Securities Exchange Act of 1934
Release No. 41750 / August 17, 1999
File No. 3-9975
|In the Matter of
STEVEN GALE TRAPP,
|ORDER INSTITUTING ADMINISTRATIVE
PROCEEDINGS PURSUANT TO SECTION
15(b)(6) OF THE SECURITIES
EXCHANGE ACT OF 1934, MAKING
FINDINGS AND IMPOSING REMEDIAL
The Commission is instituting these administrative proceedings pursuant to Section 15(b)(6) of the Securities Exchange Act of 1934 (the "Exchange Act") against Steven Gale Trapp ("Trapp").
Trapp has submitted an Offer of Settlement (the "Offer") which the Commission has determined to accept. Solely for the purposes 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 contained in this Order Instituting Administrative Proceedings Pursuant to Section 15(b)(6) of the Securities Exchange Act of 1934, Making Findings and Imposing Remedial Sanctions ("Order"), except as to jurisdiction which Trapp admits, Trapp consents to the entry of this Order by the Commission.
On the basis of this Order and Trapp's Offer, the Commission makes the following findings:
A. Trapp, of Topeka, Kansas, at relevant times was a registered representative associated with brokerage firms in southern California, including First American Biltmore Securities, Inc., and a promoter of securities.
B. During the period 1991 through 1993 while so employed, Trapp participated in schemes under which he sold securities to his unsuspecting customers in exchange for undisclosed compensation and arranged for other registered representatives to sell securities for undisclosed compensation. He received about $7,500 of compensation from issuers, promoters or associated persons in connection with sales of securities of Teletek, Inc., Medgroup, Inc. and Enrotek Corp.
C. Section 17(a) of the Securities Act of 1933 (the "Securities Act") and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder prohibit any person from, in the offer or in connection with the purchase or sale of securities, by the use of means or instruments of transportation or communication in interstate commerce or by the use of the mails, directly or indirectly, employing devices, schemes or artifices to defraud; obtaining money or property by means of or making untrue statements of material facts or omitting 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 engaging in transactions, acts, practices or courses of business which operate or would operate as a fraud or deceit. By engaging in the conduct specified in Paragraph III. B. above, Trapp willfully violated Section 17(a) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder.1
D. Trapp has submitted a sworn financial statement and other evidence and has asserted his financial inability to pay disgorgement, prejudgment interest and a civil penalty and that the Commission has determined that Trapp does not have the financial ability to pay disgorgement, prejudgment interest and a civil penalty.
In view of the foregoing, the Commission has determined that it is in the public interest to accept Trapp's Offer and to impose the sanctions specified therein.
Accordingly, IT IS ORDERED that:
A. Trapp be and he is hereby barred from association with any broker or dealer.
B. Trapp pay disgorgement in the amount of $7,500 plus prejudgment interest, but that payment of such amount be waived based upon Trapp's demonstrated financial inability to pay.
C. The Division of Enforcement may, at any time following the entry of this Order, petition the Commission to: (1) reopen this matter to consider whether Trapp provided accurate and complete financial information at the time such representations were made; (2) determine the amount of the disgorgement, prejudgment interest and civil penalty to be imposed; and (3) seek any additional remedies that the Commission would be authorized to impose in this proceeding if Trapp's Offer had not been accepted. No other issues shall be considered in connection with this petition other than whether the financial information provided by Trapp was fraudulent, misleading, inaccurate or incomplete in any material respect, the amount of disgorgement, prejudgment interest and civil penalty to be imposed and whether any additional remedies should be imposed. Trapp may not, by way of defense to any such petition, contest the findings in this Order or the Commission's authority to impose any additional remedies that were available in the original proceeding.
By the Commission.
Jonathan G. Katz
|1||Trapp was indicted in a factually related case in October 1996 by a federal grand jury sitting in Las Vegas, Nevada. U.S. v. Jay W. Nance, et al., CR-S-96-271. He subsequently pleaded guilty to one count of conspiracy, in violation of 18 U.S.C. § 371.|