SECURITIES AND EXCHANGE COMMISSION Washington, D.C. LITIGATION RELEASE NO. 15571 / November 25, 1997 SECURITIES AND EXCHANGE COMMISSION v. CHARLES O. HUTTOE, ET AL., Civil Action No. 96-02543 (GK)(D.D.C.) The Securities and Exchange Commission ("Commission") today announced settlements with Charles O. Huttoe and certain other persons and entities to be named as Relief Defendants in the action previously filed against him. The Commission filed its complaint on an emergency basis in this action on November 7, 1996, and charged Huttoe, formerly the Chairman of the Board and Chief Executive Officer of Systems of Excellence, Inc. ("SOE"), with orchestrating what was then an ongoing, massive market manipulation of that company's securities. The complaint alleged that he secretly distributed millions of SOE shares in the names of his family members and corporations, issued false favorable information concerning SOE and its business, and then sold his shares into the inflated market. The Commission has also moved to recover Huttoe's illegal profits from several Relief Defendants -- persons and entities that the Commission has alleged were the beneficiaries of a massive effort by Huttoe to dissipate and secrete those profits before the Commission's complaint was filed. As part of the settlement, Huttoe, without admitting or denying the allegations made in the Commission's complaint, consented to the entry of a final judgment of permanent injunction prohibiting him from violating Sections 5 and 17(a) of the Securities Act of 1933 ("Securities Act"), Sections 10(b), 13(b)(5), and 16(a) of the Securities Exchange Act of 1934 ("Exchange Act"), and Rules 10b-5, 13b2-1, 13b2-2, 16a-2, and 16a-3 thereunder. The Order also permanently bars Huttoe from acting as an officer or director of a public company. The Order requires that Huttoe disgorge $12,543,770, the total amount of monies or benefits that he derived from the conduct alleged in the complaint, provided that except for surrendering to the Court-appointed receiver in this case certain assets described in Huttoe's sworn statement of his financial condition, payment of the disgorgement amount is waived in light of his demonstrated inability to pay based on his sworn representations in his statement of financial condition. The Order also requires Huttoe to cooperate with the Commission and the Court-appointed receiver to, among other things, effect the surrender of all the proceeds of the fraud that are held by any other person. As an additional part of the settlement, Huttoe consented to the entry of a Commission Order barring him from association with any broker, dealer, municipal securities dealer, investment adviser or investment company. As previously announced, on November 13, 1996, Huttoe pled guilty to a two count information charging him with securities fraud and money laundering arising out of his conduct at SOE. On January 31, 1997, he was sentenced to 46 months of imprisonment. He is presently serving that sentence. See Lit. Rel. 15237 (January 31, 1997). The Commission also announced settlements with Karen Purvis Huttoe ("Purvis"), who is Huttoe's wife, and Tammy Jo Perkins ("Perkins"), who is Huttoe's niece. The Commission previously had alleged that Huttoe had issued SOE shares to them as well as to the late Josephine Brooks ("Brooks"), Huttoe's mother, that those shares were sold during the manipulation and that Purvis, Perkins and Brooks had violated Section 5 of the Securities Act. In light of evidence obtained in discovery in this matter, the Commission today requested leave of the Court to amend its complaint to drop the charge that they violated Section 5 of the Securities Act, and instead to name Purvis and Perkins as Relief Defendants. Purvis and Perkins have consented to orders requiring that they disgorge the contents of the brokerage and bank accounts in their names that were used to sell SOE securities or into which proceeds of those sales were deposited. The Commission also filed a motion with Brooks' counsel's consent requiring that assets held in such accounts in her name be surrendered to the Court-appointed receiver. Purvis also agreed to disgorge an additional $258,650 representing illegal proceeds that she received from Huttoe, provided that payment was waived in light of her demonstrated inability to pay based on her sworn representations in her statement of financial condition. The Commission also announced developments with regard to several other Relief Defendants. Today, Starlog Franchise Corp., Hope Associates, L.L.C., Michael Michaelson, Raymond J. Markman, Herman Rush, Mark Savel and George Holsten filed consents to the entry of orders requiring them to disgorge a total of $950,000 that the Commission alleged they received, directly or indirectly, from Huttoe. Finally, the Commission announced that on November 7, 1997, the Court granted its motion for leave to amend its complaint to add Mary Jane Hubbard as a Relief Defendant, granted a preliminary injunction against Hubbard and froze $531,450 representing funds Hubbard received from Huttoe. The Commission previously has made several announcements concerning this matter. See Lit. Rel. 15490 (September 12, 1997); Lit. Rel. 15286 (March 12, 1997); Lit. Rel. 15237 (January 31, 1997); Lit. Rel. 15185 (December 12, 1996); Lit. Rel. 15153 (November 7, 1996); Securities Exchange Act Rel. No. 37791 (October 7, 1996). The Commission is cooperating with separate investigations in this matter carried on by the United States Attorney's Offices for the District of Nevada and the Eastern District of Virginia, and the Criminal Investigation Division of the Internal Revenue Service. The Commission's investigation in this matter is continuing. ======END OF PAGE 2======