered unit investment trusts to acquire shares of registered management investment companies and unit investment trusts both within and outside the same group of investment companies. (Rel. IC-26173 - September 4) SELF-REGULATORY ORGANIZATIONS IMMEDIATE EFFECTIVENESS OF PROPOSED RULE CHANGE A proposed rule change (SR-Phlx-2003-52) filed by the Philadelphia Stock Exchange amending Phlx Rule 1080, Commentary .07, has become effective under Section 19(b)(3)(A) of the Securities Exchange Act of 1934. Publication of the proposal is expected in the Federal Register during the week of September 8. (Rel. 34-48430) PROPOSED RULE CHANGE The Commission issued a notice of filing of a proposed rule change (SR- NYSE-2003-23) by the New York Stock Exchange. The proposed rule change repeals NYSE Rule 500 and amends Section 806 of the NYSE Listed Company Manual regarding delisting of securities from the NYSE. Publication of the notice in the Federal Register is expected during the week of September 8. (Rel. 34-48435) SECURITIES ACT REGISTRATIONS The following registration statements have been filed with the SEC under the Securities Act of 1933. The reported information appears as follows: Form, Name, Address and Phone Number (if available) of the issuer of the security; Title and the number and/or face amount of the securities being offered; Name of the managing underwriter or depositor (if applicable); File number and date filed; Assigned Branch; and a designation if the statement is a New Issue. Registration statements may be obtained in person or by writing to the Commission's Public Reference Branch at 450 Fifth Street, N.W., Washington, D.C. 20549 or at the following e-mail box address: . In most cases, this information is also available on the Commission's website: . S-8 AEGIS ASSESSMENTS INC, 4100 NEWPORT PLACE, SUITE 660, NEWPORT BEACH, CA, 92660, 877.718.7599 - 2,101,125 ($3,151,687.50) Equity, (File 333-108487 - Sep. 4) (BR. 09) S-8 RIVAL TECHNOLOGIES INC, 625 WEST KENT, SUITE 300, VANCOUVER BC CANADA V6G 36P, A1, 00000, 6043230090 - 1,061,000 ($307,690.00) Equity, (File 333-108488 - Sep. 4) (BR. 06) S-8 PATRIOT SCIENTIFIC CORP, 10989 VIA FRONTERA, SAN DIEGO, CA, 92127, 8586745000 - 6,000,000 ($258,000.00) Equity, (File 333-108489 - Sep. 4) (BR. 37) S-3 MESA AIR GROUP INC, 410 NORTH 44TH STREET, SUITE 700, PHOENIX, AZ, 85008, 6026854000 - 129,935 ($1,396,801.25) Equity, 252,000,000 ($252,000,000.00) Non-Convertible Debt, (File 333-108490 - Sep. 4) (BR. 05) S-8 J JILL GROUP INC, 4 BATTERYMARCH PARK, STE 200, QUINCY, MA, 02169, 7817402718 - 0 ($15,485,000.00) Equity, (File 333-108494 - Sep. 4) (BR. 02) S-8 LMIC INC, 135 WEST 50TH STREET, SUITE 1700, NEW YORK, NY, 10020, 9156821761 - 2,250,000 ($5,850,000.00) Equity, (File 333-108495 - Sep. 4) (BR. 05) S-8 BRIGHTPOINT INC, 501 AIRTECH PARKWAY, PLAINFIELD, IN, 46168, 317-707-2520 - 0 ($14,301,000.00) Equity, (File 333-108496 - Sep. 4) (BR. 36) S-8 VTEX ENERGY INC, 8303 SOUTHWEST FREEWAY, SUITE 950, HOUSTON, TX, 77074, 713-773-3284 - 300,000 ($168,000.00) Equity, (File 333-108499 - Sep. 4) (BR. 04) S-8 TRIARC COMPANIES INC, 280 PARK AVENUE, 24TH FLOOR, NEW YORK, NY, 10017, 212-451-3000 - 9,949,914 ($102,285,116.00) Equity, (File 333-108500 - Sep. 4) (BR. 04) S-3 ECOLLEGE COM, 4900 SOUTH MONACO STREET, DENVER, CO, 80237, 3038737400 - 0 ($37,642,000.00) Equity, (File 333-108501 - Sep. 4) (BR. 08) S-8 KOSAN BIOSCIENCES INC, 3832 BAY CENTER PLACE, HAYWARD, CA, 94545, 5107328400 - 0 ($5,518,500.00) Equity, (File 333-108502 - Sep. 4) (BR. 01) S-3 LEHMAN ABS CORP, LEHMAN ABS CORP, 3 WORLD FINANCIAL CENTER, NEW YORK, NY, 10285, 2125267000 - 1,000,000 ($1,000,000.00) Asset-Backed Securities, (File 333-108503 - Sep. 4) (BR. 05) S-8 ARETE INDUSTRIES INC, 7102 LA VISTA PLACE, STE 100, NIWOT, CO, 80503, 3036523113 - 40,000,000 ($520,000.00) Equity, (File 333-108504 - Sep. 4) (BR. 02) S-8 BORLAND SOFTWARE CORP, 100 ENTERPRISE WAY, SCOTTS VALLEY, CA, 95066-3249, 8314311000 - 3,400,000 ($34,374,000.00) Equity, (File 333-108505 - Sep. 4) (BR. 03) S-3 LONG BEACH ACCEPTANCE CORP, ONE MACK CENTRE DR., PARAMUS, NJ, 07652, 2012625222 - 0 ($1,292,830,655.00) Equity, (File 333-108506 - Sep. 4) (BR. 07) S-8 SYNOPSYS INC, 700 E MIDDLEFIELD RD, MOUNTAIN VIEW, CA, 94043-4033, 6509625000 - 1,800,000 ($122,724,000.00) Equity, (File 333-108507 - Sep. 4) (BR. 03) S-8 FOODARAMA SUPERMARKETS INC, 922 HIGHWAY 33, BLDG 6, FREEHOLD, NJ, 07728, 7324624700 - 65,000 ($28.10) Equity, (File 333-108508 - Sep. 4) (BR. 02) S-8 JOURNAL CO, 333 WEST STATE STREET, MILWAUKEE, WI, 83203, 3,000,000 ($46,500,000.00) Equity, (File 333-108509 - Sep. 4) (BR. 05) S-8 KOOR INDUSTRIES LTD, 14 HAMELACHA STREET, PARK AFEK, ROSH HA AYIN, L3, 1,200,000 ($25,860,000.00) Equity, (File 333-108510 - Sep. 4) (BR. 37) S-8 SMITHFIELD FOODS INC, 200 COMMERCE STREET, EXECUTIVE OFFICE BUILDING, SMITHFIELD, VA, 23430, 7573653000 - 0 ($119,820,000.00) Equity, (File 333-108511 - Sep. 4) (BR. 04) S-8 AMERICAS SENIOR FINANCIAL SERVICES INC, 1071 EAST INDIAN TOWN ROAD, JUPITER, FL, 33411, 5616562322 - 1,000,000 ($210,000.00) Unallocated (Universal) Shelf, (File 333-108512 - Sep. 4) (BR. 07) S-3 PENWEST PHARMACEUTICALS CO, 39 OLD RIDGEBURY ROAD, SUITE 11, DANBURY, CT, 06810-5120, 877-736-9378 - 0 ($65,934,069.00) Equity, (File 333-108513 - Sep. 4) (BR. 01) S-8 BIOJECT MEDICAL TECHNOLOGIES INC, 7620 S W BRIDGEPORT RD, PORTLAND, OR, 97224, 5036397221 - 0 ($5,700,000.00) Equity, (File 333-108514 - Sep. 4) (BR. 36) S-4 DISTRIBUTED ENERGY SYSTEMS CORP, 10 TECHNOLOGY DR, WALLINGFORD, CT, 06492, 2036782000 - 0 ($86,573,069.00) Equity, (File 333-108515 - Sep. 4) (BR. ) S-4 RANGE RESOURCES CORP, 777 MAIN STREET, FT WORTH, TX, 76102, 817-870-2601 - 0 ($100,000,000.00) Non-Convertible Debt, (File 333-108516 - Sep. 4) (BR. 04) S-1 IVIDEONOW INC, 3104725138 - 1,200,000 ($7,840,400.00) Equity, 1,100,000 ($5,600,000.00) Other, (File 333-108517 - Sep. 4) (BR. 08) S-1 TESSERA TECHNOLOGIES INC, 3099 ORCHARD DRIVE, SAN JOSE, CA, 95134, 4088940700 - 0 ($75,000,000.00) Equity, (File 333-108518 - Sep. 4) (BR. )