UNITED STATES OF AMERICA
SECURITIES AND EXCHANGE COMMISSION
SECURITIES ACT OF 1933
Release No. 7812 / March 15, 2000
SECURITIES EXCHANGE ACT OF 1934
Release No. 42532 / March 15, 2000
File No. 3-9952
|In the Matter of
Jethro J. Barlow, CPA,
|ORDER MAKING FINDINGS
AND IMPOSING A CEASE-AND-
DESIST ORDER AS TO
ALAN K. BURTON AND
J. EDWARDS COX
On August 2, 1999 the Securities and Exchange Commission ("Commission") issued an Order Instituting Public Cease-and-Desist Proceedings ("Order Instituting") pursuant to Section 8A of the Securities Act of 1933 ("Securities Act") and Section 21C of the Securities Exchange Act of 1934 ("Exchange Act") against Alan K. Burton ("Burton") and J. Edwards Cox ("Cox").
Burton and Cox have submitted Offers of Settlement ("Offers"), which the Commission has determined to accept. Solely for the purpose of these proceedings and any other proceedings brought by or on behalf of the Commission or in which the Commission is a party, and without admitting or denying the findings herein, except the jurisdiction of the Commission over them and over the matters set forth herein, which they admit, Burton and Cox have consented to the entry of this Order Making Findings and Imposing a Cease-and-Desist Order ("Order").
On the basis of this Order and the Offers submitted by Burton and Cox, the Commission finds that:1
1. Dynamic American Corp. ("Dynamic American"), now a defunct corporation, was formed in 1961 and became a reporting company under Section 12(g) of the Exchange Act in March 1972 when its Form 10 registration statement with the Commission became effective. From August 1995 to at least June 1996, Dynamic American's affairs were directed from Robert G. Weeks ("R. Weeks"), Kenneth L. Weeks ("K. Weeks") (collectively, "the Weeks") and David A. Hesterman's ("Hesterman") offices in Salt Lake City, Utah.
2. Burton, age 60, resides in Novato, California. Burton, a consulting mining engineer, was the president, chief executive officer, and a director of Dynamic American from August 1, 1995 until his resignation from those positions on June 11, 1996.
3. Cox, age 63, resides in Salt Lake City, Utah. Cox became Dynamic American's vice-president in December 1995, and became acting president following Alan K. Burton's resignation in June 1996. Cox resigned as an officer and director of Dynamic American on March 28, 1997.
4. During the period from approximately August 1995 to June 1996, Burton violated Section 17(a) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, and, during the period from approximately December 1995 through November 1996, Cox violated Section 17(a) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder. They, directly or indirectly, in connection with the offer, purchase or sale of securities, by use of the mails and the means or instruments of transportation and communication in interstate commerce, and the means and instrumentalities of interstate commerce, employed devices, schemes or artifices to defraud; obtained money or property by means of, and made untrue statements of material fact or omitted to state material facts necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading; or engaged in acts, transactions, practices or courses of business which operated as a fraud or deceit upon purchasers or sellers of securities, namely Dynamic American's stock.
5. As part of and in furtherance of the conduct described above in sub-paragraph II.4., Burton and Cox made untrue statements of material facts and/or omitted to state material facts to the public, to investors and to prospective investors. In this regard, Burton and Cox:
(i) failed to disclose that Dynamic American acquired certain Bolivian mineral properties from an affiliate in a non-arms-length transaction;
(ii) baselessly valued the Bolivian mineral properties at approximately $40 million, and then later at approximately $38.6 million, in Dynamic American's balance sheets included in the company's Forms 10-Q filed with the Commission for the quarters ended June 30, 1995 and September 30, 1995;
(iii) baselessly valued certain U.S. mineral assets at approximately $4.3 million in Dynamic American's balance sheets included in the company's Forms 10-Q filed with the Commission for the quarters ended June 30, 1995, and September 30, 1995;
(iv) misrepresented the status of Dynamic American's operations in Bolivia, including the company's ability to fund its Bolivian operations, the profitability of a tin smelter located on its Bolivian mineral properties and the proven and probable reserves of certain minerals located on the properties; and
(v) failed to disclose that Burton, Cox and Dynamic American's other purported officers and directors, were figureheads acting at the direction of R. Weeks, Hesterman and K. Weeks, the de facto officers and directors of the company.
6. During the period from approximately August 1995 to June 1996, Burton violated Sections 5(a) and 5(c) of the Securities Act, and, during the period from approximately December 1995 to November 1996, Cox violated Sections 5(a) and 5(c) of the Securities Act. They, directly and indirectly, made use of the mails or other means or instruments of transportation or communication in interstate commerce to offer to sell, sell, and deliver after sale to members of the public, certain securities, namely Dynamic American's stock, when no registration statement was filed or in effect as to the stock and no exemption from registration was available.
7. As part of and in furtherance of the conduct described above in sub-paragraph II.6., from approximately July 1995 to September 1996, R. Weeks, Hesterman and K. Weeks caused Dynamic American to issue approximately 50.55 million shares of Dynamic American's common stock to two offshore corporations that they controlled and to an individual. The stock was delivered into U.S. and Canadian brokerage accounts in the names of the offshore corporations, and over 32 million shares were then sold for proceeds of nearly $4 million. No registration statement concerning these sales was filed with the Commission and no exemption from registration was available for the sales. R. Weeks, Hesterman and K. Weeks used some of the proceeds to pay for Dynamic American's operating expenses, but disbursed the majority of the proceeds to themselves, family members, personal and business acquaintances and others. Burton and Cox, in their capacities as directors of Dynamic American, repeatedly signed corporate resolutions instructing Dynamic American's transfer agent to issue stock to the offshore corporations.
8. At all relevant times Dynamic American was an issuer of securities required to file periodic reports with the Commission pursuant to Section 13(a) of the Exchange Act.
9. Beginning in or about June 1995, Dynamic American violated Section 13(a) of the Exchange Act and Rules 13a-1, 13a-10, 13a-11, 13a-13, 12b-20, and 12b-25 thereunder in that:
a. of the 13 Forms 10-Q and 5 Forms 10-K required to be filed by Dynamic American since June 1995, none of these 18 Forms was timely filed (four Forms were filed late by from 45 to 195 days, and 14 Forms--all of the Forms required to be filed from the year ended December 31, 1995 to the quarter ended March 31, 1999--have never been filed), and the company failed to file notices of late filing for its tardy reports;
b. as a result of the change in its fiscal year-end from December 31 to September 30, Dynamic American was required, but failed to file, a complete transition report on Form 10-K for the period ended September 30, 1995;
c. Dynamic American failed to file current reports on Form 8-K triggered by the company's change in control and its change in fiscal year; and
d. Dynamic American filed materially false periodic reports with the Commission and filed reports with the Commission that, in addition to the information expressly required to be included in the report, failed to add such further material information as was necessary to make the required statements, in the light of the circumstances under which they were made not misleading, concerning, among other things, the number of shares outstanding as of the filing dates of each of its reports (in addition to providing the required disclosure of the number of shares outstanding as of the applicable period) and false and misleading disclosures about Dynamic American's management, assets and business operations, as described above in more detail in sub-paragraphs II.5.(i-v).
10. Burton caused Dynamic American's violations of Section 13(a) of the Exchange Act and Rules 13a-1, 13a-13, 12b-20 and 12b-25 thereunder, and Cox caused Dynamic American's violations of Section 13(a) of the Exchange Act and Rules 13a-1, 13a-10, 13a-13, 12b-20 and 12b-25 thereunder, because, in their capacities as officers and directors of Dynamic American, they signed late and/or false periodic reports described in subparagraphs II.9. a. and d. above and, until their resignations from Dynamic American, were responsible for Dynamic American's failure to file notices of late filing for its tardy periodic reports and for Dynamic American's failure to file annual or quarterly reports after the period ended September 30, 1995 as described in sub-paragraph II.9.a above. Cox was also responsible for Dynamic American's failure to file a complete transition report on Form 10-K as described above in sub-paragraph II.9.b. above. In addition, Burton and Cox caused violations of Rule 13a-11 of the Exchange Act stemming from Dynamic American's failure to file current reports on Form 8-K required by the company's change of fiscal year, as described in sub-paragraph II.9.c. above.
In view of the foregoing, the Commission finds that it is appropriate to impose the sanctions against Burton and Cox as specified in their Offers.
Accordingly, IT IS ORDERED that, pursuant to Section 8A of the Securities Act and Section 21C of the Exchange Act, Burton and Cox cease and desist from committing or causing any violations, and any future violations, of Sections 5(a), 5(c), and 17(a) of the Securities Act, and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder; that Burton cease and desist from causing violations, and any future violations, of Section 13(a) of the Exchange Act, and Rules 13a-1, 13a-11, 13a-13, 12b-20, and 12b-25 thereunder, and that Cox cease and desist from causing violations, and any future violations, of Section 13(a) of the Exchange Act, and Rules 13a-1, 13a-10, 13a-11, 13a-13, 12b-20, and 12b-25 thereunder.
For the Commission, by its Secretary, pursuant to delegated authority.
Jonathan G. Katz
|The findings herein are made pursuant to the Offers of Settlement of Alan K. Burton and J. Edwards Cox and are not binding on any other person or entity named as a respondent in this or any other proceeding.