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IN THE UNITED STATES DISTRICT COURT
COMPLAINT Plaintiff United States Securities and Exchange Commission ("Commission") alleges as follows: SUMMARY 1. This case involves a $15 million "pump and dump" scheme involving the securities of Environmental Solutions Worldwide, Inc. ("Environmental"), a public company whose common stock is registered with the Commission under the Securities Exchange Act of 1934 ("Exchange Act"), and is traded on the NASDAQ Over-The-Counter Bulletin Board. Between at least February 1999 and December 2000, defendant Environmental and several of the defendants herein, engaged in an aggressive promotional campaign to prime the market for Environmental stock. After issuing 15 million "unrestricted shares" in a sham Rule 504 "private offering," Environmental issued several fraudulent press releases concerning the company's primary product, a catalytic converter that it claimed "dramatically reduces toxic emissions including nitrous oxide," a greenhouse gas believed to be a cause of global warming. In fact, the company had never tested its prototype converter's ability to reduce nitrous oxide. 2. Environmental's stock was also hyped on the company's Internet website through the dissemination of millions of spam e-mails and by a paid "analyst" who prepared a highly favorable, but false and misleading, report on Environmental. Among other things, the spam e-mails and the analyst report contained unrealistic and unsupported share-price projections for Environmental stock ranging from $15 to $150 per share. Environmental also misled the public markets in its Commission filings relating to the actual management of the corporation, the number of shares beneficially held by management, and the issuance of shares in the sham Rule 504 offering. 3. The misleading promotional campaign clearly had its intended effect: the price of Environmental stock soared by about 250% - from $2 to $7 per share. Concurrently, two of the defendants, Teodisio Pangia and Satbal Singh, dumped millions of shares they received from the sham Rule 504 offering into the market through numerous nominee accounts. Their profits from these unlawful sales exceeded $15 million, while investors lost millions of dollars buying Environmental stock at inflated prices. 4. The Commission brings this civil injunctive action against Environmental, Pangia, Singh, and 10 others in this matter, alleging various violations of the antifraud, securities registration, anti-touting, beneficial ownership, periodic reporting, and books and records provisions of the federal securities laws as set forth below. Included among the defendants are former members and a current member of Environmental's management, and the paid analyst who unlawfully touted Environmental shares. JURISDICTION 5. This Court has jurisdiction over this action pursuant to Sections 20(b) and 22(a) of the Securities Act of 1933 (the "Securities Act") [15 U.S.C. §§ 77t(b) and 77v(a)], and Sections 21(e) and 27 of the Exchange Act [15 U.S.C. §§ 78u(e) and 78aa]. 6. Defendants have, directly and indirectly, made use of the means or instrumentalities of interstate commerce and/or the mails in connection with the transactions described in this Complaint. Certain of the acts and transactions described herein took place in the Northern District of Texas. 7. Environmental violated Sections 5(a) and 5(c) of the Securities Act and Sections 10(b), 13(a), 13(b)(2)(a), and 13(b)(5) of the Exchange Act and Rules 10b-5, 12b-20, 13a-1, and 13b2-1 thereunder. 8. Pangia violated Sections 5(a), 5(c), and 17(a) of the Securities Act and Sections 10(b), 13(d), and 16(a) of the Exchange Act and Rules 10b-5, 13d-1, and 16a-3 thereunder, and aided and abetted violations of Section 13(a) of Exchange Act and Rules 12b-20 and 13a-1 thereunder. 9. Jalon Investments, Ltd., Gata Investments, Ltd., and Altea Investments, Ltd. violated Sections 5(a), 5(c), and 17(a) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder. 10. Satbal Singh violated Sections 5(a), 5(c), and 17(a) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder. 11. Zoya Financial Corporation, Ltd. violated Section 10(b) of the Exchange Act and Rule 10b-5 thereunder. 12. Michael W. Smith violated Sections 5(a) and 5(c) of the Securities Act and Sections 10(b) and 13(b)(5) of the Exchange Act and Rule 10b-5 thereunder, and aided and abetted violations of Sections 13(a) and 13(b)(2)(A) of the Exchange Act and Rules 12b-20, 13a-1, and 13b2-1 thereunder. 13. Adam Michael Oliver violated Sections 5(a) and 5(c) of the Securities Act and Sections 10(b) and 13(b)(5) of the Exchange Act and Rules 10b-5 and 13b2-2 thereunder, and aided and abetted violations of Section 13(a) of the Exchange Act and Rules 12b-20 and 13a-1 thereunder. 14. Mark Bergman and Access 1 Financial, Inc. violated Section 17(b) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder. 15. Bengt Odner violated Section 10(b) of the Exchange Act and Rule 10b-5 thereunder. 16. Eugene Foo violated Sections 5(a) and 5(c) of the Securities Act. DEFENDANTS 17. Environmental is a Florida corporation whose shares are registered with the Commission pursuant to Section 12(g) of the Exchange Act. The company is currently headquartered in Telford, Pennsylvania. During the relevant period described herein, the company's principal office was located in Richmond Hill, Ontario, Canada and later in Markham, Ontario, Canada. Environmental was formed in 1987 as BBC Stock Market, Inc. ("BBC"), and as of January 1999, it was a "shell" public company with no assets or operations. In February 1999, BBC acquired all of the outstanding stock of BBL Technologies, Inc. ("BBL"), a private Canadian company, and BBC changed its name to Environmental. At the time of its acquisition by Environmental, BBL owned a Canadian patent covering a purported new catalytic converter technology. 18. Teodisio V. Pangia ("Pangia"), age 42, is a Canadian citizen and a resident of Kleinburg, Ontario, Canada. He also maintains an office and residence in New York, New York. Pangia was the founder of a privately-held Canadian company that transferred the catalytic converter patent to BBL, Environmental's wholly-owned subsidiary. At the time of BBL's acquisition by Environmental, Pangia owned approximately 27% of BBL's stock. 19. Jalon Investments, Ltd., Gata Investments, Ltd., and Altea Investments, Ltd. ("Jalon," "Gata," and "Altea," respectively) are three nominee Guernsey corporations incorporated by Pangia in October 1999. Pangia collectively sold at least two million Environmental shares he received from Environmental's sham Rule 504 offering through accounts in the names of these companies. 20. Satbal Singh, aka Spal Singh ("Singh"), age 41, is believed to be a Canadian citizen and currently resides in Toronto, Canada. He is the principal of Zoya Financial Corporation, Ltd., a company that disseminated numerous false and misleading press releases on behalf of Environmental. Singh also indirectly controlled at least 9% of BBL at the time it was acquired by Environmental. In 1996, a Canadian court convicted Singh of narcotics trafficking and sentenced him to two years in prison. 21. Zoya Financial Corporation, Ltd. ("Zoya") is a Toronto, Ontario corporation, incorporated in 1996 and controlled by Singh. Between at least March 1999 and February 2000, Zoya performed public and investor relations services for Environmental, including the dissemination of false and misleading press releases. Between at least June 1999 and December 1999, Environmental's principal executive office was located in Zoya's offices. 22. Michael W. Smith ("Smith"), age unknown, is a Canadian attorney residing in London, Ontario, Canada. Smith was the president and a controlling shareholder of a private Canadian corporation that transferred the catalytic converter technology patent to BBL, Environmental's wholly owned subsidiary. Smith was also the founder of ESW Capital Management ("ESW Capital"), a Canadian firm that in October 1998 acquired controlling interest in BBC, Environmental's predecessor shell company. After the merger of BBC and BBL, Smith remained as an undisclosed de facto officer and director of Environmental until at least March 2000. 23. Adam Michael Oliver ("Oliver"), age 47, is a Canadian attorney residing in Otterville, Ontario. Oliver was the president of ESW Capital in October 1998 when it acquired controlling interest in BBC. From at least October 1998 through September 2000, Oliver was president of Environmental. Oliver was also Environmental's only director from February 1999 to at least September 2000. In his role as an officer and director of Environmental, Oliver acted at the direction of Smith in conducting Environmental's corporate affairs, including approving press releases, signing Commission filings, and executing Environmental corporate documents. 24. Mark Bergman ("Bergman"), age 50, is a resident of Jersey City, New Jersey, and the owner and president of Access 1 Financial, Inc. In February 2000, Bergman and Access 1 issued a false and misleading analyst report recommending the purchase of Environmental shares. 25. Access 1 Financial, Inc. ("Access 1") is a Nevada corporation, owned and controlled by Mark Bergman. During 1999 and 2000, the company maintained a website, www.access1financial.com, which touted numerous public companies, including Environmental. 26. Bengt Odner ("Odner"), age 48, is a citizen of the United Kingdom and has been the Chief Executive Officer of Environmental since August 1999, and chairman of the company since September 2000. In August 1999, a group of approximately 120 European investors represented by Odner purchased five million of the 15 million shares issued in Environmental's sham Rule 504 offering for $1 million ($.20 per share). At or about the time of Odner's purchase, Environmental's stock was trading at about $3.00 per share. 27. Eugene Foo ("Foo"), age 35, is a Canadian citizen residing in Toronto, Canada. Foo, along with Pangia, Singh, Smith and Oliver, orchestrated Environmental's sham Rule 504 offering in which 15 million shares of Environmental stock were issued in violation of the securities registration provisions of the federal securities laws. FACTS A. Pangia, Smith and Oliver Acquire Control of a Shell Public Company 28. On or about October 29, 1998, Smith and Pangia negotiated the purchase of BBC, Environmental's predecessor public shell company for $150,000 cash. Controlling interest in the shell company was purchased in the name of Smith's and Oliver's firm, ESW Capital, with the intention of merging BBC with BBL, the private Canadian firm controlled by Pangia, Singh, Smith and Oliver. Shortly after acquiring the shell company, Smith installed Oliver, his longtime friend, as the shell company's only officer and director. B. The Sham Rule 504 Offering 29. In January 1999, Pangia, Singh, Smith, Oliver, and Foo, directly or indirectly, caused BBC to issue 15 million shares of its common stock in an unregistered offering. Environmental issued the shares in purported reliance on the private offering exemption from registration afforded by the Commission's Rule 504 [17 C.F.R. 230.501 et. seq. or 17 C.F.R. 230.501-508]. Environmental issued the shares in the names of five nominee offshore companies, which at the time of the offering had yet to be incorporated. At least five million of the shares issued in the Rule 504 offering ended up in brokerage accounts controlled by Pangia and Singh. 30. At the request of Pangia and Smith, Foo retained a Florida attorney to prepare the Rule 504 offering documents, a legal opinion, and a Form D filing required by Rule 504. Pangia, Smith, Foo and Foo's assistant provided the attorney with the information necessary to complete the Rule 504 offering documents. 31. In January 1999, pursuant to instructions from Smith, Oliver executed a corporate resolution authorizing BBC's Utah transfer agent to issue the 15 million shares without a restrictive legend in the names of the five nominee offshore companies purportedly purchasing the shares. BBC's transfer agent delivered the 15 million shares to Foo in February 1999. 32. On or about February 7, 1999, BBC filed a Form D with the Commission, which among other things, claimed that five investors paid BBC a total of $150,000 in cash for the 15 million shares. In fact, this was false in that these funds were never received by BBC or Environmental. Smith and Pangia authorized Foo's assistant to sign the Form D filing as secretary of BBC. 33. Between approximately February 1999 and February 2000, Foo or Foo's assistant, directly or indirectly, delivered the 15 million shares to Pangia or Singh or transferred the shares to accounts that they designated. In each instance, Foo approved the transfer or delivery of the shares. Pangia took physical delivery of at least 6.9 million of the Rule 504 shares, of which, as discussed in paragraphs 70 and 73 below, he sold approximately two million shares through offshore brokerage accounts in the names of Jalon, Gata, and Altea. Singh, directly or indirectly, received and sold approximately 2.6 million of the Rule 504 shares. 34. In February 2000, Foo sold approximately 800,000 of the Rule 504 shares to Singh. C. BBC Merges with BBL to form Environmental 35. On or about January 29, 1999, just 10 days after the sham Rule 504 offering, BBC acquired BBL, the private Canadian firmed controlled by Pangia, Smith, Oliver and Singh, and renamed itself Environmental. As a result of the merger, Environmental issued approximately 11 million restricted shares to the shareholders of BBL, including 3.1 million shares issued to Pangia, and one million shares issued indirectly to Singh. These shares were in addition to the shares that Pangia and Singh received from the sham Rule 504 offering. 36. At Smith's request, Oliver remained the sole officer and director of Environmental and its wholly-owned subsidiary, BBL, after the merger. However, Smith maintained Environmental and BBL's corporate and financial records at his law office. Oliver's role consisted primarily of signing documents at Smith's request, including press releases, filings with the Commission, and corporate documents. Oliver made no attempts to verify the accuracy of these documents. 37. In March 1999, Zoya began performing "public relations" work for Environmental. Also during 1999, Pangia maintained an office at Zoya, and Environmental listed its official office address at Zoya's place of business. D. Environmental's Fraudulent Promotional Campaign 38. Beginning in at least February 1999, and continuing until at least December 2000, Environmental disseminated materially false and misleading information concerning, among other things, the performance and production of its prototype catalytic converter, the company's revenues, profits, and projected share price, and the identity and role of Environmental's management. As detailed herein, the misleading statements and omissions were contained in numerous press releases, postings on Environmental's Internet website, in two analyst reports, and in millions of spam e-mails. July 12, 1999 Press Release 39. On July 12, 1999, Pangia, Singh, Smith and Oliver caused Environmental to issue a press release headlined "ESWW [Environmental] turns 11 year-old clunker into A Clean Air Vehicle". The release announced the purported results of initial tests performed on the "Enviro Cat," Environmental's prototype catalytic converter, by AutoResearch Laboratories, Inc. ("AutoResearch"), an independent automobile testing facility. Pangia and Smith hired AutoResearch to measure the tailpipe emissions from a test vehicle using Environmental's prototype converter. Using unleaded fuel, AutoResearch measured the amounts of unburned hydrocarbons (HC), nitrogen oxides (NOx), carbon monoxide (CO) and carbon dioxide (CO2) that were emitted from a test vehicle while equipped with the Enviro Cat prototype. AutoResearch also measured the tailpipe emissions while operating the test vehicle without a catalytic converter. 40. Environmental's July 12, 1999, press release contained the following statements:
41. Each of the statements made by Environmental in paragraph 40 was materially false or misleading. 42. At the time of the July 12th press release, Environmental's prototype converter was not the only converter in the world to reduce emissions of NOx. The Environmental Protection Agency (EPA), which regulates the amount of certain tailpipe emissions, utilizes the term "oxides of nitrogen" or "NOx" to describe the sum of nitrogen dioxide (NO2) and nitric oxide (NO), expressed as NO2. Since 1981, it has been widely known in the automotive industry and reported in readily available public information that conventional three-way catalytic converters installed on automobiles manufactured in the United States have been very effective in reducing, not increasing, NOx emissions. Industry studies show that cars using conventional three-way catalytic converters typically emit 70% to 99% less NOx than cars operating without catalytic converters. 43. Moreover, the EPA study referred to in the July 12th press release acknowledged that conventional catalytic converters reduce the amount of NOx emitted from a vehicle. However, the study claimed that conventional converters may also increase the amount of nitrous oxide emissions. Nitrous oxide, which carries the symbol N20, is a greenhouse gas that is believed to be a cause of global warming. Unlike emissions of NOx, N2O or nitrous oxide emissions are not regulated by the EPA. 44. The AutoResearch tests performed for Environmental also demonstrated that a conventional catalytic converter reduced, not increased, the amount of NOx emissions from the test vehicle. Approximately five days before the issuance of the July 12th press release, AutoResearch began conducting additional tests on behalf of Environmental in which it measured tailpipe emissions from the test vehicle using a conventional catalytic converter. These tests were completed and provided to Environmental on or about July 19, 1999. The test results revealed that the conventional converter was as effective as the Environmental converter in reducing emissions of NOx. Moreover, the conventional converter was approximately 150% more efficient than the Environmental converter in reducing emissions of HC (hydrocarbons), a large contributor to smog. Despite receiving these test results on July 19, 1999, Environmental never issued a press correcting its misleading July 12th release. 45. Environmental's claim that it turned a smoking clunker into a low emission vehicle was also false. According to the AutoResearch tests, the test vehicle using the Enviro Cat converter did not meet the EPA standards to be classified as a "low emission" vehicle. Further, the phrase "smoking clunker" implies that the vehicle was in poor condition and had unusually high emissions before the Enviro Cat converter was installed. The AutoResearch test results show that the vehicle's emissions were not unusually high for a vehicle from which the OEM catalytic converter had been removed. 46. Environmental's claim that its converter, unlike current technology, begins working immediately after the car is started was equally misleading. AutoResearch completed its initial tests before the issuance of the July 12th release. The tests showed that during the "cold start" testing phase, or during the first 505 seconds of operation immediately following a cold start, the test vehicle using the Environmental prototype converter produced substantially more emissions of NOx, HC, and CO than during the second and third phases of the tests after the engine had warmed up. Moreover, the AutoResearch tests on the conventional catalytic converter revealed that it was more efficient than the Enviro Cat during the cold start testing phase. According to the tests, the conventional converter emitted substantially less HC, and about the same amounts of CO and NOx, as the Enviro Cat during the cold start phase. 47. Environmental's claim that conventional converters only work on unleaded fuel was similarly false. Catalytic converters are routinely installed on some diesel vehicles, and are effective in reducing tailpipe emissions of particulate matter, HC, and CO. Catalytic converters capable of reducing NOx from diesel vehicles have also been developed, and were described in published technical literature well before the Environmental press release. Moreover, by claiming that the Enviro Cat converter also worked on diesel and leaded fuels, the July 12th release implied that AutoResearch tested the Environmental converter with leaded and diesel fuels. In truth, as of July 12, 1999, AutoResearch had tested the Environmental converter only with unleaded fuel - a fact not disclosed in the July 12th release. 48. The July 12th release also failed to disclose that during the AutoResearch testing of the Enviro Cat, the prototype produced significant levels of "back pressure" in the test vehicle's exhaust system. Back pressure, which is pressure in the exhaust pipe due to the flow restriction created by the catalytic converter, negatively affects engine power and efficiency. According to the AutoResearch tests, the Enviro Cat produced twice as much back pressure as the conventional converter at higher vehicle speeds. August 4, 1999 Analyst Report 49. On August 4, 1999, a stock analyst working for a New York brokerage firm issued a "buy" recommendation on Environmental, based upon information provided to him by Pangia, whom the analyst described in his accompanying report as Environmental's "acting CEO." The analyst's report restated many of the false and misleading representations from the July 12th press release including that the Environmental converter "greatly exceeded existing technology standards for NOx reduction," while "recent EPA studies suggest conventional converters actually increase NOx emissions." It further stated that the "company's findings reveal that the new converter works upon startup, with typical converters working only after a warm-up period." Pangia reviewed and approved the analyst's report before its issuance. Environmental also issued a press release announcing the analyst's favorable report and posted the report on its website. February 23, 2000 Press Release 50. On February 23, 2000, Environmental issued a press release that claimed the "Enviro Cat dramatically reduces toxic emissions - including greenhouse gases such as nitrous oxide." The release, which contained several quotes from Odner, the company's CEO, also claimed that the July 1999 AutoResearch tests "validated the prototypes (sic) ability to reduce nitrous oxide as well as hydrocarbons and carbon monoxide." In fact, neither AutoResearch nor Environmental had tested the Environmental converter's ability to reduce nitrous oxide emissions. The February 23rd press release was also posted on the Environmental website. Access 1 Analyst Report 51. In late January 2000 or early February 2000, Pangia hired Bergman and his company, Access 1, to prepare a report recommending the purchase of Environmental's stock. Bergman and Access 1 were paid 30,000 Environmental shares and $25,000 in cash for the report. Access 1 and Bergman touted penny stocks in reports distributed over newswires and on the Access 1 website. At the time of the Environmental report, the Access 1 website referred to Bergman as "Dr. Mark Bergman" and claimed that Bergman had the "uncanny ability to identify select high-growth potential companies offering significant long-term returns [making] him one of the most highly respected analysts in the industry." In fact, Bergman did not have a doctorate degree, and many of the stocks touted on his website, including Environmental, were thinly-traded penny stocks. 52. In preparing the Environmental report, Bergman and his two part-time employees relied on information provided by Pangia and Singh, whom the report described as Environmental's "visionary and business-oriented management team." Among other things, Pangia and Singh provided Bergman with the company's prior press releases, the August 4, 1999, analyst report on Environmental, and production and costs projections for the Enviro Cat. 53. On February 25, 2000, Bergman and Access 1 issued a report on Environmental with a "buy" recommendation for Environmental stock. The report described Environmental as "an industry leader and innovator," and the company's catalytic converter technology as "revolutionary." The report also made the following claims:
54. Each of the statements described in paragraph 53 was materially false or misleading. 55. As previously noted, Environmental had not tested the Enviro Cat's ability to reduce or eliminate nitrous oxide emissions. Moreover, the report failed to disclose that the AutoResearch tests confirmed that: (a) a conventional catalytic converter was equally or more effective than the Environmental prototype converter in reducing tailpipe emissions; and (b) the Environmental converter was less efficient than a conventional converter in reducing overall tailpipe emissions during the ignition or cold start testing phase. 56. The Access 1 recommendation report on Environmental also claimed that Environmental had begun "the first phase of the large-scale manufacture of the Enviro Cat prototype," with "product rollout expected for mid-to-late FY 2000." The report further projected that the company would produce revenues of $35 million and earn $14.2 million in the year 2000. Contrary to these claims, in February 2000 the company was still designing and testing prototype converters and there was simply no reasonable basis to say the company would establish production in 2000, much less have any revenues or earnings for the year. 57. The Access 1 report concluded with an "extremely conservative" 6-month price target on Environmental stock of $15 per share, and a 12 to 18 month "valuation" of $30 to $125 per share. These price targets and valuations were also made without any reasonable basis. 58. Neither Bergman nor the Access 1 employees who assisted Bergman in preparing the Environmental report ever reviewed Environmental's disclosures in its public filings with the Commission. Before the report was issued, Environmental had filed a Form 10-12G registration statement with the Commission registering its shares under the Exchange Act. In response to a comment from the Commission's Division of Corporate Finance, which was reviewing the filing, Environmental made the following statement in the October 22, 1999, amendment to the Form 10-12G filing: "[Environmental's converter] may have no advantage over existing converter technology, or may be less efficient than existing technology in reducing some or all noxious emissions." 59. The Access 1 report was posted on the Environmental and the Access 1 websites, and both Access 1 and Environmental issued press releases announcing the favorable analyst coverage. In neither the report nor the press releases was it disclosed that Access 1 was paid 30,000 shares of Environmental stock and $25,000 for the report. 60. On March 10, 2000, Environmental removed the Access 1 report from its website. On March 23, 2000, Environmental issued a corrective press release in which it strongly disavowed several claims in the report. Notwithstanding Environmental's apparent repudiation of the report, Bergman upgraded his recommendation on Environmental from a "buy" to a "strong buy" on the Access 1 website, stating: "[w]e . . . expect a retractment [sic] of the statement that ESWW [Environmental] released denouncing Access 1 Financial's recommendation. We are extremely positive about the company and their [sic] technology." Spam E-mail Campaign 61. From on or about February 14, 2000, through on or about March 19, 2000, Environmental was promoted in a massive unsolicited e-mail campaign also known as "spam" e-mails. The e-mails falsely claimed that "ESWW [Environmental] is close to announcing contracts totaling $600 million." The e-mails also touted the recently published Access 1 report and repeated many of the misleading statements from the report. The emails also falsely reported that two other analysts, R.J. Jackson, Inc., and Anderson Analytical had issued target share prices for Environmental of $150 and $70, respectively. In fact, the R.J. Jackson and Anderson Analytical recommendations do not exist. 62. Pangia and Singh were directly or indirectly responsible for hiring the persons responsible for orchestrating the spam email campaign touting Environmental stock. At least 15,000 shares from the sham Rule 504 offering were used to compensate the spammers. Odner's June 12, 2000, Interview with an Online Investment Publication 63. On or about June 12, 2000, Odner gave an "in depth" interview with an online weekly investment publication. In the interview, which was linked to the Environmental website, Odner expressed his view that Environmental's then current stock price (around $2) was "cheap," and made several materially false or misleading claims about the Environmental converter, including the following:
Other Misleading Press Releases and Postings on Environmental's Website 64. Between May 4, 2000, and at least November 1, 2000, Environmental, with the approval of Odner, issued numerous press releases that repeated several of the prior misstatements concerning the efficiency of the Environmental catalytic converter. These misleading press releases remained on the Environmental website until at least December 27, 2000. For example, in several press releases Environmental touted its converter's purported ability to "dramatically" reduce nitrous oxide emissions, despite the fact that Environmental had not tested the converter's ability to reduce such emissions. 65. Moreover, between February 1999 and December 2000, Environmental falsely claimed on its website that current or existing converters were "ineffective [during] first 10 minutes to remove emissions," while the Environmental converter "immediately removes toxic gases once engine is engaged." 66. The Environmental website also claimed as late as December 2000, "[t]he company believes the new converter works equally well on leaded, unleaded and diesel fuels. The Company has recently completed successful testing for the unleaded and diesel application. Further testing is anticipated for leaded and non-automotive applications, in the near future." However, at the time, Environmental could not produce any tests showing it had tested its prototype converter using leaded fuel. Moreover, the limited tests performed on the Environmental prototype using diesel fuel were not done in compliance with EPA federal test procedures. Further, the diesel tests revealed that the ENVIRONMENTAL prototype reduced emissions of NOx by only an insignificant amount. In addition, the diesel tests performed on the Environmental converter did not measure the emissions of particulate matter, which is the principal harmful emission (in addition to NOx) generated by diesel engines. E. Market Reaction 67. Environmental's fraudulent promotional campaign artificially stimulated a rise in Environmental's share price. Between January 20, 1999, and July 9, 1999, Environmental's average closing share price was $2.00, and the average daily trading volume was 40,138 shares. The price began to rise just before the July 12th release announcing the purported results of the AutoResearch tests, closing at $2.72 and $3.88 on the two days before the release. Then on July 12th, Environmental's share price closed at $4.22 with 467,600 shares traded. By the end of August 1999, the stock price had returned to the $2 level. 68. Between September 3, 1999, and January 27, 2000, Environmental's average closing share price was $1.84 with average daily trading volume of 35,669 shares traded. On February 3, 2000, Environmental's share prices closed at $3.06. Then, on February 4, 2000, the Toronto Star newspaper published a story citing an "unnamed industry source" announcing that Environmental was on the verge of concluding a deal with Wescast Industries, Ltd., one of the world's largest manufacturers of automotive exhaust manifolds. (In fact, no deal with Wescast was ever reached.) The next full trading day after the story, February 7, 2000, Environmental's closing share price increased to $4.53 on volume of 781,000 shares. On or about February 14, 2000, the misleading spam e-mail campaign began, and that same day the price spiked to $4.94 on volume of 1,193,600 shares. Between February 15, 2000, and February 25, 2000, as the spam e-mails continued, Environmental's average closing price was $4.43 on average daily trading volume of 575,300 shares. 69. On February 28, 2000, the first trading day after the publication of the Access 1 report, Environmental's stock reached $6.00 on volume of 627,300. The price continued to rise, closing at a high of $7.35 on March 9, 2000. F. Pangia and Singh Dump Millions of Environmental Shares into the Inflated Market 70. As previously alleged, prior to Environmental's fraudulent promotional campaign, Environmental's predecessor shell company, BBC, and several of the individual defendants, orchestrated a sham Rule 504 offering in which 15 million shares were issued in the names of five nominee offshore companies. 71. Pangia took physical delivery of at least 6.9 million of the 15 million Environmental Rule 504 shares. He transferred approximately 2.6 million shares to brokerage accounts in the names of three Guernsey companies he created: Jalon, Gata, and Altea. At Pangia's request, a Guernsey accounting firm served as the nominee director for each of the three entities. Per Pangia's instructions, the accounting firm opened Canadian brokerage accounts for each company. Between January 2000 and February 2001, Pangia directed the firm to sell or transfer at least 2 million shares through the Jalon, Gata, and Altea accounts realizing approximately $3.8 million. 72. Pangia also disposed of approximately 2 million of the Environmental Rule 504 shares through a U.S. brokerage account that he indirectly controlled styled "Dolphin Partners." During August 1999, Pangia directed the signatory on the Dolphin Partners account to transfer approximately 1.7 million shares from the account to numerous other persons or accounts, including 125,000 shares to Pangia's Jalon account. Pangia also directed the transfer of 30,000 shares from the Dolphin Partners account as partial payment to Mark Bergman for the Access 1 report, and the transfer of 15,000 shares from the account to pay the persons responsible for the spam emails touting Environmental. 73. Between June 1999 and May 2000, Singh sold approximately 2.63 million of the Rule 504 Environmental shares through a United Kingdom investment firm account realizing approximately $11.2 million. Pangia also received at least $65,000 from this account. G. Environmental Files a False and Misleading Registration Statement 74. On August 31, 1999, Environmental filed a Form 10-12G registration statement with the Commission, seeking to register its shares under the Exchange Act. The registration statement became effective on December 10, 1999, after Environmental filed four amendments to the initial filing. Environmental's outside securities counsel prepared the registration statement and amendments with the assistance of Smith and Pangia. Oliver, at Smith's direction, signed the registration statement and the management representation letter to Environmental's Canadian auditor despite having made no effort to verify any of the statements in the Form 10-12G. 75. The Form 10-12G and its amendments contained no mention of Smith, or his role in the management of the company. Specifically, the filing did not disclose that Oliver, the company's president and only director, was merely serving as a figurehead. Similarly, the filing did not disclose Singh's management role in the company. Further, although Pangia is identified in the filing as a "consultant" and controlling shareholder, the filing omitted to disclose his active management role. 76. The Form 10-12G also misstated the true beneficial ownership of Environmental securities held by Pangia and failed to disclose the shares held by Singh. In particular, the filing omitted to disclose their ownership or control over the 15 million shares issued in the sham Rule 504 offering. At the time of the registration statement, the Rule 504 shares represented approximately 55% of the company's outstanding stock. Pangia aided and abetted this non-disclosure by misrepresenting his beneficial ownership in a questionnaire he completed for Environmental's securities counsel. 77. The Form 10-12G also misrepresented the true nature of the Rule 504 offering and the consideration purportedly received by the company for the issuance of the 15 million shares. The filing stated that the 15 million shares were issued "in settlement of indebtedness of $150,000." The purported indebtedness was an invoice created by Smith dated January 8, 1999, for purported legal services performed for Environmental's predecessor shell company, BBC. Smith purportedly assigned the $150,000 invoice to one of the five offshore companies in whose name the Rule 504 shares were issued. In reality, Environmental never received any consideration for the Rule 504 shares, and Smith merely created the invoice and assignment after the fact to justify the issuance of the 15 million shares. Further, the purported liability represented by Smith's invoice was placed in Environmental's financial statements for the period ending December 31, 1998, and was the only transaction during the fourth quarter of 1998. 78. In a letter dated August 20, 1999, addressed to Environmental's auditor, Oliver represented that: (a) all liabilities were reflected in the December 31, 1998, financial statements; (b) all transactions were arms-length or separately disclosed; (c) all related-party transactions had been disclosed; and (d) there had been no irregularities involving management or employees who had significant roles in the system of internal controls. Despite signing the letter with these representations, Oliver had never seen nor reviewed the financial statements, and thus was unable to truthfully make any such representations about the financial statements or the internal controls. Oliver signed the letter at the direction of Smith. H. Pangia Files a False and Misleading Form 3 and Schedule 13D 79. On December 20, 1999, Pangia filed a Form 3 and Schedule 13D with the Commission in which he disclosed that his total stock holdings in Environmental consisted of approximately 3.1 million restricted shares that his Canadian firm received in the merger between BBC and BBL. Pangia's Form 3 and Schedule 13D filings failed to disclose his beneficial control and ownership of the shares he received in the sham Rule 504 offering. Pangia also failed to file Forms 4 with the Commission disclosing his acquisition and sales of the Rule 504 shares. I. Environmental Files a Misleading Form 10-K for the Period Ending December 31, 1999 80. On or about March 30, 2000, Environmental filed its annual report on Form 10-K with the Commission for the period ending December 31, 1999. Oliver and Odner signed the filing. Environmental failed to disclose Pangia, Singh and Smith's active management roles in the company, and Oliver's role as a figurehead officer and director. The filing also misrepresented Pangia's beneficial ownership of Environmental shares, and failed to disclose Singh's beneficial ownership of the Rule 504 shares. Moreover, the filing falsely claimed that the 15 million Rule 504 shares were issued to satisfy a $150,000 accounts payable. As previously alleged, the $150,000 liability was a bogus invoice created by Smith. FIRST CLAIM Violations of Section 10(b) of the Exchange Act and Rule 10b-5 Thereunder by Defendants Environmental, Pangia, Jalon, Gata, Altea, Singh, Zoya, Smith, Oliver, Bergman, Access 1, and Odner 81. Plaintiff Commission repeats and incorporates paragraphs 1 through 80 of this Complaint by reference as if set forth verbatim. 82. Defendants Environmental, Pangia, Jalon, Gata, Altea, Singh, Zoya, Smith, Oliver, Bergman, Access 1, and Odner, directly or indirectly, singly or in concert with others, in connection with the purchase and sale of securities, by use of the means and instrumentalities of interstate commerce and by use of the mails, have: (a) employed devices, schemes and artifices to defraud; (b) made untrue statements of material facts and omitted to state material facts necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading; and (c) engaged in acts, practices and courses of business which operate as a fraud and deceit upon purchasers, prospective purchasers, and other persons. 83. As a part of and in furtherance of their scheme, defendants Environmental, Pangia, Jalon, Gata, Altea, Singh, Zoya, Smith, Oliver, Bergman, Access 1, and Odner, directly and indirectly, prepared, approved, and disseminated press releases, website postings, spam e-mails, analyst reports, and Commission filings, which contained untrue statements of material facts and misrepresentations of material facts, and which omitted to state material facts necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading, including, but not limited to, those set forth in paragraphs 17 through 80 above. 84. Defendants Environmental, Pangia, Jalon, Gata, Altea, Singh, Zoya, Smith, Oliver, Bergman, Access 1, and Odner knowingly or recklessly engaged in the conduct described in this Claim. 85. By reason of the foregoing, defendants Environmental, Pangia, Jalon, Gata, Altea, Singh, Zoya, Smith, Oliver, Bergman, Access 1, and Odner have violated, and unless enjoined, will continue to violate the provisions of Section 10(b) of the Exchange Act [15 U.S.C. §78j(b)] and Rule 10b-5 thereunder [17 C.F.R. §240.10b-5]. SECOND CLAIM Violations of Section 17(a) of the Securities Act by Defendants Pangia, Jalon, Gata, Altea, and Singh 86. Plaintiff Commission repeats and incorporates paragraphs 1 through 80 of this Complaint by reference as if set forth verbatim. 87. Defendants Pangia, Jalon, Gata, Altea, and Singh, directly or indirectly, singly or in concert with others, in the offer and sale of securities, by use of the means and instruments of transportation and communication in interstate commerce and by use of the mails, have: (a) employed devices, schemes or artifices to defraud; (b) obtained money or property by means of untrue statements of material fact or omissions to state material facts necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading; and (c) engaged in transactions, practices, and courses of business which operate or would operate as a fraud or deceit upon purchasers of securities. 88. As part of and in furtherance of their scheme, defendants Pangia, Jalon, Gata, Altea, and Singh, directly and indirectly, prepared, approved, and disseminated press releases, website postings, spam e-mails, analyst reports, and Commission filings which contained untrue statements of material fact and which omitted to state material facts necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading, including, but not limited to, those statements and omissions set forth in paragraphs 17 through 80 above. 89. Defendants Pangia, Jalon, Gata, Altea, and Singh knowingly or recklessly engaged in the conduct described in this Claim. 90. By reason of the foregoing, defendants Pangia, Jalon, Gata, Altea, and Singh have violated and, unless enjoined, will continue to violate Section 17(a) of the Securities Act [15 U.S.C. 77q(a)]. THIRD CLAIM Violations of Sections 5(a) and 5(c) of the Securities Act by Defendants Environmental, Pangia, Jalon, Gata, Altea, Singh, Smith, Oliver, and Foo, 91. Plaintiff Commission repeats and incorporates paragraphs 1 through 80 of this Complaint by reference as if set forth verbatim. 92. Defendants Environmental, Pangia, Jalon, Gata, Altea, Singh, Smith, Oliver, and Foo, directly or indirectly, singly or in concert with others: (a) without a registration statement in effect as to the securities, (i) made use of the means or instruments of transportation or communication or the mails to sell such securities through the use or medium of a prospectus or otherwise, or (ii) carried or caused to be carried through the mails, or in interstate commerce, by any means or instruments of transportation, such securities for the purpose of sale or for delivery after sale; and (b) made use of the means or instruments of transportation or communication in interstate commerce or of the mails to offer to sell or offer to buy through the use or medium of a prospectus or otherwise securities for which a registration statement had not been filed as to such securities. 93. By reason of the foregoing, Environmental, Pangia, Jalon, Gata, Altea, Singh, Smith, Oliver, and Foo have violated and, unless enjoined, will continue to violate Sections 5(a) and 5(c) of the Securities Act [15 U.S.C. §§77e(a) and 77e(c)]. FOURTH CLAIM Violations of Section 13(a) of the Exchange Act and Rules 12b-20, and 13a-1 Thereunder by Defendant Environmental, and Aiding and Abetting Violations by Defendants Pangia, Smith, and Oliver 94. Plaintiff Commission repeats and incorporates paragraphs 1 through 80 of this Complaint by reference as if set forth verbatim. 95. Environmental is a public company whose common stock is registered with the Commission and is required to file annual reports with the Commission in accordance with Section 13(a) of the Exchange Act and Rule 13a-1 thereunder. Exchange Act Rule 12b-20 requires that such reports contain, in addition to disclosures expressly required by statute and rules, such other information as is necessary to ensure that the statements made are not, under the circumstances, misleading. 96. On or about March 30, 2000, Pangia, Smith, and Oliver caused Environmental to file a false and misleading Form 10-K for the year ending December 31, 1999. The filing contained false and misleading statements concerning the identity and roles of the management of the company, the beneficial securities held by management, and the purported consideration received by the company for the issuance of 15 million Rule 504 shares. 97. By reason of the foregoing, defendant Environmental has violated and, unless enjoined, will continue to violate, and defendants Pangia, Smith, and Oliver have aided and abetted violations of, and unless enjoined, will continue to aid and abet violations of, Section 13(a) of the Securities Act [15 U.S.C. §78m(a)] and Rules 12b-20 and 13a-1 thereunder [17 C.F.R. 240.12b-20 and 13a-1]. FIFTH CLAIM Violations of Section 13(b)(2)(a) of the Exchange Act and Rule 13(b)(2)(1) Thereunder by Defendant Environmental 98. Plaintiff Commission repeats and incorporates paragraphs 1 through 80 of this Complaint by reference as if set forth verbatim. 99. Section 13(b)(2)(a) of the Exchange Act and Rule 13(b)(2)(1) thereunder require that Environmental: (1) make or keep books, records and accounts, which in reasonable detail accurately and fairly reflect the transactions and dispositions of Environmental's assets; and (2) devise and maintain a system of internal accounting controls sufficient to provide reasonable assurances that: (a) transactions are executed in accordance with management's general or specific authorization; (b) transactions are recorded as necessary (i) to permit preparation of financial statements in conformity with generally accepted accounting principles or any other criteria applicable to such statements, and (ii) to maintain accountability for assets; (c) access to assets is permitted only in accordance with management's general or specific authorization; and (d) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any difference. 100. Environmental, a company registered under Section 12 of the Exchange Act, kept false books and records. Specifically, Environmental falsely recorded the accrual of and satisfaction of the purported liability in its reports relating to its issuance of 15 million shares in a purported Rule 504 offering. 101. By reason of the foregoing, Environmental violated and, unless enjoined, will continue to violate Section 13(b)(2)(a) of the Exchange Act [15 U.S.C. §78m(b)(2))(a)] and Rule 13(b)(2)(1) thereunder [17 C.F.R. 240.13b2-1]. SIXTH CLAIM Violations of Section 13(b)(5) of the Exchange Act by Defendants Oliver, Smith and Environmental 102. Plaintiff Commission repeats and incorporates paragraphs 1 through 80 of this Complaint by reference as if set forth verbatim. 103. Section 13(b)(5) of the Exchange Act requires that no person shall knowingly circumvent or knowingly fail to implement a system of internal accounting controls or knowingly falsify any book, record, or account required to be kept by a registrant under Section 13(b)(2) of the Exchange Act. (See Paragraph 99 above). 104. Oliver, Environmental's former president and sole director, knowingly failed to implement a system of internal accounting controls. These controls include a system that would have examined Smith's bogus invoice for legal services provided. Smith knowingly falsified books, records, and accounts required to be kept under Section 13(b)(2) of the Exchange Act. Specifically, Smith created a false legal services invoice to cause Environmental to falsely record the accrual of and satisfaction of the purported liability in its reports relating to Environmental's issuance of 15 million shares in a purported Rule 504 offering. 105. By reason of the foregoing, Oliver, Smith and Environmental violated and, unless enjoined, will continue to violate Section 13(b)(5) of the Exchange Act [15 U.S.C. §78m(b)(5)]. SEVENTH CLAIM Violations of Exchange Act Rule 13b2-2 by Defendant Oliver 106. Plaintiff Commission repeats and incorporates paragraphs 1 through 80 of this Complaint by reference as if set forth verbatim. 107. Exchange Act Rule 13b2-2 prohibits officers and directors of an issuer from directly or indirectly making or causing to be made a materially false or misleading statement or omitting to state, or causing another person to omit to state, any material fact necessary in order to make the statements made, in light of the circumstances under which such statements were made, not misleading to an accountant in connection with any audit or examination of the issuer's required financial statements or the preparation of any document or report filed with the Commission. 108. Oliver, Environmental's former president and sole director, falsely stated to Environmental's auditor in a letter dated August 20, 1999, relating to Environmental's financial statements for the period ending December 31, 1998, that all liabilities were reflected in the financial statements, that all transactions were arms-length or separately disclosed, that all related-party transactions had been disclosed, and that there had been no irregularities involving management or employees who had significant roles in the system of internal controls. 109. By reason of the foregoing, Oliver violated and, unless enjoined, will continue to violate Exchange Act Rule 13b2-2 [17 C.F.R. 240.13b2-2]. EIGHTH CLAIM Violations of Section 13(d) of the Exchange Act and Rules 13d-1 and 13d-2 Thereunder by Defendant Pangia 110. Plaintiff Commission repeats and incorporates paragraphs 1 through 80 of this Complaint by reference as if set forth verbatim. 111. Section 13(d) of the Exchange Act and Rule 13d-1 thereunder require that any person that acquires more than 5% of a company's class of stock registered under Section 12 of the Exchange Act must notify the issuer and the Commission within 10 days of the acquisition. Exchange Act Rule 13d-2 requires that the person notify the issuer and the Commission of any material increases or decreases in the percentage of beneficial ownership. 112. Pangia had beneficial ownership of more than 5% of Environmental's outstanding shares of common stock by August 1999 by acquiring the shares issued in the Rule 504 offering. After Environmental's Form 10-12G registration statement became effective in December 1999, Pangia was required to file Form 3 and Schedule 13D with the Commission. Pangia's Form 3 and Schedule 13D were inaccurate because they failed to disclose his beneficial ownership of Rule 504 shares. Further, Pangia failed to file Forms 4 notifying the Commission of changes in his Environmental holdings relating to the Rule 504 shares. 113. By reason of the foregoing, Pangia violated and, unless enjoined, will continue to violate Section 13(d) of the Exchange Act [15 U.S.C. §78m(a)] and Rules 13d-1 and 13d-2 thereunder [17 C.F.R. 240.13d-1, 13d-2]. NINTH CLAIM Violations of Section 16(a) of the Exchange Act and Rule 16a-3 Thereunder by Defendant Pangia 114. Plaintiff Commission repeats and incorporates paragraphs 1 through 80 of this Complaint by reference as if set forth verbatim. 115. Section 16(a) of the Exchange Act and Rule 16a-3 thereunder require that any person that directly or indirectly beneficially owns more than 10% of a company's class of stock registered under Section 12 of the Exchange Act must notify the Commission within 10 days of the acquisition. Additionally, Section 16(a) of the Exchange Act requires that if there has been a change of such ownership during a month, the reporting persons shall file with the Commission a statement indicating their ownership at the end of the calendar month and the changes in that ownership that occurred during the month. Exhange Act Rule 16a-3 requires that initial statements of beneficial ownership be filed on Form 3, and that statements of changes in beneficial ownership be filed on Form 4. 116. Pangia had beneficial ownership of more than 10% of Environmental's outstanding shares of common stock by August 1999 by acquiring shares issued in the Rule 504 offering. After Environmental's Form 10-12G registration statement became effective in December 1999, Pangia was required to file Form 3 with the Commission. Pangia's Form 3 and Schedule 13D were inaccurate because they failed to disclose his beneficial ownership of Rule 504 shares. Further, Pangia failed to file Forms 4 notifying the Commission of changes in his Environmental holdings relating to the Rule 504 shares. Accordingly, Pangia violated Section 16(a) and Rule 16a-3 thereunder. 117. By reason of the foregoing, Pangia violated and, unless enjoined, will continue to violate Section 16(a) of the Exchange Act [15 U.S.C. §78p(a)] and Rule 16a-3 thereunder [17 C.F.R. 240.16a-3]. TENTH CLAIM Violations of Section 17(b) of the Securities Act by Defendants Bergman and Access 1 118. Plaintiff Commission repeats and incorporates paragraphs 1 through 80 of this Complaint by reference as if set forth verbatim. 119. Defendants Bergman and Access 1 used the means or instruments of transportation or communication in interstate commerce or of the mails to publish, give publicity to, or circulate any notice, circular, advertisement, newspaper, article, letter, investment service, or communication which, though not purporting to offer a security for sale, described such security for consideration received or to be received, directly or indirectly, from an issuer, underwriter, or dealer, without fully disclosing the receipt, whether past or prospective, of such consideration and the amount thereof. 120. By reason of the foregoing activities, Bergman and Access 1 violated and, unless enjoined, will continue to violate Section 17(b) of the Securities Act [15 U.S.C. §77q(b)]. PRAYER FOR RELIEF WHEREFORE, the Commission respectfully requests that this Court enter a judgment: (i) permanently enjoining defendant Environmental, and its agents, servants, employees, attorneys, and those in active concert or participation with it, who receive actual notice by personal service or otherwise, from violating Sections 5(a) and 5(c) of the Securities Act and Sections 10(b), 13(a), 13(b)(2)(a), and 13(b)(5) of the Exchange Act and Rules 10b-5, 12b-20, 13a-1, and 13b2-1 thereunder; (ii) permanently enjoining defendant Pangia, and his agents, servants, employees, attorneys, and those in active concert or participation with him, who receive actual notice by personal service or otherwise, from violating Sections 5(a), 5(c), and 17(a) of the Securities Act and Sections 10(b), 13(d), and 16(a) of the Exchange Act and Rules 10b-5, 13d-1, and 16a-3 thereunder, and aiding and abetting violations of Section 13(a) of Exchange Act and Rules 12b-20 and 13a-1 thereunder; (iii) permanently enjoining defendants Jalon, Gata, and Altea, and their agents, servants, employees, attorneys, and those in active concert or participation with them, who receive actual notice by personal service or otherwise, from violating Sections 5(a), 5(c), and 17(a) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder; (iv) permanently enjoining defendant Satbal Singh, and his agents, servants, employees, attorneys, and those in active concert or participation with him, who receive actual notice by personal service or otherwise, from violating Sections 5(a), 5(c), and 17(a) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder; (v) permanently enjoining defendant Zoya Financial Corporation, Ltd., and its agents, servants, employees, attorneys, and those in active concert or participation with it, who receive actual notice by personal service or otherwise, from violating Section 10(b) of the Exchange Act and Rule 10b-5 thereunder; (vi) permanently enjoining defendant Michael W. Smith, and his agents, servants, employees, attorneys, and those in active concert or participation with him, who receive actual notice by personal service or otherwise, from violating Sections 5(a) and 5(c) of the Securities Act and Sections 10(b) and 13(b)(5) of the Exchange Act and Rule 10b-5 thereunder, and aiding and abetting violations of Sections 13(a) and 13(b)(2)(A) of the Exchange Act and Rules 12b-20, 13a-1 and 13b2-1 thereunder; (vii) permanently enjoining defendant Adam Michael Oliver, and his agents, servants, employees, attorneys, and those in active concert or participation with him, who receive actual notice by personal service or otherwise, from violating Sections 5(a) and 5(c) of the Securities Act and Sections 10(b) and 13(b)(5) of the Exchange Act and Rules 10b-5 and 13b2-2 thereunder, and aiding and abetting violations of Section 13(a) of the Exchange Act and Rules 12b-20 and 13a-1 thereunder; (viii) permanently enjoining defendants Mark Bergman and Access 1 Financial, Inc., and their agents, servants, employees, attorneys, and those in active concert or participation with them, who receive actual notice by personal service or otherwise, from violating Section 17(b) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder; (ix) permanently enjoining defendant Bengt Odner, and his agents, servants, employees, attorneys, and those in active concert or participation with him, who receive actual notice by personal service or otherwise, from violating Section 10(b) of the Exchange Act and Rule 10b-5 thereunder; (x) permanently enjoining defendant Eugene Foo, and his agents, servants, employees, attorneys, and those in active concert or participation with him, who receive actual notice by personal service or otherwise, from violating Sections 5(a) and 5(c) of the Securities Act; (xi) ordering defendants Pangia, Jalon, Gata, Altea, Singh, Zoya, Smith, Oliver, Bergman, Access 1, and Odner to provide an accounting of all ill-gotten gains from the conduct alleged herein; (xii) ordering defendants Pangia, Jalon, Gata, Altea, Singh, Bergman, and Access 1 to disgorge all ill-gotten gains from the conduct alleged herein, with prejudgment interest; (xiii) ordering defendants Pangia, Jalon, Gata, Altea, Singh, Zoya, Smith, Oliver, Bergman, Access 1, Odner, and Foo to pay civil money penalties pursuant to Section 20(d) of the Securities Act [15 U.S.C. § 77t(d)] and Section 21(d)(3) of the Exchange Act [15 U.S.C. § 78u(d)(3)]; (xiv) permanently barring defendants Pangia, Singh, Smith, and Oliver from serving as an officer or director of a publicly traded company pursuant to Section 20(e) of the Securities Act [15 U.S.C. §77t(e)] and Section 21(d) of the Exchange Act [15 U.S.C. § 78u(d)]; and (xv) granting such other relief as this Court may deem just and appropriate. Dated this day of August, 2002.
OF COUNSEL SPENCER C. BARASCH
http://www.sec.gov/litigation/complaints/comp17673.htm
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