UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
TAMPA DIVISION

CASE NO.

Complaint for Injunctive and Other Relief

Plaintiff Securities and Exchange Commission ("Commission") alleges as follows:

Introduction

2. In addition to preliminary and permanent injunctions against all Defendants, the Commission seeks disgorgement of the Defendants' ill-gotten gains and prejudgment interest thereon, the imposition of civil money penalties pursuant to Section 21(d) of the Exchange Act, and penny stock bars against certain Defendants pursuant to Section 21(d) of the Exchange Act.

Defendants

3. Thomas E. Loyd, individually and d/b/a Investors' Alert ("Loyd"), age 39, resides in Houston, Texas. During the Relevant Period, Loyd has prepared and distributed Investors' Alert newsletters through his company, Vantage International Consultants, Inc., to facsimile numbers in Florida and other states throughout the nation.

4. Paul A. Spray, individually and d/b/a OTC Investor's Edge ("Spray"), age 34, is a resident of Tampa, Florida. During the Relevant Period, Spray has prepared and distributed OTC Investor's Edge newsletters to facsimile numbers in Florida and other states throughout the nation.

5. Marc Barhonovich ("Barhonovich"), age 40, is a resident of Lutz, Florida. Barhonovich is the director and president of Equity Advisors, Inc., a Florida corporation. During the Relevant Period, Barhonovich, through Equity Advisors, has retained Spray to prepare and distribute OTC Investor's Edge newsletters, has known or has been reckless in not knowing of the material misrepresentations and omissions in the newsletters, and has contracted with Loyd, through Vantage International Consultants, to distribute newsletters.

6. Investors' Alert, Inc. ("Investors' Alert"), is a Texas corporation with its principal place of business in Houston, Texas. During the Relevant Period, the company has distributed Investors' Alert newsletters prepared by Loyd to subscribers and others via facsimile.

7. OTC Consulting, Inc. ("OTC Consulting"), is a Bahamian corporation with its principal place of business in Nassau, the Bahamas. Spray is the majority shareholder in the company. During the Relevant Period, OTC Consulting has maintained an Internet website that has posted essentially the same information printed in OTC Investor's Edge newsletters.

8. Vantage International Consultants, Inc. ("Vantage"), is a Nevada corporation with its principal place of business in Houston, Texas. Loyd is the president of Vantage. During the Relevant Period, Loyd has used Vantage to distribute the Investors' Alert and OTC Investor's Edge newsletters and to pay to have other commercial facsimile broadcasters fax the newsletters.

9. Equity Advisors, Inc. ("Equity Advisors") is a Florida corporation with its principal place of business in Tampa, Florida. Barhonovich is Equity Advisors' director and president. During the Relevant Period, Barhonovich and Equity Advisors have contracted with Spray to prepare OTC Investor's Edge newsletters, and have paid Vantage and others to distribute the newsletters via facsimile.

Jurisdiction and Venue

10. This Court has jurisdiction over this action pursuant to Sections 21(d), 21(e), and 27 of the Exchange Act, 15 U.S.C. §§ 78u(d), 78u(e) and 78aa. These provisions authorize the Commission to seek injunctive relief from the federal district courts and authorize the courts to impose civil money penalties and penny stock bars for violations of the federal securities laws.

11. The 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 conduct of which the Commission complains.

12. The Middle District of Florida is the proper venue for this action. A great number of the acts and transactions constituting violations of the Exchange Act have occurred in the Middle District of Florida. Two of the companies touted by the Defendants, New Millennium Media International, Inc. ("New Millennium") and Dtomi Inc. ("Dtomi"), are located in the Middle District of Florida. Spray and Barhonovich reside in the Middle District of Florida, and Barhonovich's company, Equity Advisors, is also located in the Middle District of Florida.

Misrepresentations and Omissions

I. Investors' Alert's Touting of Nebo Products

13. Loyd, through his newsletter Investors' Alert, is touting Nebo Products, Inc. ("Nebo"), a company that supplies hand tools and weekend camping gear to U.S. retailers.

14. Loyd has prepared two Investors' Alert newsletters relating to Nebo, dated April and May 2002, respectively. Both contain material misrepresentations and omissions.

15. Among other things, the Investors' Alert newsletters falsely state that Nebo is a profitable company, and holds patents on two of its largest-selling tools. In fact, Nebo is not profitable and does not hold patents on the tools in question. In addition, the newsletters fail to disclose that Nebo's auditors issued a going concern opinion in their year-end 2001 report.

16. The Investors' Alert newsletters also contain a series of baseless, unrealistic and misleading financial projections about Nebo, including projections made without any basis in fact that the company could expect short-term stock share prices of $6.50 to $12, and that its revenues could grow to $140 million.

17. Lloyd knew or was reckless in not knowing at the time he prepared and disseminated the newsletters that they contained the material misrepresentations and omissions set forth in Paragraphs 15 and 16.

18. The Investors' Alert newsletters were delivered to NWP, a company based in Belize. NWP e-mailed the newsletters to Vision Lab, a commercial facsimile broadcaster based in Miami, Florida, along with lists containing millions of facsimile numbers. Vision Lab used the facsimile numbers provided by NWP to fax broadcast the Investors' Alert newsletters from at least April 14 through May 24, 2002.

19. NWP received funds from Vantage and Loyd to pay for the Vision Lab faxes.

20. The material misrepresentations and omissions in the Investors' Alert newsletters fueled a rise in both the price and trading volume of Nebo's common stock in both mid-April and mid-May as the newsletters were being distributed. For example, following distribution of the Investors' Alert newsletter in April and May 2002, Nebo's average daily trading volume rose 700 percent.

II. OTC Investor's Edge Touting of New Millennium

21. Spray, through his newsletter OTC Investor's Edge, has been touting New Millennium, a billboard advertising company, and Dtomi, an Internet technology provider.

22. Spray has prepared and distributed OTC Investor's Edge newsletters concerning numerous micro-cap companies since at least January 2001. Spray has distributed OTC Investor's Edge by facsimile and e-mail, and also has posted the newsletters on an Internet web page maintained by his company, OTC Consulting.

23. Barhonovich contacted Spray in approximately late June or early July 2001 to prepare and distribute an OTC Investor's Edge newsletter promoting New Millennium. At the time, New Millennium had hired Barhonovich to provide investor relations services, including conducting an investor awareness campaign. Barhonovich negotiated the amount Spray would be paid for preparing the newsletter, and through Equity Advisors paid Spray 18,000 shares of New Millennium stock for preparing the OTC Investor's Edge newsletter discussing New Millennium in July 2001.

24. Barhonovich subsequently retained Spray to prepare and distribute additional Investor's Edge newsletters on behalf of New Millennium in August and October 2001. Spray received at least 20,000 shares of New Millennium stock from Barhonovich for the additional two newsletters.

A. Misrepresentations and Omissions Concerning New Millennium in the OTC Investor's Edge Newsletters

25. New Millennium claims to be an advertising-media company that uses "cutting edge technology to maximize client exposure." The company purportedly has exclusive U.S. manufacturing and distribution rights to the patented "Illumisign Eyecatcher Display" system. The system displays up to 24 advertisements in a wall-mounted or pedestal-supported, front-lit case. The screens are displayed on buildings, poles, and traditional billboards, and project video or computer-formatted advertisements that can be remotely updated.

26. The three 2001 OTC Investor's Edge newsletters contain material misrepresentations and omissions concerning New Millennium. Among other things, the newsletters falsely state the dollar amount of contracts New Millennium had, falsely represent that New Millennium's "management" was projecting a 28% net profit margin for the company, and falsely state that New Millennium's revenue for the quarter ending March 31, 2001 exceeded the revenue of the entire previous year by 90%. In addition, without any basis in fact, the OTC Investor's Edge newsletters grossly overstate New Millennium's potential revenue stream and projected share price.

27. Spray knew or was reckless in not knowing that the newsletters he prepared and disseminated contained the material misrepresentations and omissions set forth in Paragraph 26. Barhonovich saw the newsletters before they were disseminated and also knew or was reckless in not knowing that they contained the material misrepresentations and omissions set forth in Paragraph 26.

28. The July, August and October 2001 OTC Investor's Edge newsletters concerning New Millennium were distributed through different mechanisms to potential investors. First, Spray issued newsletters to his own subscriber base of 500 to 700. The newsletters also were faxed and emailed to potential investors through Vantage, NWP and Vision Lab. Barhonovich, through his company Equity Advisors, paid more than $200,000 to both Vantage and NWP for the faxes and e-mails.

B. The March and April New Millennium Newsletters

29. After Spray prepared the July, August, and October 2001 newsletters for Barhonovich, Loyd hired Spray to prepare a similar newsletter discussing New Millennium in the spring of 2002. Loyd promised Spray 100,000 shares of New Millennium stock to prepare those newsletters for distribution.

30. Spray prepared a newsletter touting New Millennium for Loyd. Dated March 2002, the OTC Investor's Edge newsletter contains many of the material misrepresentations and omissions as the 2001 newsletters. In addition, the March 2002 newsletter falsely states the amount of revenue the company receives from its advertising "boards." Also, the March 2002 newsletter omits several material facts, including that New Millennium was undercapitalized and that its auditors had issued a going concern opinion. Finally, without any basis in fact, the March 2002 OTC Investor's Edge newsletter grossly overstates New Millennium's potential revenue stream and projected share price.

31. Spray distributed the March 2002 newsletter to his subscribers. He also sent it to Loyd for further mass dissemination in March and April. Both Spray and Loyd either knew or were reckless in not knowing the newsletter contained the material misrepresentations and omissions set forth in Paragraph 30.

32. The 2002 New Millennium newsletter was sent to NWP, which in turn sent it to Vision Lab. Vision Lab faxed the March and April 2002 New Millennium newsletters from March 25 through at least April 4, 2002.

33. The misrepresentations and omissions in all five OTC Investor's Edge newsletters fueled a rise in both the price and trading volume of New Millennium's common stock. The trading volume rose from as low as 30,000 shares a day immediately before the faxing began to as high as 502,000 shares a day during periods when the newsletter was faxed. The price of New Millennium stock rose by as much as 67 percent.

III. OTC Investor's Edge Touting of Dtomi

34. At Barhonovich's request, Spray also prepared an OTC Investor's Edge newsletter promoting Dtomi, an Internet technology company, in November 2001. Dtomi claims to turn business data into market intelligence by gathering and analyzing critical data for sales and marketing professionals to expand their businesses.

35. The OTC Investor's Edge newsletter discussing Dtomi contains numerous material misrepresentations and omissions. For example, the newsletter fails to disclose that the company is in default on certain promissory notes and has accumulated almost $4.8 million in operating losses since its inception, fails to disclose that the company has no clients, falsely represents that the company has revised its earnings projections upward, and falsely represents that the company owns sophisticated technology. In addition, the newsletter states without any basis in fact that the company can achieve revenues of $80 million a year.

36. Barhonovich again hired Loyd, through Vantage, to arrange the faxing of the Dtomi newsletter. Barhonovich paid Loyd at least $101,000 to fax the Dtomi newsletter. The Dtomi newsletter was delivered to NWP. NWP then e-mailed the newsletter, along with lists containing millions of facsimile numbers, to Vision Lab to be broadcast. Vision Lab faxed the Dtomi newsletter from at least November 19 through December 19, 2001.

37. Spray knew or was reckless in not knowing that the newsletter he prepared and disseminated contained the material misrepresentations and omissions set forth in Paragraph 35. Barhonovich saw the Dtomi newsletter before it was disseminated and also knew or was reckless in not knowing that it contained the material misrepresentations and omissions set forth in Paragraph 35.

38. The newsletter fueled a rise in both the price and trading volume of Dtomi's stock. Following several days of faxing and emailing, the average number of shares traded per day rose 600 percent. The price rose from $1.95 per share to as high as $2.36 per share during the same time.

V. Ongoing Pattern of Conduct

39. The distribution of the Investors' Alert and OTC Investor's Edge newsletters follow a continuous cycle. The Defendants and others associated with them use different newsletters at different times to tout various thinly traded stocks in a coordinated fashion, causing an increase in their volume and price. A stock is touted through one newsletter for several weeks. The touting then temporarily ceases, but a short time later the stock is again touted through a different newsletter. This pattern, using different newsletters at different times, amounts to ongoing conduct.

Count I

Fraud in Violation of Section 10(b) of the Exchange Act and Rule 10b-5

40. The Commission realleges and repeats the allegations in Paragraphs 1 through 39 of this Complaint as if fully restated herein.

41. Since at least July 2001 through the present, the Defendants, directly or indirectly, by use of the means and instrumentalities of interstate commerce or of the mails, or of any facility of any national securities exchange, in connection with the purchase or sale of the securities, as described herein, have knowingly, willfully or recklessly: (a) employed devices, schemes or 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 the light of the circumstances under which they were made, not misleading; and (c) engaged 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.

42. By reason of the foregoing, Defendants, directly and 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.

Relief Requested

WHEREFORE, the Commission respectfully requests that the Court:

I. Declaratory Relief

Declare, determine and find that the Defendants have committed the violations of the federal securities laws alleged herein;

II. Injunctive Relief

Issue Preliminary and Permanent Injunctions, enjoining the Defendants, their agents, servants, employees, attorneys, and all persons in active concert or participation with them, and each of them, from violating 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;

III. Disgorgement

Issue an Order directing each of the Defendants 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 thereon;

IV. Penalties

Issue an Order directing each of the Defendants to pay civil money penalties pursuant to Section 21(d) of the Exchange Act, 15 U.S.C. § 78u(d)(3);

V. Penny Stock Bars

Issue an Order barring Loyd, Spray, and Barhonovich from participating in penny stock offerings, pursuant to Section 21(d) of the Exchange Act, 15 U.S.C. § 78u(d)(3) and the equitable powers of the Court; and

VI. Retention of Jurisdiction

Issue an Order retaining jurisdiction over this action to implement and carry out the terms of all orders and decrees that may be entered, or to entertain any suitable application or motion by the Commission for additional relief within the jurisdiction of this Court.

Respectfully submitted,

________________, 2002

http://www.sec.gov/litigation/complaints/complr17721.htm