UNITED STATES SECURITIES AND EXCHANGE COMMISSION LITIGATION RELEASE NO. 15850 / August 17, 1998 SECURITIES AND EXCHANGE COMMISSION V. CERTAIN UNIT INVESTMENT TRUSTS, ET.AL., CASE NO. 98-1644-CIV-T-23-F (M.D. Fla.) The Securities and Exchange Commission ("SEC") announced that on August 11, 1998, the Honorable Steven D. Merryday, United States District Judge for the Middle District of Florida, entered a Temporary Restraining Order and Other Relief ("Order") against defendants Certain Unit Investment Trusts ("Trusts"), Inside Edge Communications Southeast, Inc. ("Southeast"), Holding International Corp. ("Holding Int'l"), Derek Bartsch ("Bartsch"), and Burnell Hoekstra ("Hoekstra"), halting their sale of fraudulent, unregistered securities through what the SEC alleges to be a boiler-room operation. The Order restrains the defendants from violating the registration and anti-fraud provisions of the federal securities laws, namely Sections 5(a), 5(c) and 17(a) of the Securities Act of 1933 ("Securities Act") and Section 10(b) of the Securities Exchange Act of 1934 ("Exchange Act") and Rule 10b-5, thereunder. The Order also restrains Holding Int'l from acting as an unregistered broker-dealer in violation Section 15(a) of the Exchange Act. On August 11, 1998, the Commission filed a complaint against the Trusts, Southeast, Holding Int'l, Bartsch, and Hoekstra seeking emergency relief. That same day, the Court entered the Order, which also froze the defendants' assets. The Court also appointed a receiver, who immediately secured Holding Int'l's premises and is now in possession of Holding Int'l's offices and its books and records. According to the SEC's complaint, the defendants made material misrepresentations and omissions in connection with their sale of $2.5 million in "units" to the investing public. The defendants represented to investors that the funds raised through these offerings would be used to establish a prepaid telephone service for the "credit impaired," i.e., individuals and businesses with poor or no credit histories. In the complaint, the SEC also alleges that the defendants represented to investors that the prepaid telephone service had entered into a joint venture or service agreement with a California-based telecommunications company, Uni-Net, Inc. ("Uni-Net"). The SEC's complaint alleges that, in fact, there is no joint venture or service agreement with Uni-Net. In addition, the complaint alleges that the offering materials sent to investors contained financial projections, which are baseless in the absence of a joint venture or service agreement with Uni-Net. The SEC complaint also alleges that the defendants, unbeknownst to investors, intended to keep 70% to 85% of the funds raised from as commissions, fees, and costs. The SEC's complaint further alleges, among other things, that the defendants lied about the background and experience of those associated with the offerings. In addition to preliminary and permanent injunctions, the SEC's action also seeks disgorgement of ill-gotten profits against the defendants and money penalties against Bartsch and Hoekstra. Named as relief defendants in the Commission's lawsuit are Capital Asset Allocators, Inc., The Inside Edge Communications, Inc., The Inside Edge Nationwide, Inc., and Trinity Alliance, Inc.