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U.S. Securities and Exchange Commission

Before the

Securities Exchange Act of 1934
Release No. 50001 / July 12, 2004

Administrative Proceeding No. 3-11543


The Commission has instituted administrative proceedings against Dale Carone pursuant to Section 15(b) of the Securities Exchange Act of 1934 (Exchange Act).

The Division of Enforcement (Division) alleges that on March 9, 2004, Carone was enjoined by Judge Nora M. Manella of the U.S. District Court, Central District of California, from future violations of Sections 5(a), 5(c) and 17(a) of the Securities Act of 1933 (Securities Act) and Sections 10(b) and 15(a) of the Exchange Act and Rule 10b-5 thereunder. The Commission filed its complaint against Carone and others on January 16, 2003.

The Division of Enforcement also alleges that the Complaint in the underlying injunctive action stated that LinkNet, Inc. (LinkNet) and LinkNet de America Latina, Ltd. (Latina), companies that employed Carone, had conducted a fraudulent offering scheme, collectively raising over $17 million and defrauding more than 1900 investors located throughout the United States. The Complaint alleged that LinkNet and Latina hired Carone and others to organize and operate a boiler room to solicit investors to purchase securities in LinkNet and Latina. The Complaint further alleged that Carone directed the activities of the boiler room and that Carone and others made numerous misrepresentations to investors, including: that a public offering of LinkNet stock was imminent; that LinkNet's stock would shortly be listed on Nasdaq; and that LinkNet and Latina had contracts for the sale of hundreds of millions of minutes of long distance service that would generate millions of dollars in revenue to the companies. The Complaint also alleged that Carone and others also failed to disclose that at least thirty percent of the offering proceeds were paid as commissions to the boiler room operations. The Complaint finally alleged that Carone acted as an unregistered broker in connection with sales of the stock of LinkNet and Latina, and through the boiler room operations of those issuers

A hearing will be scheduled before an administrative law judge to determine whether the allegations contained in the Order are true, to provide Dale Carone an opportunity to dispute these allegations, and to determine what remedial sanctions, if any, are appropriate.

Pursuant to the Commission's Rules of Practice, an initial decision shall be issued by the administrative law judge no later than 210 days from the date of service of this order.

See also the Order in this matter



Modified: 07/12/2004