SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
LITIGATION RELEASE NO. 15571 / November 25, 1997
SECURITIES AND EXCHANGE COMMISSION v. CHARLES O. HUTTOE, ET AL., Civil
Action No. 96-02543 (GK)(D.D.C.)
The Securities and Exchange Commission ("Commission") today announced
settlements with Charles O. Huttoe and certain other persons and entities
to be named as Relief Defendants in the action previously filed against
him. The Commission filed its complaint on an emergency basis in this
action on November 7, 1996, and charged Huttoe, formerly the Chairman of
the Board and Chief Executive Officer of Systems of Excellence, Inc.
("SOE"), with orchestrating what was then an ongoing, massive market
manipulation of that company's securities. The complaint alleged that he
secretly distributed millions of SOE shares in the names of his family
members and corporations, issued false favorable information concerning SOE
and its business, and then sold his shares into the inflated market. The
Commission has also moved to recover Huttoe's illegal profits from several
Relief Defendants -- persons and entities that the Commission has alleged
were the beneficiaries of a massive effort by Huttoe to dissipate and
secrete those profits before the Commission's complaint was filed.
As part of the settlement, Huttoe, without admitting or denying the
allegations made in the Commission's complaint, consented to the entry of a
final judgment of permanent injunction prohibiting him from violating
Sections 5 and 17(a) of the Securities Act of 1933 ("Securities Act"),
Sections 10(b), 13(b)(5), and 16(a) of the Securities Exchange Act of 1934
("Exchange Act"), and Rules 10b-5, 13b2-1, 13b2-2, 16a-2, and 16a-3
thereunder. The Order also permanently bars Huttoe from acting as an
officer or director of a public company. The Order requires that Huttoe
disgorge $12,543,770, the total amount of monies or benefits that he
derived from the conduct alleged in the complaint, provided that except for
surrendering to the Court-appointed receiver in this case certain assets
described in Huttoe's sworn statement of his financial condition, payment
of the disgorgement amount is waived in light of his demonstrated inability
to pay based on his sworn representations in his statement of financial
condition. The Order also requires Huttoe to cooperate with the Commission
and the Court-appointed receiver to, among other things, effect the
surrender of all the proceeds of the fraud that are held by any other
person. As an additional part of the settlement, Huttoe consented to the
entry of a Commission Order barring him from association with any broker,
dealer, municipal securities dealer, investment adviser or investment
company.
As previously announced, on November 13, 1996, Huttoe pled guilty to a
two count information charging him with securities fraud and money
laundering arising out of his conduct at SOE. On January 31, 1997, he was
sentenced to 46 months of imprisonment. He is presently serving that
sentence. See Lit. Rel. 15237 (January 31, 1997).
The Commission also announced settlements with Karen Purvis Huttoe
("Purvis"), who is Huttoe's wife, and Tammy Jo Perkins ("Perkins"), who is
Huttoe's niece. The Commission previously had alleged that Huttoe had
issued SOE shares to them as well as to the late Josephine Brooks
("Brooks"), Huttoe's mother, that those shares were sold during the
manipulation and that Purvis, Perkins and Brooks had violated Section 5 of
the Securities Act. In light of evidence obtained in discovery in this
matter, the Commission today requested leave of the Court to amend its
complaint to drop the charge that they violated Section 5 of the Securities
Act, and instead to name Purvis and Perkins as Relief Defendants. Purvis
and Perkins have consented to orders requiring that they disgorge the
contents of the brokerage and bank accounts in their names that were used
to sell SOE securities or into which proceeds of those sales were
deposited. The Commission also filed a motion with Brooks' counsel's
consent requiring that assets held in such accounts in her name be
surrendered to the Court-appointed receiver. Purvis also agreed to
disgorge an additional $258,650 representing illegal proceeds that she
received from Huttoe, provided that payment was waived in light of her
demonstrated inability to pay based on her sworn representations in her
statement of financial condition.
The Commission also announced developments with regard to several
other Relief Defendants. Today, Starlog Franchise Corp., Hope Associates,
L.L.C., Michael Michaelson, Raymond J. Markman, Herman Rush, Mark Savel and
George Holsten filed consents to the entry of orders requiring them to
disgorge a total of $950,000 that the Commission alleged they received,
directly or indirectly, from Huttoe. Finally, the Commission announced
that on November 7, 1997, the Court granted its motion for leave to amend
its complaint to add Mary Jane Hubbard as a Relief Defendant, granted a
preliminary injunction against Hubbard and froze $531,450 representing
funds Hubbard received from Huttoe.
The Commission previously has made several announcements concerning
this matter. See Lit. Rel. 15490 (September 12, 1997); Lit. Rel. 15286
(March 12, 1997); Lit. Rel. 15237 (January 31, 1997); Lit. Rel. 15185
(December 12, 1996); Lit. Rel. 15153 (November 7, 1996); Securities
Exchange Act Rel. No. 37791 (October 7, 1996).
The Commission is cooperating with separate investigations in this
matter carried on by the United States Attorney's Offices for the District
of Nevada and the Eastern District of Virginia, and the Criminal
Investigation Division of the Internal Revenue Service.
The Commission's investigation in this matter is continuing.
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