U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 19863 / October 11, 2006
SEC v. James Lamar McMichael and Nancy A. McMichael, Civil Action No. 8:05-CV-01937-RAL-TGW (M.D. Fla., Tampa Division)
On October 10, 2006, the Honorable Richard A. Lazzara, U. S. District Judge for the Middle District of Florida, entered Final Judgments as to defendants James Lamar McMichael and Nancy A. McMichael ("defendants"), restraining and enjoining them from future violations of Sections 5 and 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934, and Rule 10b-5 thereunder. The Court waived amounts of disgorgement and prejudgment interest against defendant Nancy McMichael based on her sworn representations in her Statement of Financial Condition, and did not impose civil penalties. No disgorgement or penalties were imposed against defendant James Lamar McMichael based upon his criminal conviction, incarceration and a $20 million restitution judgment in a related criminal case. The defendants consented to the entries of the judgments without admitting or denying any of the allegations of the Commission's complaint.
The complaint alleged that from October 1998 until May 2003, the defendants orchestrated, directed and controlled the fraudulent and unregistered offer and sale of approximately $33 million of securities issued by PhyMed and Healthcare Preferred to more than 500 investors in at least 23 states. According to the complaint, PhyMed developed and operated pain management clinics and Healthcare Preferred claimed to be a financial services consultant. The complaint further alleged that the defendants made misrepresentations and omissions of material fact to investors through the PhyMed securities offerings concerning the likely investments returns, the use of investor funds, and risks of the investment, among other things. The complaint also alleged that the defendants made misrepresentations and omissions of material fact to investors through the Healthcare Preferred securities offerings concerning Healthcare Preferred's misuse of investor funds by transferring the funds to PhyMed and the McMichaels, among other things. According to the complaint, both PhyMed and Healthcare Preferred are now defunct and investors collectively have lost over $20 million.
James Lamar McMichael and his wife, Nancy A. McMichael, were executive officers of PhyMed and Healthcare Preferred.
See also: L.R. 19434 (October 19, 2005)