SECURITIES AND EXCHANGE COMMISSION Washington, D.C. LITIGATION RELEASE NO. 15888 / September 18, 1998 SECURITIES AND EXCHANGE COMMISSION v. MICHELLE SOTNIKOW, Civil Action No. 98-2227 (GK)(D.D.C.) U.S. v. MICHELLE SOTNIKOW, CR-98-228-A (AVB) (E.D.Va) NEW YORK PROMOTER SETTLES SEC CHARGES AND PLEADS GUILTY; SIXTH TO PLEAD IN SYSTEMS OF EXCELLENCE MICROCAP PUMP AND DUMP SCHEME The Securities and Exchange Commission ("Commission") today filed a Complaint against Michelle Sotnikow ("Sotnikow"), a New York stock promoter, for her role in the manipulation of the market for the stock of Systems of Excellence, Inc. ("SOE") in 1995 and 1996. The Complaint, filed in United States District Court for the District of Columbia, alleges that Sotnikow introduced Charles O. Huttoe ("Huttoe"), the former CEO and Chairman of SOE, to several stock brokers to help "push" SOE stock on the investing public. Huttoe then bribed those firms with SOE shares and cash for their cooperation. For her participation in the SOE fraud, Sotnikow received 600,000 shares of unregistered, free- trading SOE stock. She sold 210,000 of those shares for proceeds of $474,308. Simultaneously with the SEC filing the Complaint, Sotnikow, without admitting or denying the SEC's allegations, settled the action by consenting to the entry of a permanent injunction from violations of the securities registration (Sections 5(a) and (c) of the Securities Act of 1933) and antifraud provisions (Section 17(a) of the Securities Act and 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder) of the federal securities laws, and an order requiring her to disgorge her illegal profits of $474,308, provided that upon her transfer of $110,000 in cash and certain other non-cash assets to the Court-appointed Receiver in the action, collection of the remaining disgorgement will be waived in light of Sotnikow's demonstrated inability to pay based on her sworn representations in her statement of financial condition. Sotnikow also agreed to a Commission order barring her from participating in an offering of penny stock. In the parallel criminal action, the Honorable Albert V. Bryan, United States District Judge for the Eastern District of Virginia, today sentenced Sotnikow to three years of supervised probation with the special conditions of being barred from participation in the securities industry, participation in a substance abuse program, 100 hours of community service, and the costs of her probation. Sotnikow was sentenced pursuant to a criminal information charging her with one count of conspiracy to commit securities fraud and defeat the lawful function of the Internal Revenue Service. Sotnikow entered into a plea agreement with the government on June 12, 1998. Both the criminal information and the plea agreement were filed under seal and remained sealed until September 16, 1998. Sotnikow's guilty plea was the sixth related to the SOE pump and dump scheme. The Commission previously has made several announcements concerning these matters. See Lit. Rel. 15677 (March 19, 1998); Lit. Rel. 15617 (January 14, 1998); Lit. Rel. 15600 (December 22, 1997); Lit. Rel. 15571 (November 25, 1997); Lit. Rel. 15490 (September 12, 1997); Lit. Rel. 15286 (March 12, 1997); Lit. Rel. 15490 (January 31, 1997); Lit. Rel. 15185 (December 12, 1996); Lit. Rel. 15153 (November 7, 1996); Securities Exchange Act Rel. No. 33791 (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. This enforcement action is part of the Commission's four-pronged approach to minimizing Microcap fraud: enforcement, inspections, investor education and regulation. For more information about the SEC's response to Microcap fraud, visit the SEC's Microcap Fraud Information Center at http://www.sec.gov/news/extra/microcap.htm.