SECURITIES AND EXCHANGE COMMISSION Washington, D.C. LITIGATION RELEASE NO. 16069 / February 24, 1999 SECURITIES AND EXCHANGE COMMISSION v. P. JOSEPH VERTUCCI, BRUCE E. STRAUGHN, ROBERT V. PETRY, ROLAND R. BAUGHMAN, RICHARD M. JOHNSON, EDWARD MEYER, JR., and HAZLET INVESTORS, INC., Civil Action No. 5:99CV426 (N.D. Ohio) February 24, 1999 SEC CHARGES PRESIDENT OF INTERACTIVE MULTIMEDIA PUBLISHERS, INC., AND INTERNET STOCK PROMOTERS WITH SECURITIES FRAUD. The Securities and Exchange Commission today filed a civil injunctive action against P. Joseph Vertucci ("Vertucci"), the president and chief executive officer of Interactive Multimedia Publishers, Inc. ("IMP"), an Akron, Ohio software development firm, charging him with insider trading, financial fraud and stock price manipulation. The SEC’s complaint, filed in the U.S. District Court in Akron, Ohio, also names Bruce E. Straughn ("Straughn"), a former broker in the Chicago office of La Jolla Capital Corporation, which was a market maker for IMP’s stock. The complaint alleges that Straughn schemed with Vertucci to inflate the price of IMP’s stock, and that both Vertucci and Straughn secretly sold shares through nominees when the price rose. According to the Commission’s complaint, in 1994 a private company named Fujacorp Industries, Inc., assumed the identity of a dormant public company of the same name and began making Commission filings as though it were the public entity. In 1995, the new Fujacorp merged with another privately-held corporation controlled by Vertucci, and the resulting entity was renamed IMP. Based on the fiction that IMP was the successor entity to the public company, purportedly freely trading shares of IMP stock were then distributed to nominee accounts of Vertucci and Straughn, as well as others. To inflate the price of IMP stock, the complaint alleges, Vertucci made public statements grossly overvaluing certain IMP assets and misrepresenting certain of its business opportunities. Straughn and Vertucci also arranged to have various professional stock touters promote IMP, both in print and over the internet, in return for free or cheap IMP stock, without disclosing their receipt of compensation. Vertucci and Straughn, as well as the touters they hired, then sold their IMP stock into the market at inflated prices. Subsequently, the stock collapsed and the company ceased operations. Others named in the SEC’s suit are: * Richard M. Johnson, a stock promoter based in Houston, Texas. In 1996, the complaint alleges, Straughn and Vertucci enlisted Johnson to promote IMP’s stock, paying Johnson with IMP shares. Johnson touted IMP stock directly in a newsletter he financed and paid others to promote IMP in other publications. * Roland R. Baughman ("Baughman") of Cuyahoga Falls, Ohio. In February 1996, the complaint alleges, Johnson paid Baughman with cheap IMP shares to promote IMP’s stock on the internet. From his home computer, Baughman began aggressively touting IMP on the Prodigy Services Money Talk bulletin board in February 1996, but he did not disclose that he was being paid for his touts or that he himself was selling shares while recommending that others buy them. * Edward Meyer, Jr. ("Meyer") and Hazlet Investors, Inc., of Hazlet, New Jersey. Meyer is a stock promoter who does business through the corporate entity Hazlet Investors, Inc. At Johnson’s behest, according to the Commission’s complaint, Meyer arranged for a purportedly independent research report about IMP to appear in Investor’s Business Daily in March 1996. Although compensated for this by Vertucci and Johnson with IMP shares, Meyer did not disclose the payments or his own contemporaneous sales of IMP securities. * Robert V. Petry ("Petry") of Kent, Ohio. The complaint alleges that Vertucci paid Petry with unregistered IMP stock for facilitating the merger with the purportedly public company, which Petry then sold into the market. * Joanne C. Straughn. The SEC’s action seeks to recover from Joanne Straughn, the wife of Bruce Straughn, any proceeds of Straughn’s stock sales remaining in her hands. The SEC alleges that Vertucci and Straughn each violated Sections 5 and 17(a) of the Securities Act of 1933 ("Securities Act") and Section 10(b) of the Securities Exchange Act of 1934 ("Exchange Act"); that Johnson, Meyer and Hazlet Investors, Inc. each violated Sections 5 and 17(b) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder; that Baughman violated Section 17(b) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder; and that Petry violated Section 5 of the Securities Act. The SEC seeks an injunction against future violations of these provisions of the securities laws, disgorgement of profits, and civil money penalties. It also seeks to bar Vertucci from future service as an officer or director of any publicly held company. 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. The Commission acknowledges the assistance of the National Association of Securities Dealers, Inc. in connection with this matter.