UNITED STATES SECURITIES AND EXCHANGE COMMISSION Litigation Release No. 15415 / July 16 , 1997 Accounting and Auditing Enforcement Release No. 936 / July 16, 1997 SECURITIES AND EXCHANGE COMMISSION v. UNITED FIRE TECHNOLOGY, INC., BEVERLEE KAMERLING, WWBM CONSULTANTS, INC., JAMES GARTLAND, CHARLES F. JONES, MICHAEL J. HOOPER AND KENNETH R. STARNES, C97-1151R, U.S.D.C., W.D.Wa. The Securities and Exchange Commission announced the filing of a Complaint in the United States District Court for the Western District of Washington alleging numerous violations of the federal securities laws by Beverlee Kamerling ("Kamerling") and others in connection with their efforts to sell more than $1 million in stock of United Fire Technology, Inc. ("UFT"), a company that claimed to possess the patents and marketing rights for fire-extinguishing and fire-retarding products known as "Flamex products." In September 1995, the Commission suspended trading in the common stock of UFT because of questions that had been raised regarding the accuracy of information UFT had disseminated to the public about the company and its Flamex products, and UFT's common stock has not been publicly traded since that time. Named as defendants were: * UFT, a publicly traded corporation that was based in Bellevue, Washington from approximately July 1994 through December 1995. * Kamerling, a/k/a Beverlee Claydon, approximately 53 years old, and a resident of the Seattle area, who secretly controlled UFT's corporate affairs and operations. In 1989, the British Columbia Securities Commission entered an order barring Kamerling from serving as an officer and director of any public company after she had pled guilty to six counts of unlawfully trading in the securities of Ultra Glow Cosmetics, Ltd. * WWBM Consultants, Inc. ("WWBM"), a Delaware corporation that was based in Bellevue, Washington and was Kamerling's alter ego. * James Gartland ("Gartland"), age 51, a resident of Kirkland, Washington, who served as the President of UFT. * Michael J. Hooper ("Hooper"), age 45, a resident of the Spokane, Washington area, who worked for UFT as an accountant and auditor. * Charles F. Jones ("Jones"), age 62, a resident of Lake Dallas, Texas, who worked with Kamerling and as an unregistered broker. ======END OF PAGE 1====== * Kenneth R. Starnes ("Starnes"), age 30, a resident of Taylors, South Carolina, who was a stockbroker. The Commission's Complaint alleges as follows: From approximately July 1994 through December 1995, the defendants committed numerous violations of the federal securities law as they illegally raised money for themselves and UFT. UFT conducted an unregistered distribution of common stock, and Kamerling, WWBM, and Jones illegally sold this stock to investors. Specifically, Kamerling directed UFT to issue stock to entities and individuals that were her nominees, and Kamerling then had these nominees resell approximately 580,000 shares of this stock to investors at prices ranging from approximately $2.00 to $5.50 per share, generating proceeds of approximately $1,350,000. Kamerling then kept proceeds from these sales for her personal use. Jones facilitated much of this stock selling effort, and acted as an unregistered broker. While these shares of UFT stock were being sold, UFT, Kamerling, Gartland, and Hooper made materially false and misleading statements, and failed to disclose material information to brokers and the investing public concerning UFT and its alleged Flamex products. For instance, the defendants falsely stated that third parties had tested and certified UFT's Flamex products, when no such testing had been performed and no such certification existed. The defendants falsely claimed that UFT owned a manufacturing plant, and had contracts in place to manufacture its Flamex products, when no such manufacturing capabilities existed. The defendants failed to disclose that Kamerling, who had previously violated British Columbia's securities laws, controlled UFT's corporate affairs and its operations. The defendants also falsely stated that UFT had obtained a legal opinion stating that patents for its Flamex products were defensible, when no such opinion existed. Finally, there were misrepresentations and omissions in UFT's financial statements including misrepresentations concerning UFT's stock issuances, and omissions concerning related party transactions. UFT, through Kamerling, also paid undisclosed compensation, or kickbacks, to Starnes, a broker, to sell UFT common stock to his customers. Starnes sold over 56,000 shares of UFT stock to his customers, and he did not reveal to customers the fact that he received kickbacks in the form of free UFT stock as a consequence of his customers' purchases of UFT stock. The Complaint seeks permanent injunctive relief against UFT and Kamerling for violations of Sections 5(a), 5(c) and 17(a) of the Securities Act of 1933 ("Securities Act") and Section 10(b) of the Securities Exchange Act of 1934 ("Exchange Act") and Rule 10b-5 thereunder; WWBM for violations of Sections 5(a) and 5(c) of the Securities Act; Gartland, Hooper and Starnes for violations of Section 17(a) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder; and Jones for violations of Sections 5(a) and 5(c) of the Securities Act and Section 15(a) of the Exchange Act. The Complaint also seeks disgorgement from UFT, Kamerling, WWBM, Starnes and Jones, as well as an accounting from UFT, and an officer and director bar against Kamerling. ======END OF PAGE 2======