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U.S. Securities and Exchange Commission

UNITED STATES OF AMERICA
Before the
SECURITIES AND EXCHANGE COMMISSION

SECURITIES EXCHANGE ACT OF 1934
Release No. 50268 / August 26, 2004

Admin. Proc. File No. 3-11552


In the Matter of

RONALD D. BROUILLETTE, JR.



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ORDER MAKING FINDINGS AND IMPOSING SANCTION BY DEFAULT

SUMMARY

This Order bars Ronald D. Brouillette, Jr. (Brouillette) from association with a broker-dealer. Brouillette was previously enjoined from violating the antifraud and registration provisions of the securities laws, based on his involvement in a fraudulent pump and dump scheme.

I. BACKGROUND

The Securities and Exchange Commission (Commission) issued its Order Instituting Proceedings (OIP) against Brouillette on July 21, 2004, pursuant to Section 15(b) of the Securities Exchange Act of 1934 (Exchange Act). The OIP alleges that he was enjoined in 2004 from violating the antifraud and registration provisions of the federal securities laws, barred from participating in any penny stock offering, and ordered to pay disgorgement, based on his wrongdoing while associated with a broker-dealer, Centex Securities, Inc. (Centex). Brouillette was served with the OIP on August 2, 2004. He failed to file an answer, due twenty days after service of the OIP, that is, by August 23, 2004. See 17 C.F.R. 201.220(b); OIP at 3. A respondent who fails to file an answer to the OIP may be deemed to be in default, and the administrative law judge may determine the proceeding against him. See 17 C.F.R. 201.155(a), .220(f); OIP at 3. Thus, Brouillette is in default, and the undersigned finds the following allegations in the OIP are true.

II. FINDINGS OF FACT

Brouillette is permanently enjoined from violating the antifraud and registration provisions of the federal securities laws. SEC v. Desjardins, Civil Action No. 1:03CV01992 (PLF) (D.D.C. July 1, 2004). Specifically, the court entered a Final Judgment of Permanent Injunction, Disgorgement and Other Relief against Brouillette: (i) permanently enjoining him from, directly, or indirectly, violating Sections 5(a), 5(c) and 17(a) of the Securities Act of 1933 and Sections 10(b) and 15(a)(1) of the Exchange Act and Rule 10b-5 thereunder.; (ii) barring him from participating in any penny stock offering; (iii) ordering him to pay disgorgement, including prejudgment interest, of $84,126.22; and (iv) reserving judgment as to imposition of penalty.

The wrongdoing that underlies Brouillette's injunction occurred from October 1998 through August 1999, when he was involved in a fraudulent pump and dump scheme to sell the securities of Pay Pop, Inc. (Pay Pop), to the public. Pay Pop, a now-defunct company, was traded via the NASD's Over-the-Counter Bulletin Board. Robert Zaba (Zaba), a Pay Pop principal, and Daryl Desjardins (Desjardins) were also involved in the scheme. As a registered representative at Centex, Brouillette set up accounts in Desjardins's name and in the names of nominees of Desjardins and Zaba, based on false information, and effected trades between these accounts to create the appearance of genuine demand for Pay Pop stock. Brouillette received dozens of share certificates, for hundreds of thousands of shares, in the names of Desjardins and his nominees, and deposited them in Centex accounts. Brouillette then sold the Pay Pop stock in the nominee accounts. To effect this scheme, he drafted the trade authorizations required by Centex's clearing broker, and secured the nominees' signatures, knowing that they would be forged by, or at the direction of, Desjardins. He was active in assuring that there were buyers for the stock by making false representations to his customers, including baseless assurances of quick gains to encourage purchases. Brouillette also made unauthorized trades in Pay Pop stock. He never disclosed to the customers to whom he was selling Pay Pop stock that he was simultaneously selling Pay Pop stock for his own benefit or for Desjardins. Brouillette profited by at least $63,786 from his participation in the scheme.

III. CONCLUSIONS OF LAW

Brouillette is permanently enjoined "from engaging in or continuing any conduct or practice in connection . . . with the purchase or sale of any security" within the meaning of Sections 15(b)(4)(C) and 15(b)(6)(A)(iii) of the Exchange Act.

IV. SANCTION

Brouillette will be barred from association with any broker-dealer. This sanction will serve the public interest and the protection of investors, pursuant to Section 15(b) of the Exchange Act. It accords with Commission precedent and the sanction considerations set forth in Steadman v. SEC,, 603 F.2d 1126, 1140 (5th Cir. 1979), aff'd on other grounds, 450 U.S. 91 (1981). Brouillette's unlawful conduct was recurring and egregious, extending over a period of many months. There are no mitigating circumstances.

V. ORDER

IT IS ORDERED that, pursuant to Section 15(b) of the Securities Exchange Act of 1934, RONALD D. BROUILLETTE, JR., IS BARRED from association with any broker or dealer.

Jonathan G. Katz
Secretary


http://www.sec.gov/litigation/admin/34-50268.htm


Modified: 08/31/2004