UNITED STATES OF AMERICA
In the Matter of
BRETT R. MALLORY,
|ORDER INSTITUTING PROCEEDINGS, MAKING FINDINGS AND IMPOSING REMEDIAL SANCTIONS PURSUANT TO SECTION 15(b) OF THE SECURITIES EXCHANGE ACT OF 1934|
The Securities and Exchange Commission ("Commission") deems it appropriate and in the public interest that public administrative proceedings be instituted pursuant to Section 15(b) of the Securities Exchange Act of 1934 ("Exchange Act") against Brett R. Mallory ("Mallory").
In anticipation of the institution of these proceedings, Mallory has submitted an Offer of Settlement ("Offer") 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 Commission's findings set forth herein, except those findings pertaining to the jurisdiction of the Commission over him and over the subject matter of these proceedings, and the entry of a Final Judgment of Permanent Injunction and Other Relief, as described in Section III, paragraph D, below, which he admits, Mallory consents to the entry of this Order Instituting Proceedings, Making Findings and Imposing Remedial Sanctions Pursuant to Section 15(b) of the Securities Exchange Act of 1934 ("Order").
Accordingly, IT IS HEREBY ORDERED that public administrative proceedings be, and hereby are, instituted against Mallory pursuant to Section 15(b) of the Exchange Act.
On the basis of this Order and Mallory's Offer, the Commission finds that:
A. Mallory, 42, is the founder, president and chief executive offficer who, at all relevant times, controlled Anamar Communications, Inc. ("Anamar").
B. On March 15, 2002, the Commission filed a complaint in the United States District Court for the District of Massachusetts, against Anamar and Mallory, captioned SEC v. Anamar Communications, Inc. and Brett Mallory [Civil Action No. 2:00-CV-10471 (DPW)]. The complaint alleged that Mallory violated Section 17(a) of the Securities Act of 1933 ("Securities Act") and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder. The complaint alleged that Mallory fraudulently sold Anamar stock at five cents per share and induced investments in Anamar by, among other things, misrepresenting to potential investors that: (i) Verizon Communications, Inc. ("Verizon"), a large telecommunications company, had agreed to purchase Anamar for $2.5 million, because Anamar owned the exclusive right to distribute a new web-based payphone; (ii) the investors' monies would double in as little as 90 days; (iii) investing in Anamar was essentially risk-free because even if the Verizon deal fell through, Verizon had agreed to pay an "opt-out" fee to Anamar, which would allow investors to sell their shares back to Anamar; and (iv) Anamar was pursuing new lucrative deals that could potentially cause Anamar's stock price to increase "100 fold," and that he had a meeting scheduled with Bill Gates of Microsoft. According to the complaint, Mallory and Anamar raised more than $130,000 from at least 14 investors.
C. Through the conduct described in Section III, paragraph B above, Mallory participated in the offering of the common stock of Anamar, which was a penny stock.
D. On June 27, 2002, without admitting or denying any of the allegations in the complaint, except as to jurisdiction, which he admitted, Mallory consented to the entry of a Final Judgment of Permanent Injunction, Disgorgement and Other Relief as to Defendant Brett R. Mallory ("Mallory Judgment"). On September 3, 2002, the United States District Court for the District of Massachusetts entered the Mallory Judgment: (i) permanently enjoining Mallory from, directly or indirectly, violating Section 17(a) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder; and (ii) ordering that Mallory is liable for disgorgement of $130,500 plus pre-judgment interest of $6,417, for a total amount of $136,917, but waiving payment of that amount and not imposing a civil monetary penalty based on the sworn representations in his statement of financial condition and other documents provided to the staff.
E. On April 24, 2002, the United States Attorney's Office filed a criminal complaint against Mallory based on the conduct described in Section III, paragraph B above. On May 28, 2002, Mallory pled guilty to two counts of mail fraud in violation of 18 U.S.C. § 1341. On September 5, 2002, a judgment in the criminal case was entered against Mallory. He wassentenced to a prison term of 12 months followed by three years of supervised release, fined $200 and ordered to make restitution in the amount of $130,500.
F. The counts of the criminal information to which Mallory pled guilty alleged, inter alia, that Mallory defrauded investors and obtained money and property by means of materially false and misleading statements, that he used the United States mails to send false account statements, and that he caused commercial interstate carriers to deliver investors' checks to him.
Based on the foregoing, the Commission deems it appropriate and in the public interest to accept the Offer and to impose the sanctions agreed to in the Offer.
Accordingly, IT IS HEREBY ORDERED, that Mallory be, and hereby is, barred from participating in any offering of a penny stock, including: acting as a promoter, finder, consultant, agent, or other person who engages in activities with a broker, dealer or issuer for purposes of the issuance or trading in any penny stock; or inducing or attempting to induce the purchase or sale of any penny stock.
By the Commission.
Jonathan G. Katz
|Home | Previous Page||