U.S. SECURITIES AND EXCHANGE COMMISSION
PACIFIC REGIONAL OFFICE
Litigation Release. No.16234/August 2, 1999
SECURITIES AND EXCHANGE COMMISSION V. NORTH AMERICAN CORPORATE CONSULTANTS, INC., ROBERT LESLIE MILLSTONE, AND JAY FRANKLIN JOHNSON, Civil Action No. 99-1613(BTM)(S.D. Cal.)
As part of its nationwide crackdown on stock promotors who illegally tout microcap stock, the Securities and Exchange Commission filed a civil action in federal district court in San Diego, California against North American Corporate Consultants ("NACC"), a financial public relations firm based in Glendale, Arizona and Ramona, California, and its principals Robert Leslie Millstone, age 55, resident of Glendale, Arizona and Jay Franklin Johnson, age 42, resident of Ramona, California. The Complaint alleges that the defendants touted the stock of seven clients, including six microcap companies, without disclosing that the issuers of the stocks paid for those promotional efforts.
According to the Complaint, from the Fall of 1995 through the Summer of 1998, NACC touted the stock of corporate clients by featuring the companies in a variety of newsletters published by NACC and distributed to thousands of investors. Although NACC's touts appeared to be independent, NACC in fact had agreements to receive compensation from the companies featured in the newsletters and received almost $1 million in cash and stock from the seven companies. The Complaint further alleges that NACC violated Section 17(b) of the Securities Act of 1933 ("Securities Act") because it failed to disclose that NACC (1) had agreements to receive compensation from the featured companies in exchange for the touts and (2) received almost $1 million in cash and stock from the seven companies. Section 17(b) of the Securities Act makes it unlawful for any person to distribute a publication recommending a security without fully disclosing the nature, terms and amounts of compensation received or to be received. The Complaint seeks permanent injunctions, civil penalties, and other relief.http://www.sec.gov/litigation/litreleases/lr16234.htm