U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 19870 / October 16, 2006
In Re Application for Orders to Show Cause Requiring Compliance With Administrative Subpoena, (United States District Court for the District of Massachusetts, Docket No. 1:06-mc-10387-NMG)
Commission Files Subpoena Enforcement Action Against Clifford A. Lewis, Richard A. Dabney, and Thomas E. Nelson
The Securities and Exchange Commission announced today that, on September 29, 2006, it filed an application in the United States District Court for the District of Massachusetts for orders to enforce investigative subpoenas served on Clifford A. Lewis of Harrison, Maine, Richard A. Dabney of Torrance, California, and Thomas E. Nelson of Fountain Hills, Arizona.
The Commission's application and supporting papers allege that, on January 12, 2006, the Commission issued a Formal Order of Private Investigation entitled, In the Matter of Strategy X, Inc. Strategy X, Inc., is a Nevada corporation based in Harrison, Maine, which purports to have unique expertise in the field of "homeland security." Its stock is publicly traded on the Pink Sheets. Strategy X is not registered and does not file reports with the Commission. According to the Commission's application and supporting papers, its staff is investigating, among other things, the basis for certain statements in Strategy X press releases and statements made about Strategy X directly to investors by persons purporting to act on behalf of the company and whether those statements were false and misleading. The investigation also concerns transactions involving large amounts of unrestricted Strategy X stock that have not been registered with the Commission.
According to the Commission's application, Lewis and Dabney are officers of Strategy X, and Nelson is a consultant who purportedly provides investor relations services to the company. On January 19, 2006, the Commission issued investigative subpoenas to Lewis and Dabney in the course of its investigation into possible violations of the antifraud and securities registration provisions of the federal securities laws. The subpoenas required Lewis and Dabney to produce documents relevant to the investigation and to appear before the Commission staff for testimony. The Commission alleges that, despite a number of postponements in order to accommodate Lewis and Dabney, as of the date of its application, they failed to produce all of the subpoenaed documents and failed to appear for testimony. The Commission further alleges that, on August 24, 2006, it issued an investigative subpoena to Nelson requiring him to produce documents relevant to the investigation and to appear for testimony. As of the date of its application, Nelson failed to produce any of the subpoenaed documents and failed to appear for testimony. According to the Commission's application, Lewis, Dabney, and Nelson have no valid justification for their failure to comply with the subpoenas, and court orders are necessary to compel them to produce the subpoenaed documents and to appear for testimony.
A hearing on the Commission's application has not yet been scheduled.