UNITED STATES DISTRICT COURT
COMPLAINT FOR INJUNCTIVE AND OTHER RELIEF
Plaintiff Securities and Exchange Commission ("Commission") alleges:
1. The Commission brings this action to restrain and enjoin Defendants from continuing to violate the federal securities laws in connection with their ongoing, fraudulent, unregistered offer and sale of securities in the form of shares of stock and promissory notes. Unless immediately restrained and enjoined, Defendants will continue to defraud the investing public and place investor funds at serious risk of diversion and theft.
2. Defendant World Class Limousines, Inc. ("WCL") is a Florida corporation incorporated in February 1998, with principal offices located at 744 N. Federal Highway, Pompano Beach, Florida 33062. WCL is a subsidiary of Defendant 1-800-GET-LIMO, Inc.
3. Defendant 1-800-GET-LIMO, Inc. ("GET-LIMO") is a Florida corporation incorporated in December 2000, with principal offices located at 744 N. Federal Highway, Pompano Beach, Florida 33062. GET-LIMO is the parent company of WCL and another company called 1-800-GET-LIMO Services, Inc.
4. Defendant Anthony P. Caliendo, Jr. ("Caliendo") is thirty-two years old and is the president, chief executive officer and chairman of the board of WCL and GET-LIMO. He resides at 12762 Tulipwood Circle, Boca Raton, Florida 33428.
JURISDICTION AND VENUE
5. This Court has jurisdiction over this action pursuant to Sections 20(b), 20(d) and 22(a) of the Securities Act of 1933 ("Securities Act"), 15 U.S.C. §§ 77t(b), 77t(d) and 77v(a), and Sections 21(d), 21(e), and 27 of the Securities Exchange Act of 1934 ("Exchange Act"), 15 U.S.C. §§ 78u(d), 78u(e) and 78aa.
6. Certain of the acts and transactions constituting violations of the Securities Act and the Exchange Act have occurred within the Southern District of Florida. The principal offices of Defendants WCL and GET-LIMO are located within the Southern District of Florida. Defendant Caliendo resides in the Southern District of Florida. Defendants have engaged in many of the acts and practices complained of herein within the Southern District of Florida.
7. Defendants, directly and indirectly, have made use of the means and instrumentalities of interstate commerce, the means and instruments of transportation and communication in interstate commerce, and the mails, in connection with the acts, practices, and courses of business complained of herein.
THE FRAUDULENT SCHEME
8. WCL specializes in the rental of exotic limousines. GET-LIMO, WCL's parent company, claims that it is in the business of selling, repairing and providing parts for exotic limousines and that it is developing a nationwide telephonic and Internet limousine reservation service.
9. WCL and GET-LIMO are controlled and operated by Caliendo. Both of the companies engage in the same type of business and their separate corporate entities are disregarded. The assets of WCL and GET-LIMO, including investor monies, are pooled together. Accordingly, WCL and GET-LIMO function as one issuer - "WCL/GET-LIMO."
10. From at least January 2000, WCL/GET-LIMO raised at least $1.9 million, and are continuing to raise money, from investors worldwide through the sale of securities.
11. In offering and selling the securities, WCL/GET-LIMO has made numerous material misrepresentations and omissions to prospective and actual investors. In addition, a portion of the monies raised have been misappropriated by Caliendo.
I. WCL/GET-LIMO's Offering
12. From a date unknown but from at least January 2000, WCL/GET-LIMO has been engaged in an integrated on-going offering. WCL/GET-LIMO has been offering and selling shares of WCL stock and promissory notes and shares of GET-LIMO to the general public. For the most part, the promissory notes have been converted into GET-LIMO common stock. The offerings are part of a single plan of financing, involve the same class of securities, were made at or about the same time and are for the same general purposes.
13. WCL/GET-LIMO solicits investors over the Internet and through sales agents employed by the company who are under Caliendo's direction and control.
14. Marketing materials including, among others, shareholder letters, a magazine article, business plan and pro forma financial statements are sent to prospective and/or actual investors.
15. The cover page of the draft private placement term sheets are also sent to prospective and/or actual investors. The body of the private placement term sheets, prepared by a national law firm, are not distributed. The body of the private placement term sheets contain risk disclosures relating to the investment and state that WCL's pre-December, 2000 offerings may have violated federal and state securities laws.
16. The sales representatives, who are under Caliendo's direction and control, often "cold call" investors and use scripts to aid them with their sales pitch.
17. The sales representatives, who are under Caliendo's direction and control, invite prospective investors to visit the company and encourage them to speak with Caliendo for more information about the company.
18. From the commencement of the offering until December 11, 2000, WCL sold shares to investors that were not authorized by WCL's articles of incorporation. As a result, investors were sold shares which were non-existent. Investors who hold WCL shares and promissory notes are currently being solicited to convert those securities to GET-LIMO common stock under an unregistered recession and exchange offer.
II. Material Misrepresentations and Omissions in Connection with the Offer and Sale
19. WCL/GET-LIMO's marketing and offering materials, as well as oral statements by Caliendo and the sales representatives acting at his direction, contain material misrepresentations and omissions concerning, among other things, the use of proceeds, commissions paid to sales representatives, the safety of the investment and WCL/GET-LIMO's operations.
A. Use of Proceeds
20. Investors and prospects are led to believe, based on written statements in offering and marketing materials and oral statements by Caliendo and the sales representatives, acting at his direction, that all of their funds will be used for the purpose of a limousine services and reservation company.
21. In reality, Caliendo, who controls WCL/GET LIMO's brokerage account, used at least $615,000, out of the approximately $1.9 million that was raised, to engage in speculative and risky margin trading. In total, over $104,000 of investor funds was lost as a result of the risky trading.
22. Caliendo also diverted investor funds for his personal use from WCL/GET LIMO's brokerage account. Caliendo spent approximately $11,000 on a cruise vacation, $2,000 at a plastic surgery center and $2,000 on a pool table. Caliendo also paid $800 from investor funds to a day care center attended by his children. At least another $39,550 was diverted by Caliendo for his and his wife's personal uses.
B. Exaggerated and Unrealistic Claims About
23. WCL/GET-LIMO falsely represents to prospective and actual investors, through Caliendo and sales agents acting at his direction, that it will conduct an initial public offering ("IPO") within 6 months to one year. That statement is false because WCL/GET-LIMO has not taken any steps necessary to complete an IPO.
24. WCL/GET-LIMO falsely represents to prospective and actual investors, through Caliendo and sales agents acting at his direction, that WCL/GET-LIMO's stock, which is selling for $1 per share will publicly trade for at least $5 per share after the IPO, thereby providing a 400% return on the investment. That statement is false because WCL/GET-LIMO is a start-up with minimal revenue and few assets.
C. Verbal Misrepresentations to Investors Regarding the
25. WCL/GET-LIMO's sales agents, at the direction of Caliendo, make materially false and misleading oral statements to prospective investors concerning the safety of investing in the company. Investors are told that "returns are guaranteed" and that WCL/GET-LIMO will repurchase the securities at any time upon their request. Neither the sales agents nor Caliendo orally apprise potential investors of the risk of investing in a start-up company with little revenues. The body of the WCL/GET-LIMO private placement term sheet, which details the risks associated with the investment, is not distributed to prospects and investors. Moreover, WCL/GET-LIMO does not, for the most part, repurchase its securities upon request.
D. Misrepresentations Relating to a Joint Venture with Interide, Inc.
26. WCL/GET-LIMO's business model relies on revenue generated from an online limousine reservation service. Pro forma financial projections distributed to investors state that the bulk of WCL/GET-LIMO's future revenues are dependant upon online reservation fees. In a March 2001, letter to shareholders, sent under Caliendo's name, WCL/GET-LIMO falsely claimed that it completed a joint venture with Interide, Inc. ("Interide") which it described as "the nation's largest provider of on-line reservation infrastructure." There was never any joint venture or agreement between Interide and WCL/GET-LIMO.
E. False Statements Concerning WCL/GET-LIMO's Acquisition of 3DDD Custom Coach, Inc.
27. Prospects and investors were sent a July 2000 article from Simply the Best magazine profiling Caliendo and WCL/GET-LIMO. The article states that WCL/GET-LIMO "would soon cut out the middleman by purchasing 3-D Custom Coach, the Texas based company that builds his [Caliendo's] specialty vehicles." Although there were some preliminary discussions with 3DDD Custom Coach, Inc. concerning a possible acquisition, the discussions never reached the negotiation level and there was never any informal or formal agreement relating to the acquisition.
F. False Claim that WCL/GET-LIMO
28. WCL/GET-LIMO's Internet website describes the company as "the Nation's Leading Luxury Transportation and Limousine Sales/Service Organization." That statement is false and misleading. WCL/GET-LIMO does not appear on an industry list of the top 75 limousine operators in the United States in terms of number of vehicles in its fleet or on an industry list of national limousine reservation networks.
G. Misrepresentations Relating to the Reorganization and Exchange Offer
29. In December 2000, Caliendo orchestrated a corporate reorganization whereby WCL became GET-LIMO's 99% owned subsidiary. The corporate reorganization occurred because WCL sold shares to investors which were unauthorized under its corporate articles and therefore non-existent. WCL/GET-LIMO admits in its private placement term sheet, which was never distributed to prospects or investors, that the reorganization was an effort "to remedy the error made by WCL in issuing its shares in excess of its then authorized shares."
30. In an update letter sent to shareholders in March, 2001, Caliendo misleadingly stated that the reorganization of WCL into GET-LIMO was the result of a "revised business model." Shareholders were never informed that the reorganization was a direct result of WCL's issuance of unauthorized shares.
31. After the corporate reorganization, WCL/GET-LIMO began soliciting investors to convert their purported WCL shares and promissory notes into GET-LIMO shares. The investors who are solicited to exchange their purported WCL shares or promissory notes for GET-LIMO shares are not told that WCL's offering may have violated federal and state securities laws as stated in the body of the private placement term sheet that was never distributed to investors.
H. Misrepresentations Relating to Sales Commissions
32. The one page of the private placement term sheet for the WCL/GET-LIMO offerings which was sent to investors stated that no commissions would be charged. That statement is false. A significant portion of investor monies were, and are, used to pay undisclosed commissions ranging between 9% and 12%.
I. Misrepresentations About Caliendo's Background
33. The Simply the Best magazine article disseminated to investors touts Caliendo as an "entrepreneur with holdings including Royal Palm Homes and Global Assets." The article fails to disclose that Global Assets was a boiler room and that Caliendo was a sales manager who was fired in 2000.
34. The GET-LIMO August 2001 confidential business plan describes Caliendo as an "independent investment consultant" from 1994 until the founding of WCL. The business plan omits that Caliendo was in fact a stock broker with at least four broker-dealers from 1994.
35. WCL/GET-LIMO fails to disclose to prospects and investors that in 1999 a National Association of Securities Dealers ("NASD") arbitration panel found that Caliendo, and others, intentionally misled a customer and ordered the payment of compensatory and punitive damages.
36. As president, chief executive officer and chairman of the board of WCL/GET-LIMO, sole authorized shareholder of WCL and majority shareholder of GET-LIMO, Caliendo manages the day-to-day operations of WCL/GET-LIMO.
37. Caliendo has signing authority over WCL/GET-LIMO's brokerage account and controls the movement and disposition of investor funds.
38. Caliendo directs and controls the sales representatives who solicit investors to invest in the securities of WCL/GET-LIMO.
39. Caliendo solicits investors orally and in writing, makes misrepresentations and omissions and closes sales.
SALE OF UNREGISTERED SECURITIES IN VIOLATION OF
40. The Commission repeats and realleges paragraphs 1 through 39 of this Complaint.
41. No registration statement was filed or in effect with the Commission pursuant to the Securities Act and no exemption from registration exists with respect to the securities and transactions described herein.
42. Since a date unknown, but since at least January 2000 through the present, Defendants WCL, GET-LIMO and Caliendo, directly and indirectly, have been: (a) making use of the means or instruments of transportation or communication in interstate commerce or of the mails to sell securities as described herein, through the use or medium of a prospectus or otherwise; (b) carrying securities or causing such securities, as described herein, to be carried through the mails or in interstate commerce, by any means or instruments of transportation, for the purpose of sale or delivery after sale; and/or (c) making 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 any prospectus or otherwise, as described herein, without a registration statement having been filed or being in effect with the Commission as to such securities.
43. By reason of the foregoing, WCL, GET-LIMO and Caliendo, directly and indirectly, 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).
FRAUD IN VIOLATION OF
44. The Commission repeats and realleges paragraphs 1 through 39 of the Complaint.
45. Since a date unknown, but since at least January 2000 through the present, Defendants WCL, GET-LIMO and Caliendo directly and indirectly, by use of the means or instruments of transportation or communication in interstate commerce and by use of the mails, in the offer or sale of securities, as described herein, have been, knowingly, willfully or recklessly employing devices, schemes or artifices to defraud.
46. By reason of the foregoing, Defendants WCL, GET-LIMO and Caliendo, directly and indirectly, have violated and, unless enjoined, will continue to violate Section 17(a)(1) of the Securities Act, 15 U.S.C. § 77q(a)(1).
FRAUD IN VIOLATION OF SECTION 10(b)
47. The Commission repeats and realleges paragraphs 1 through 39 of its Complaint.
48. Since a date unknown, but since at least January 2000 through the present, Defendants WCL, GET-LIMO and Caliendo, directly and indirectly, by use of the means and instrumentality of interstate commerce, and of the mails, and of any facility of any national securities exchange, in connection with the purchase or sale of the securities, as described herein, have been, knowingly, willfully or recklessly: (a) employing devices, schemes or artifices to defraud; (b) making untrue statements of material facts and 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) engaging in acts, practices and courses of business which have operated, are now operating and will operate as a fraud upon the purchasers of such securities.
49. By reason of the foregoing, Defendants WCL, GET-LIMO and Caliendo, directly or indirectly, have violated and, unless enjoined, will continue to violate Section 10(b) of the Exchange Act, 15 U.S.C. § 78j(b), and Rule 10b-5, 17 C.F.R. § 240. 10b-5, thereunder.
FRAUD IN VIOLATION OF
50. The Commission repeats and realleges paragraphs 1 through 39 of its Complaint.
51. Since a date unknown, but since at least January 2000 through the present, Defendants WCL, GET-LIMO and Caliendo, directly and indirectly, by use of the means or instruments of transportation or communication in interstate commerce and by the use of the mails, in the offer or sale of securities, as described herein, have been: (a) obtaining money or property by means of untrue statements of material facts and omissions to state material facts necessary to make the statements made, in the light of the circumstances under which they were made, not misleading; and/or (b) engaging in transactions, practices and courses of business which are now operating and will operate as a fraud or deceit upon purchasers and prospective purchasers of such securities.
52. By reason of the foregoing, Defendants WCL, GET-LIMO, and Caliendo, directly and indirectly, have violated and, unless enjoined, will continue to violate Sections 17(a)(2) and 17(a)(3) of the Securities Act, 15 U.S.C. §§ 77(q)(a)(2) and 77(q)(a)(3).
WHEREFORE, the Commission respectfully requests that the Court:
Declare, determine and find that Defendants WCL, GET-LIMO and Caliendo committed the violations of the federal securities laws alleged herein.
Temporary Restraining Order,
Issue a Temporary Restraining Order, a Preliminary Injunction and a Permanent Injunction, restraining and enjoining Defendants WCL, GET-LIMO and Caliendo, their officers, agents, servants, employees, attorneys, and all persons in active concert or participation with them, and each of them, from violating: (i) Sections 5(a) and 5(c) of the Securities Act, 15 U.S.C. §§ 77e(a) and 77e(c); (ii) Section 17(a)(1) of the Securities Act, 15 U.S.C. § 77q(a); (iii) Section 10(b) of the Exchange Act, 15 U.S.C. § 78j(b), and Rule 10b-5, 17 C.F.R. § 240.10b-5, thereunder; and, (iv) Sections 17(a)(2) and 17(a)(3) of the Securities Act, 15 U.S.C. §§ 77(q)(a)(2).
Issue an Order requiring Defendants WCL, GET-LIMO and Caliendo to disgorge all ill-gotten profits or proceeds that they have received as a result of the acts and/or courses of conduct complained of herein, with prejudgment interest.
Issue an Order directing Caliendo to pay civil money penalties pursuant to Section 20(d) of the Securities Act, 15 U.S.C. § 77t(d), and Section 21(d) of the Exchange Act, 15 U.S.C. § 78(d)(3).
Asset Freeze and Accounting
Issue an Order temporarily freezing the assets of Defendants WCL, GET-LIMO and Caliendo until further Order of the Court, and requiring accountings by WCL, GET-LIMO and Caliendo.
Appointment of Receiver
Issue an Order appointing a Receiver of the assets of WCL and GET-LIMO to marshal and safeguard all of said assets, and any other duties the Court deems appropriate, and to prepare a report to the Court and the Commission detailing the activities of WCL, GET-LIMO and Caliendo and the whereabouts of investor funds.
Records Preservation and Expedited Discovery
Issue an Order requiring Defendants WCL, GET-LIMO and Caliendo to preserve any records related to the subject matter of this lawsuit that are in their custody, possession or subject to their control, and to respond to discovery on an expedited basis.
Repatriation of Investor Proceeds
Issue an Order requiring Defendants WCL, GET-LIMO and Caliendo to take such steps as are necessary to repatriate to the territory of the United States all funds and assets of investors described in the Commission's Complaint in this action which are held by them or are under their direct or indirect control, jointly or singly, and deposit such funds into the registry of the United States District Court for the Southern District of Florida, and provide the Commission and the Court a written description of the funds and assets so repatriated.
Grant such other and further relief as may be necessary and appropriate.
Retention of Jurisdiction
Further, the Commission respectfully requests that the Court retain jurisdiction over this action in order to implement and carry out the terms of all orders and decrees that may hereby be entered, or to entertain any suitable application or motion by the Commission for additional relief within the jurisdiction of this Court.