U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 19957 / January 4, 2007
SEC v. Exotics.com, Inc., et al. (United States District Court, District of Nevada, C.A. No. CV-S-05-0531-PMP-GWF)
Final Judgment Against Gary Thomas a/k/a Gary Thomas Vojtesak in Market Manipulation and Financial Fraud Case
The Securities and Exchange Commission announced today that, on December 22, 2006, a federal district court in Nevada entered a final judgment of default against Gary Thomas a/k/a Gary Thomas Vojtesak in connection with a stock manipulation and accounting fraud scheme that occurred from 1999 to 2002. The final judgment permanently enjoins Thomas from violating the antifraud, books and records, internal accounting controls, and securities ownership reporting provisions of the federal securities laws and orders him to pay civil money penalties totaling $540,000.
The judgment against Thomas arises out of an April 21, 2005 civil action filed by the Commission against Exotics.com, Inc., a Nevada corporation based in Vancouver, British Columbia, and 12 other principal defendants and a relief defendant. The Commission alleges in its complaint that, between at least 1999 and 2002, Exotics.com, which was then an Over-the-Counter Bulletin Board company in the business of operating adult Web sites, was the subject of a stock manipulation and accounting fraud perpetrated by, among others, its officers, attorneys and outside auditors. The Commission alleges that Thomas, a founder and former CEO and director of Exotics.com's sole operating subsidiary, played a role in the scheme by, among other things, providing false and misleading financial data that was incorporated into a press release issued by Exotics.com. The Commission also alleges that Thomas, as CEO and a director of the subsidiary, failed to implement a system of internal accounting controls and to ensure that the company maintained accurate books and records. In addition, the Commission alleges that Thomas, who beneficially owned more than 15% of the total Exotics.com shares outstanding, failed to file any required beneficial ownership reports with the Commission.
The final judgment enjoins Thomas from violating the antifraud provisions of the federal securities laws, Section 10(b) of the Securities Exchange Act of 1934 (Exchange Act) and Rule 10b-5 thereunder, the books and records and internal accounting controls provisions, Sections 13(b)(2)(A) and 13(b)(2)(B) of the Exchange Act, and the securities ownership reporting provisions, Sections 13(d) and 16(a) of the Exchange Act and Rules 13d-1 and 16a-3 thereunder. The litigation is continuing with regard to the remaining defendants and the relief defendant.