Litigation Release No. 15899 / September 24, 1998
SEC SUES WEST PALM BEACH-BASED MICROCAP COMPANY AND OTHERS IN "PUMP AND DUMP" SCHEME
Securities and Exchange Commission v. Omnigene Development, Inc., f/k/a Omnigene Diagnostics, Inc., Dominic Scacci and Jerome M. Wenger, (Civil Action No. 98-8672-CIV-RYSKAMP (S.A., Fla) (West Palm Beach Div.)
The Securities and Exchange Commission announced that today it filed a civil injunctive action against OmniGene Development, Inc., f/k/a OmniGene Diagnostics, Inc. of West Palm Beach, Florida, its president and CEO, Dominic Scacci of West Palm Beach, Florida, and Jerome Wenger of Bethesda, Maryland, a stock promoter and host of "The Next SuperStock," a nationally syndicated radio show. The SEC previously suspended trading in Omnigenes stock.
The SEC is seeking permanent injunctions, civil penalties and disgorgement. The SECs complaint alleges that Omnigene, a penny stock issuer purportedly engaged in the business of providing dental diagnostic testing services, together with Scacci and Wenger, violated the antifraud provisions of the federal securities laws by engaging in a "pump and dump" stock scheme. The SECs complaint also alleges that Wenger violated the federal securities laws by touting Omnigenes stock without disclosing his receipt of compensation from Omnigene. The SECs complaint alleges that Scacci caused Omnigene to issue stock in a sham private placement offering to nominee accounts he controlled. Scacci then got the stock quoted on the OTC Bulletin Board and began a promotional campaign designed to create demand and artificially inflate Omnigenes share price so that he and others could sell their shares at a substantial profit. In furtherance of the scheme, Omnigene, Scacci and Wenger made false and misleading statements of material fact concerning Omnigenes past and projected revenues, certain purported patent rights, contracts, and laboratory staff. The misrepresentations and omissions were broadcast to the investing public on Wengers radio show, published to prospective investors in Omnigenes investor packets which were distributed via U.S. mail, and repeated in messages posted on the Internet. In addition, the Commissions complaint further alleges that Wenger failed to disclose that he received 66,000 shares of Omnigene stock as compensation for promoting Omnigene on his radio show.
The staff seeks to obtain permanent injunctions, civil penalties and disgorgement against Omnigene, Scacci, and Wenger based on their violations of Section 17(a) of the Securities Act of 1933 ("Securities Act") and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5, thereunder, and Wengers violations of Section 17(b) of the Securities Act. The SEC previously suspended trading in Omnigenes stock.
This enforcement action is one of several cases filed by the SEC today in an effort to address abuses in the microcap market. It is also part of the SEC's four-pronged approach to minimizing microcap fraud: enforcement, inspections, investor education and regulation. For more information about the SEC's response to microcap fraud, visit the SEC's Microcap Fraud Information Center at http://www.sec.gov/news/extra/microcap.htm.