UNITED STATES OF AMERICA
|In the Matter of
DAVID S. DARLING,
|ORDER INSTITUTING PUBLIC ADMINISTRATIVE PROCEEDING PURSUANT TO SECTIONS 15(b) AND 19(h) OF THE SECURITIES EXCHANGE ACT OF 1934, MAKING FINDINGS AND IMPOSING REMEDIAL SANCTIONS|
The Securities and Exchange Commission ("Commission") deems it appropriate in the public interest and for the protection of investors that a public administrative proceeding be instituted pursuant to Sections 15(b) and 19(h) of the Securities Exchange Act of 1934 ("Exchange Act") against Respondent David S. Darling ("Darling" or "Respondent").
Accordingly, IT IS HEREBY ORDERED that said proceeding against Darling be, and hereby is, instituted.
In anticipation of the institution of this proceeding, Darling has submitted an Offer of Settlement ("Offer") to the Commission, which the Commission has determined to accept. Solely for the purpose of this proceeding and any other proceeding 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 that Darling admits the jurisdiction of the Commission over him and over the subject matter of this proceeding, the entry of the criminal judgment against him set forth in Section III.B. and the entry of the final judgment of permanent injunction against him set forth in Section III.C., Darling consents to the entry of this Order Instituting Public Administrative Proceeding Pursuant to Sections 15(b) and 19(h) of the Securities Exchange Act of 1934, Making Findings and Imposing Remedial Sanctions ("Order") and to the entry of the findings and sanctions set forth below.
On the basis of this Order and Darling's Offer, the Commission finds that:
A. Darling, age 56, was vice president of Amtel Communications, Inc. ("Amtel") from 1991 until July 1995. During that period, Darling held Series 7 and 24 securities licenses and was associated with Equity Programs Corporation, a registered broker-dealer (File No. 8-16771).
B. On January 20, 1999, the United States District Court for the Southern District of California entered a judgment in a criminal case against Darling. Darling was found guilty of violating 18 U.S.C. § 1341 (mail fraud). United States v. Randall Smith Kuhlmann and David Sidney Darling, Criminal Case No. 97CR2871-H (S.D. Cal.).
C. A Final Judgment of Permanent Injunction and Other Relief ("Final Judgment") was entered in the United States District Court for the Southern District of California against Darling on February 24, 2000. The Final Judgment permanently enjoins Darling from violating Sections 5(a), 5(c) and 17(a) of the Securities Act of 1933, Sections 10(b) and 15(a)(1) of the Exchange Act and Rule 10b-5. SEC v. Amtel Communications, Inc., et al., Civil Action No. 95-1127 JM (AJB) (S.D. Cal.).
D. The Commission's Amended Complaint in the action referenced in Section III.C. alleges that Darling and other defendants engaged in a fraudulent scheme in connection with the sale of securities. Darling sold unregistered securities in the form of "units" in an investment program in which Amtel sold and leased back privately-owned pay telephones. Amtel agreed to pay the investor a monthly rental for the telephone and buy back the telephone for the original purchase price after five years. The Amended Complaint alleges, among other things, that Darling and sales agents working under his supervision misled investors concerning the financial condition of Amtel, which operated continuously at a loss, and failed to disclose to investors the source of the monthly payments.
Based on the foregoing, the Commission deems it appropriate in the public interest and for the protection of investors to impose the sanctions specified by Darling in his Offer.
Accordingly, IT IS ORDERED that Respondent Darling be, and hereby is, barred from association with any broker or dealer.
By the Commission.
Jonathan G. Katz