U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 19868 / October 13, 2006
Securities and Exchange Commission, Appellee, v. Maxxon, Inc., Defendant-Appellant, Gifford M. Mabie, Jr., Defendant-Appellant, and Thomas R. Coughlin, Jr., Defendant, United States Court of Appeals for the Tenth Circuit, Appeal No. 05-5091 (October 11, 2006)
Securities and Exchange Commission v. Maxxon, Inc., Gifford M. Mabie, Jr., and Thomas R. Coughlin, Jr., United States District Court for the Northern District of Oklahoma, Civil Action No. 4:02-CV-00975-TCK-SAJ (Filed December 30, 2002)
Tenth Circuit Court of Appeals Affirms Jury Verdict and Remedies Imposed Against Maxxon, Inc. and Former President/CEO, Gifford M. Mabie, Jr.
The United States Court of Appeals for the Tenth Circuit, on October 11, 2006, affirmed a jury verdict which found Maxxon, Inc. and its former President and Chief Executive Officer, Gifford M. Mabie, Jr., civilly liable for violating the antifraud provisions of the federal securities laws and regulations, and affirmed the remedies imposed by the federal district court. The Tenth Circuit rejected all contentions raised by Maxxon and Mabie on appeal, concluding, among other things, that the district court judge had broad discretion in calculating disgorgement, due to its equitable nature, and in determining the period of time during which gains must be disgorged.
On November 18, 2004, a federal jury in the United States District Court for the Northern District of Oklahoma found that Maxxon and Mabie violated the antifraud provisions of the federal securities laws by making false or misleading statements in various media about the company and a "safety syringe" it was attempting to develop. The jury found Maxxon and Mabie violated Section 10(b) of the Securities Exchange Act of 1934 ("Exchange Act") and Rule 10b-5 thereunder. The jury also found that Maxxon and Mabie violated Sections 17(a)(2) and (3) of the Securities Act of 1933 ("Securities Act").
On March 11, 2005, Sven Erik Holmes, formerly the Chief Judge of the Northern District of Oklahoma, entered an Order of Final Judgment against Maxxon and Mabie. Judge Holmes permanently enjoined Mabie and Maxxon from violating, or aiding and abetting the violation of, Section 10(b) of the Exchange Act and Rule 10b-5, and Sections 17(a)(2) and 17(a)(3) of the Securities Act. Judge Holmes also barred Mabie from acting as an officer or director of any public company for five years, permanently barred him from participating in any offering of penny stock, and ordered him to pay disgorgement of $433,228.52, prejudgment interest of $221,610.16, and a civil penalty of $433,228.52.