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UNITED STATES DISTRICT COURT
COMPLAINT Plaintiff, United States Securities and Exchange Commission, for its Complaint alleges as follows: SUMMARY 1. This case arises out of materially false or misleading public statements and omissions made by defendant Maxxon, Inc. and Gifford M. Mabie, Jr., Maxxon's President and Chief Executive Officer. The false or misleading statements and omissions were made from at least 1997 through 1999 and in 2002 and related to Maxxon's only product, a safety syringe with a retractable needle designed to reduce needle-stick injuries ("Maxxon Syringe"). Maxxon and Mabie engaged in an extensive media campaign making materially false or misleading statements and omissions about Maxxon and the Maxxon Syringe. 2. In 1997, 1998, and 1999, in press releases, on television, on the Internet, and in a nationwide telephone conference call to securities brokers, Maxxon and Mabie claimed that the Maxxon Syringe could be manufactured and sold for the same cost as a standard syringe with a non-retractable needle; that the Maxxon Syringe met safety standards promulgated by the U.S. government; that Maxxon had begun clinical trials and manufacturing of the Maxxon Syringe; that Maxxon had received orders from persons and entities who sought to purchase the Maxxon Syringe; that a foreign government was negotiating with Maxxon regarding specific steps the government planned to undertake with Maxxon; that major health-care companies had determined that Maxxon had the best design anywhere in the world for a safety syringe; and that Maxxon was about to be acquired by a major health-care company. Mabie made or approved each statement, and he knew, or was reckless in not knowing, that the statements and omissions were materially false or misleading. 3. In early 2002, Maxxon, Mabie, and two other company officials, defendant Dr. Thomas R. Coughlin, Jr., Maxxon's Medical Advisor, and defendant Rhonda R. Vincent, Maxxon's Financial Reporting Manager, made additional material false or misleading statements and omissions regarding the status of Maxxon's U.S. Food and Drug Administration ("FDA") application for approval of the Maxxon Syringe. The materially false or misleading statements and omissions were made in press releases and filings with the Commission. Mabie, Coughlin, and Vincent knew, or were reckless in not knowing, that the statements were materially false or misleading. 4. Mabie made at least $1,602,173.50 in ill-gotten gains by selling Maxxon shares from 1998 through 2002. He sold many of his shares in violation of the registration provisions of the federal securities laws. In 2002, Coughlin made at least $50,290 in ill-gotten gains, and Vincent made at least $29,526.93 in ill-gotten gains. Mabie, Coughlin, and Vincent sold these shares at prices that were inflated by the impact of the materially false or misleading statements, or omissions of material facts, that they made and/or caused Maxxon to make. 5. By engaging in the conduct alleged herein, the defendants violated the antifraud, periodic reporting, and registration requirements of the federal securities laws. Unless enjoined, the defendants are likely to do so in the future. JURISDICTION AND VENUE 6. The Commission brings this action pursuant to Section 20(b) of the Securities Act of 1933 ("Securities Act") [15 U.S.C. § 77t(b)], and Sections 21(d) and 21(e) of the Securities Exchange Act of 1934 ("Exchange Act") [15 U.S.C. §§ 78u(d) and 78u(e)] to permanently restrain and enjoin Maxxon, Mabie, Coughlin, and Vincent from engaging in the acts, practices, and transactions stated herein. 7. This Court has jurisdiction over this action pursuant to Section 22(a) of the Securities Act [15 U.S.C. § 77v(a)], and Sections 21(d), 21(e), and 27 of the Exchange Act [15 U.S.C. §§ 78u(d), 78u(e), and 78aa]. Venue lies in this Court pursuant to Section 20(a) of the Securities Act [15 U.S.C. § 77t], and Section 27 of the Exchange Act [15 U.S.C. § 78aa]. 8. Maxxon, Mabie, Coughlin, and Vincent, directly or indirectly, have made use of the means and instrumentalities of interstate commerce or the mails, or of the means or instrumentalities of transportation or communication in interstate commerce, or of the facilities of a national securities exchange, in connection with the acts, practices, and transactions alleged herein, certain of which occurred within the State of Oklahoma. DEFENDANTS 9. Maxxon is a start-up medical-syringe development company incorporated in Oklahoma in 1996 and based in Tulsa. It became a Nevada corporation in 1997 after a reverse merger with a publicly traded Nevada shell corporation that had the legal ability to have its stock publicly traded but had few, if any, assets. During the relevant time period, Maxxon's common stock publicly traded on the Over-The-Counter Bulletin Board and was quoted in the National Quotation Bureau's Pink Sheets. Maxxon's common stock is registered with the Commission pursuant to Section 12(g) of the Exchange Act [15 U.S.C. § 78l(g)], and the company is required to file reports, including registration statements and quarterly and annual financial statements, with the Commission pursuant to Sections 12(g) and 15(d) of the Exchange Act [15 U.S.C. §§ 78l(g) and 78o(d)]. Since 1997, Maxxon has been engaged in the development of one product - a safety syringe with a needle that retracts automatically. 10. Mabie, age 62, a resident of Tulsa, Oklahoma, was at all relevant times the President and Chief Executive Officer of Maxxon. He was the cofounder of Maxxon and Chairman of the Board of Directors until July 1999, when he became the company's sole director. 11. Coughlin, age 53, is a Tulsa cardiologist who became Medical Director of Maxxon in late 1998 or early 1999. His title changed to Medical Advisor in 2000. 12. Vincent, age 38, a Tulsa resident, is a Certified Public Accountant and the Financial Reporting Manager of Maxxon. She was the cofounder of Maxxon and, from 1997 until mid-1999, held the positions of Secretary, Treasurer, Chief Financial Officer, and a director of Maxxon. FACTS A. Background 13. In April 1997, Maxxon purchased an exclusive license to develop and market a syringe with a retractable needle that purportedly would reduce the incidence of needle-stick injuries among health care workers. In July 1997, Maxxon contracted with Texas Applied Biotechnology Services ("TABS"), a small consulting company located in Houston, to carry out the initial stages of developing the Maxxon Syringe. 14. Maxxon and Mabie began in the spring of 1997 to engage in an extensive media campaign to promote the Maxxon Syringe. From May 12, 1997, to at least the end of 1999, and then again in early 2002, Maxxon and Mabie made repeated false or misleading statements and omissions about Maxxon and the Maxxon Syringe. B. False or Misleading Statements and Omissions in 1997, 1998, and 1999 1. False or Misleading Statements concerning the Maxxon Syringe's Cost 15. Between January 8, 1998, and January 28, 1999, Mabie, representing Maxxon, stated on six television shows in California and in one nationwide conference call to brokers that the Maxxon Syringe could be produced for the same cost as a standard syringe. 16. In fact, all information available to Maxxon and Mabie had confirmed that the Maxxon Syringe would be more costly to produce than a standard syringe. The TABS consultants that Maxxon had hired to carry out the initial stages of developing the Maxxon Syringe had informed Mabie of this fact. 17. Mabie knew, or was reckless in not knowing, that the public statements he made on behalf of Maxxon regarding the Maxxon Syringe's cost were materially false or misleading. Maxxon, through Mabie's knowledge, also knew, or was reckless in not knowing, that these public statements were materially false or misleading. 2. False or Misleading Statements that the Syringe Met Federal Government Safety Standards 18. Between May 12, 1997, and January 28, 1999, Maxxon stated in at least nine press releases, during seven television appearances by Mabie, and in at least one posting on its Internet website, that the Maxxon Syringe met safety standards set by the federal government. The posting on the Internet website remained available to the public until at least the end of 1999. 19. Maxxon's statements that the Maxxon Syringe met OSHA standards were materially false or misleading. 20. Maxxon and Mabie made each of the materially false or misleading statements. Mabie knew, or was reckless in not knowing, that no OSHA standard was in effect requiring that needle retraction of a syringe be accomplished by a one-handed technique. 21. Mabie knew, or was reckless in not knowing, that the public statements Maxxon and he made claiming that the Maxxon Syringe met OSHA standards were materially false or misleading. 3. False or Misleading Statements that Maxxon Was Conducting Clinical Trials and Had Begun Manufacturing 22. Between February 12, 1998, and July 23, 1998, Mabie, representing Maxxon, made materially false or misleading statements on television related to clinical trials performed on the Maxxon Syringe as part of the FDA approval process for devices, and related to the manufacturing and production of the Maxxon Syringe. 23. On February 12, 1998, Mabie stated during a television appearance that the Maxxon Syringe could not be sold domestically yet because "in the United States we're still going through the clinical trials . . . ." 24. On July 23, 1998, Mabie stated during a television appearance: "We're now in manufacturing. Hartzell Manufacturing in Denton, Texas, is doing the first production run of the syringe, and we're very excited about that. Some of these syringes will be used to start the FDA clinical trials . . . ." 25. In fact, as Mabie knew, or was reckless in not knowing, Maxxon never began clinical trials of the Maxxon Syringe. Furthermore, as Mabie knew, or was reckless in not knowing, Maxxon never manufactured the Maxxon Syringe. 26. Mabie knew, or was reckless in not knowing, that the public statements he made on behalf of Maxxon concerning clinical trials and manufacturing of the Maxxon Syringe were materially false or misleading. 4. False or Misleading Statements regarding Orders for the Maxxon Syringe 27. Between January 8, 1998, and September 15, 1998, Mabie, representing Maxxon, made materially false or misleading statements claiming that orders had been placed for the Maxxon Syringe. 28. Mabie knew, or was reckless in not knowing, that the public statements he made on behalf of Maxxon claiming that Maxxon had received orders for the Maxxon Syringe were materially false or misleading. Maxxon, through Mabie's knowledge, also knew, or was reckless in not knowing, that these public statements were materially false or misleading. 5. False or Misleading Statements regarding Steps Taken by a Foreign Government relating to the Maxxon Syringe 29. Between at least March 25, 1998, and August 27, 1998, Mabie, representing Maxxon, made materially false or misleading statements on television and in a press release about negotiations with the Swedish government relating to the Maxxon Syringe. Mabie stated that representatives of the Swedish government were negotiating with Maxxon to build a plant with Maxxon and that the Swedish government would pay for the building of a plant. 30. In fact, as Mabie knew, or was reckless in not knowing, representatives of the Swedish government did not negotiate with Maxxon to build a plant with the company, and the Swedish government did not state that it would pay for the building of a plant. 31. Mabie knew, or was reckless in not knowing, that the public statements he made on behalf of Maxxon about negotiations with the Swedish government relating to the Maxxon Syringe were materially false or misleading. Maxxon, through Mabie's knowledge, also knew, or was reckless in not knowing, that these public statements were materially false or misleading. 6. False or Misleading Statements relating to an Acquisition of Maxxon 32. On September 15, 1998, Maxxon and Mabie made false or misleading statements claiming that major health-care companies had determined that Maxxon had "the best design anywhere in the world" for a safety syringe and that a major health-care company had expressed an interest in acquiring Maxxon, 33. In fact, as Mabie knew, or was reckless in not knowing, no major health-care company had determined that Maxxon had "the best design anywhere in the world" for a safety syringe, and no major health-care company had expressed an interest in buying Maxxon during the relevant time period. 34. On September 30, 1998, and October 14, 1998, Maxxon, with Mabie's knowledge and approval, issued press releases stating that The Patterson Group, a Chicago-based business-consulting company would be assisting in the merger and acquisition process for Maxxon and had entered into an agreement to assist in the merger and acquisition process. The press release was posted on Maxxon's Internet website and remained available to the public until at least the end of 1999. 35. In fact, as Mabie knew, or was reckless in not knowing, The Patterson Group was not going to be assisting in the merger and acquisition process for Maxxon, and Maxxon had not entered into an agreement with The Patterson Group to assist Maxxon with its merger and acquisition plans. 36. Mabie knew, or was reckless in not knowing, that the public statements he and Maxxon made suggesting that Maxxon was about to be acquired by a major health-care company, that major health-care companies had determined that Maxxon had the best design anywhere in the world for a safety syringe, that The Patterson Group would be assisting in the merger and acquisition process for Maxxon, and that Maxxon had entered into an agreement with The Patterson Group to assist Maxxon with its merger and acquisition plans were materially false or misleading. C. False or Misleading Statements and Omissions in 2002 Press Releases regarding Maxxon's FDA Application 37. On December 10, 2001, Maxxon filed a 510(k) application with the FDA, in which Maxxon sought to have the FDA approve the Maxxon Syringe as a medical device. On this same date, Maxxon issued a press release announcing the filing of its application with the FDA. 38. On December 19, 2001, the FDA, in a written response to Maxxon's application, informed Maxxon that, among other things, its application was "administratively incomplete" and was being placed "on hold." The FDA requested detailed additional information from Maxxon that the agency said must be provided before a "substantive review" of the application could begin. The FDA also requested a "simulated clinical study." 39. On February 20, 2002, Maxxon issued a press release that Coughlin prepared and Mabie reviewed in which Maxxon said that it had "recently submitted its 510(k) application to the FDA for approval to manufacture and market the safety syringe in the United States." The press release failed to disclose that the FDA had already responded to Maxxon's 510(k) application; that the FDA's response stated that Maxxon's application was "administratively incomplete" and was being placed "on hold"; and that the FDA responded with numerous questions and a request for a "simulated clinical study." By omitting this material information, the press release created the false or misleading impression that the FDA had not yet responded to Maxxon's application and was still reviewing it. 40. Mabie and Coughlin knew, or were reckless in not knowing, that statements and omissions in the February 20, 2002, press release were materially false or misleading. 41. On April 8, 2002, Maxxon issued a press release that Coughlin prepared and Mabie reviewed. The press release stated: "Maxxon anticipates the 510(k) application will be approved upon receipt of answers to the original 6 questions and the use study data." This statement was materially false or misleading because at the time, there was no reasonable basis for the statement. Mabie and Coughlin were aware of undisclosed facts undermining the accuracy of the statement, including that the FDA's December 19, 2001, response stated that Maxxon's application was "administratively incomplete," that the application was placed "on hold," and that the FDA requested additional information from Maxxon before a "substantive review" of the application could begin. 42. Mabie and Coughlin knew, or were reckless in not knowing, that statements and omissions in the April 8, 2002, press release were materially false or misleading. 43. On May 20, 2002, Maxxon submitted its response to the FDA's December 19, 2001, letter. 44. On May 21, 2002, Maxxon issued a press release that Coughlin prepared and Mabie reviewed that announced that the company had submitted its response to the FDA's letter and had submitted its use study. The press release discussed the "use study" that Maxxon conducted but omitted the material fact that only 150 syringes had been used in the "use study." This omission was material because Maxxon stated in its April 8, 2002, press release that approximately 400 syringes would be used in the "use study." In fact, unbeknownst to the investing public, the FDA recommended in its December 19, 2001, letter that Maxxon use 500 syringes in its study. The May 21 press release was deceptive and/or misleading because it omitted to disclose facts known to Maxxon that tended to seriously undermine the accuracy of Maxxon's statement that it expected the FDA to approve its 510(k) application "upon receipt" of the new information. 45. Mabie and Coughlin knew, or were reckless in not knowing, that statements in the May 21, 2002, press release were materially false or misleading, and that the omission of the number of syringes used in the use study was material. D. False or Misleading Statements and Omissions in Commission Filings related to Maxxon's FDA Application 46. On April 1, 2002, Maxxon filed with the Commission its annual Form 10K-SB for the period ended December 31, 2002. 47. On April 4, 2002, Maxxon filed with the Commission a Form SB-2 Registration Statement. 48. On May 15, 2002, Maxxon filed with the Commission its Form 10Q-SB for the period ended March 31, 2002. 49. In all three filings, Maxxon disclosed that it had filed its 510(k) application with the FDA. However, Maxxon failed to disclose in any of these filings the material information contained in the FDA's December 19, 2001, response to Maxxon (see paragraph 38 above). This omission created the materially false or misleading impression that the FDA had not yet responded to Maxxon's application and was still reviewing it. 50. Mabie, as President and Chief Executive Officer of Maxxon, signed each of the three filings. Vincent, as Maxxon's Financial Reporting Manager, prepared each of the three filings. 51. Mabie and Vincent each knew, should have known, or was reckless in not knowing, that the foregoing statements made in Maxxon's filings were materially false or misleading. E. Sales of Maxxon Stock at Inflated Prices 1. Mabie's Sales in 1998 and 1999 and Continuing through 2001 52. Between January 8, 1998, and November 16, 1999, Mabie sold Maxxon shares on approximately 351 out of 469 trading days in at least seven accounts that he controlled or exercised influence over. 53. Mabie received the shares he sold directly from Maxxon in an unregistered transaction on May 31, 1997, not involving any public offering. As cofounder of Maxxon, and as its President, Chief Executive Officer, and a director, Mabie was in a control relationship over Maxxon and an affiliate of Maxxon. 54. Mabie sold at least 1,298,071 Maxxon shares between January 8, 1998, and November 16, 1999. In every three-month period beginning January 1, 1998, and ending December 31, 1999, Mabie sold more than 1% of the outstanding shares of Maxxon. 55. Mabie sold the shares at prices that were inflated by virtue of Mabie's and Maxxon's continuing stream of materially false or misleading statements and omissions about Maxxon and the Maxxon Syringe. Mabie made at least $1,541,817.59 in profits by selling Maxxon shares in 1998 and 1999. 56. Mabie also sold Maxxon shares in 2000 and 2001. 2. Sales of Maxxon Stock by Mabie, Coughlin, and Vincent Between December 2001 and July 2002 57. Between February 20, 2002, and July 15, 2002, Mabie sold approximately 321,150 shares of Maxxon stock and realized profits of at least $60,356. 58. Between February 20, 2002, and July 15, 2002, Coughlin sold approximately 289,500 shares of Maxxon stock and realized profits of at least $50,290. 59. Between February 20, 2002, and July 15, 2002, Vincent sold approximately 162,500 shares of Maxxon stock and realized profits of at least $29,526.93. 60. Mabie, Coughlin and Vincent sold these shares at prices that were inflated by virtue of materially false or misleading statements, or omissions of material facts, that they caused Maxxon to make regarding the status of the FDA's approval of Maxxon's 510(k) application. FIRST CLAIM Maxxon, Mabie, Coughlin, and Vincent Violated Section 10(b) of the Exchange Act and Exchange Act Rule 10b-5 (Materially False and Misleading Statements and Failure to Disclose Material Facts in Connection with the Purchase or Sale of Securities) 61. Paragraphs 1 through 60 above are re-alleged and incorporated herein by reference. 62. Maxxon, in 1997, 1998, and 1999, made materially false and misleading statements, and omitted to state material facts, in press releases, on television, in Internet postings, and in a nationwide telephone conference call to brokers, relating to, among other things, U.S. government standards purportedly met by the Maxxon Syringe; the cost and design of the Maxxon Syringe; clinical trials and manufacturing of the Maxxon Syringe; orders for the Maxxon Syringe; undertakings with a foreign government related to the Maxxon Syringe; and a claimed acquisition of Maxxon by a major health-care company. In 2002, Maxxon made materially false and misleading statements, and omitted to state material facts, in press releases and filings with the Commission regarding the status of Maxxon's application with the FDA for approval of the Maxxon Syringe and the expected FDA approval of Maxxon's 510(k) application. Maxxon knew, or was reckless in not knowing, that the statements were materially false or misleading, and that the omissions were material. 63. Mabie, in 1997, 1998, and 1999, made materially false and misleading statements, and omitted to state material facts, in press releases, on television, in Internet postings, and in a nationwide telephone conference call to brokers, regarding, among other things, U.S. government standards purportedly met by the Maxxon Syringe; the cost and design of the Maxxon Syringe; clinical trials and manufacturing of the Maxxon Syringe; orders for the Maxxon Syringe; undertakings with a foreign government relating to the Maxxon Syringe; and a claimed acquisition of Maxxon by a major health-care company. In 2002, Mabie made materially false and misleading statements, and omitted to state material facts, in press releases and filings with the Commission regarding the status of Maxxon's application with the FDA for approval of the Maxxon Syringe and the expected FDA approval of Maxxon's 510(k) application. Mabie knew, or was reckless in not knowing, that the statements were materially false or misleading, and that the omissions were material. 64. In 2002, Coughlin made materially false and misleading statements, and omitted to state material facts, in press releases regarding the status of Maxxon's application with the FDA for approval of the Maxxon Syringe and the expected FDA approval of Maxxon's 510(k) application. Coughlin knew, or was reckless in not knowing, that the statements were materially false or misleading and that the omissions were material. 65. In 2002, Vincent made materially false and misleading statements, and omitted to state material facts, in filings with the Commission, regarding the status of Maxxon's application with the FDA for approval of the Maxxon Syringe. Vincent knew, or was reckless in not knowing, that the statements were materially false or misleading, and that the omissions were material. 66. Defendants Maxxon, Mabie, Coughlin, and Vincent, directly or indirectly, singly or in concert with others, in connection with the purchase or sale of securities, and by use of the means or instrumentalities of interstate commerce or by use of the mails, or by use of any facility of any national securities exchange: (a) employed devices, schemes or artifices to defraud; (b) made untrue statements of material facts or 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/or (c) engaged in acts, practices or courses of business which operated or would operate as a fraud or deceit upon any person. 67. By reason of the foregoing, defendants Maxxon, Mabie, Coughlin, and Vincent have, directly or indirectly, singly or in concert, violated Section 10(b) of the Exchange Act [15 U.S.C. § 78j(b)] and Exchange Act Rule 10b-5 [17 C.F.R. § 240.10b-5]. SECOND CLAIM Maxxon, Mabie, and Vincent Violated Section 17(a) of the Securities Act
68. Paragraphs 1 through 60 above are re-alleged and incorporated herein by reference. 69. Maxxon, Mabie, and Vincent made materially false and misleading statements of material fact, and omitted to state material facts, regarding the status of Maxxon's application with the FDA for approval of the Maxxon Syringe, in Maxxon's Form SB-2 Registration Statement that was filed on April 4, 2002. Maxxon, Mabie, and Vincent knew, or were reckless in not knowing, that the statements were materially false or misleading and that the omissions were material. 70. Defendants Maxxon, Mabie, and Vincent, directly or indirectly, singly or in concert with others, in the offer or sale of securities, by the use of the means or instrumentalities of transportation or communication in interstate commerce or by use of the mails: (a) employed devices, schemes or artifices to defraud; (b) obtained money or property by means of untrue statements of material fact or by omitting to state material facts necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading; and/or (c) engaged in acts, practices or courses of business which operated or would operate as a fraud or deceit upon the purchaser of such securities. 71. By reason of the foregoing, defendants Maxxon, Mabie, and Vincent violated Section 17(a) of the Securities Act [15 U.S.C. §78q(a)]. THIRD CLAIM Maxxon Violated Section 13(a) of the Exchange Act and Exchange Act Rules 13a-1, 13a-13, and 12b-20 (Materially False and Misleading Statements, and Omissions of Material Fact, in Filings with the Commission) 72. Paragraphs 1 through 60 above are re-alleged and incorporated herein by reference. 73. Maxxon filed with the Commission its annual Form 10K-SB for the period ended December 31, 2002, on April 1, 2002; its Form SB-2 Registration Statement on April 4, 2002; and its Form 10Q-SB for the period ended March 31, 2002, on May 15, 2002. In each of these filings, Maxxon made false or misleading statements of material fact, or omissions of material fact, regarding the status of Maxxon's 510(k) application to the FDA for approval of the Maxxon Syringe. Maxxon knew, should have known, or was reckless in not knowing that the statements were materially false or misleading, and that the omissions were material. 74. Section 13(a) of the Exchange Act [15 U.S.C. §78m(a)] and Exchange Act Rules 13a-1, 13a-13, and 12b-20, [17 C.F.R. §§ 240.13a-1, 240.13a-13, and 240.12b-20] require that quarterly, annual and other reports and statements filed by issuers with the Commission not contain untrue statements of material facts or omissions of material facts. 75. By reason of the foregoing, defendant Maxxon violated Section 13(a) of the Exchange Act [15 U.S.C. § 78m(a)] and Exchange Act Rules 13a-1, 13a-13, and 12b-20 [17 C.F.R. §§ 240.13a-1, 240.13a-13, and 240.12b-20]. FOURTH CLAIM Mabie and Vincent Aided and Abetted Maxxon's Violations of Section 13(a) of the Exchange Act and Exchange Act Rules 13a-1, 13a-13, and 12b-20
76. Paragraphs 1 through 60 above are re-alleged and incorporated herein by reference. 77. Mabie, as President and Chief Executive Officer of Maxxon, caused Maxxon to file with the Commission on April 1, 2002, its annual Form 10K-SB for the period ended December 31, 2002; on April 4, 2002, its Form SB-2 Registration Statement; and on May 15, 2002, its Form 10Q-SB for the period ended March 31, 2002. Mabie signed all of these filings, each of which contained materially false or misleading statements, or omissions of material fact, regarding the status of Maxxon's 510(k) application to the FDA for approval of the Maxxon Syringe. Mabie knew, should have known, or was reckless in not knowing that the statements were materially false or misleading, and that the omissions were material. 78. Vincent, as Maxxon's Financial Reporting Manager, prepared the annual Form 10K-SB that Maxxon filed with the Commission on April 1, 2002, for the period ended December 31, 2002; Maxxon's Form SB-2 Registration Statement that it filed on April 4, 2002; and Maxxon's Form 10Q-SB for the period ended March 31, 2002, that it filed on May 15, 2002. Each of these filings contained materially false or misleading statements, or omissions of material fact, regarding the status of Maxxon's 510(k) application to the FDA for approval of the Maxxon Syringe. Vincent knew, should have known, or was reckless in not knowing that the statements were materially false or misleading, and that the omissions were material. 79. Defendants Mabie and Vincent knowingly provided substantial assistance to Maxxon in connection with the company's violations set forth in the Third Claim, paragraphs 72 through 75 above. 80. By reason of the foregoing, and pursuant to Section 20(e) of the Exchange Act [15 U.S.C. § 78t(e)], defendants Mabie and Vincent are liable as aiders and abettors of Maxxon's violations of Section 13(a) of the Exchange Act [15 U.S.C. § 78m(a)] and Exchange Act Rules 13a-1, 13a-13, and 12b-20 [17 C.F.R. §§ 240.13a-1, 240.13a-13, and 240.12b-20]. FIFTH CLAIM Mabie Violated Section 5 of the Securities Act
81. Paragraphs 1 through 60 above are re-alleged and incorporated herein by reference. 82. Sections 5(a) and 5(c) of the Securities Act [15 U.S.C. § 77e] prohibit any person, directly or indirectly, from making use of any means or instrument of transportation or communication in interstate commerce or of the mails to offer to sell or to sell a security unless a registration statement is filed or in effect, or an exemption applies. 83. Mabie sold at least 770,084 Maxxon shares between January 8, 1998, and November 16, 1999, in excess of 1% of the outstanding shares of Maxxon. These securities were not registered with the Commission, and such sales were not eligible for any exemption from registration. 84. By reason of the foregoing, defendant Mabie violated Section 5 of the Securities Act [15 U.S.C. § 77e]. PRAYER FOR RELIEF WHEREFORE, the Commission respectfully requests that this Court: I. Issue a Final Judgment of Permanent Injunction and Other Relief restraining and enjoining Maxxon from, directly or indirectly, violating Section 10(b) of the Exchange Act [15 U.S.C. § 78j(b)] and Exchange Act Rule 10b-5 [17 C.F.R. § 240.10b-5]; Section 17(a) of the Securities Act [15 U.S.C. § 77q(a)]; and Section 13(a) of the Exchange Act [15 U.S.C. § 78m(a)] and Exchange Act Rules 12b-20, 13a-1, and 13a-13 [17 C.F.R. §§ 240.12b-20, 240.13a-1, and 240.13a-13]. II. Issue an Order of Permanent Injunction restraining and enjoining Mabie from, directly or indirectly, violating Section 10(b) of the Exchange Act [15 U.S.C. § 78j(b)] and Exchange Act Rule 10b-5 [17 C.F.R. § 240.10b-5]; Section 17(a) of the Securities Act [15 U.S.C. § 77q(a)]; and Sections 5(a) and 5(c) of the Securities Act [15 U.S.C. § 77e]; and from aiding and abetting violations of Section 13(a) of the Exchange Act [15 U.S.C. § 78m(a)] and Exchange Act Rules 12b-20, 13a-1, and 13a-13 [17 C.F.R. §§ 240.12b-20, 240.13a-1, and 240.13a-13]. III. Issue an Order of Permanent Injunction restraining and enjoining Coughlin from, directly or indirectly, violating Section 10(b) of the Exchange Act [15 U.S.C. § 78j(b)] and Exchange Act Rule 10b-5 [17 C.F.R. § 240.10b-5]. IV. Issue an Order of Permanent Injunction restraining and enjoining Vincent from, directly or indirectly, violating Section 10(b) of the Exchange Act [15 U.S.C. § 78j(b)] and Exchange Act Rule 10b-5 [17 C.F.R. § 240.10b-5]; Section 17(a) of the Securities Act [15 U.S.C. § 77q(a)]; and from aiding and abetting violations of Section 13(a) of the Exchange Act [15 U.S.C. § 78m(a)] and Exchange Act Rules 12b-20, 13a-1, and 13a-13 [17 C.F.R. §§ 240.12b-20, 240.13a-1, and 240.13a-13]. V. Issue an Order pursuant to Section 20(e) of the Securities Act [15 U.S.C. § 77t(e)] and Section 21(d)(2) of the Exchange Act [15 U.S.C. § 78u(d)(2)] permanently barring Mabie from acting as an officer or director of any issuer that has a class of securities registered pursuant to Section 12 of the Exchange Act [15 U.S.C. § 78l] or that is required to file reports pursuant to Section 15(d) of the Exchange Act [15 U.S.C. § 78o(d)]. VI. Issue an Order pursuant to the Court's equitable powers permanently barring Mabie from acting as an officer or director of any issuer that is required to file reports pursuant to Section 15(d) of the Exchange Act [15 U.S.C. § 78o(d). VII. Issue an Order, pursuant to Section 603 of the Sarbanes-Oxley Act of 2002 [Public Law No. 107 - 204, 116 Stat. 745 (July 30, 2002)], Section 21(d)(6) of the Exchange Act [15 U.S.C. § 78u(d)(6)] and Section 20(g) of the Securities Act [15 U.S.C. § 77t(g)], and pursuant to the Court's equitable powers, permanently barring Mabie from participating in an offering of penny stock. VIII.
Issue an Order requiring Mabie to prepare an accurate accounting of all stock sales and trading profits from the sale of Maxxon stock by him in accounts that he controlled or exercised influence over during the period January 1, 1998, through July 15, 2002. IX. Issue an Order requiring Mabie to disgorge (i) all ill-gotten gains from sales of Maxxon securities in accounts that he controlled or exercised influence over between January 1, 1998, and July 15, 2002, plus prejudgment interest; and (ii) all ill-gotten gains from violations of the federal securities laws, plus prejudgment interest. X. Issue an Order requiring Coughlin and Vincent to disgorge (i) all ill-gotten gains from sales of Maxxon securities in accounts that each controlled or exercised influence over between December 19, 2001, and July 15, 2002, plus prejudgment interest; and (ii) all ill-gotten gains from violations of the federal securities laws, plus prejudgment interest. XI. Issue an Order requiring Mabie and Vincent to pay civil money penalties pursuant to Section 20(d) of the Securities Act [15 U.S.C. § 77t(d)] and an Order requiring Mabie, Coughlin, and Vincent to pay civil money penalties pursuant to Section 21(d)(3) of the Exchange Act [15 U.S.C. § 78u(d)(3)]. XII. Retain jurisdiction of this action in accordance with the principles of equity and the Federal Rules of Civil Procedure in order to implement and carry out the terms of all Orders and Decrees that may be entered, or to entertain any suitable application or motion for additional relief; and XIII. Grant such other and further relief as this Court may deem necessary and appropriate under the circumstances. Respectfully submitted, Dated: December 30, 2002 s/______________________
Christopher R. Conte, Assistant Director
Attorneys for Plaintiff
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