SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 16449 / February 24, 2000
SECURITIES AND EXCHANGE COMMISSION v. JON F. WILLIAMS, JOHN G. WRIGHT, JR., JAMES B. DEAN AND CONRADO B. TOPACIO, United States District Court for the Northern District of California, Civil Action No. C-00-0594.
The Securities and Exchange Commission announced that it has filed charges resulting from a penny stock fraud masterminded by the former owner of Global Strategies Group, Inc., a now inactive San Francisco brokerage firm, and his associates. In its lawsuit, the Commission alleges that the defendants defrauded Global customers while selling them $2.1 million in high-risk, unregistered securities.
The Commission's complaint alleges that between 1995 and 1997 Jon F. Williams, the owner of Global, and others fraudulently sold $2.1 million in "stock repurchase agreements" to Global customers. The agreements provided that investors would purchase shares of three start-up companies at $1.00 per share and then Williams and others would repurchase the shares within six months for a 20% or greater return to the investors. In fact, the defendants' companies never transferred ownership of the stock to investors, their companies lacked the funds to repay the investors, and in some sales the defendants falsely stated that the agreements were backed by valuable guarantees. The start-up companies whose shares were involved in the stock repurchase agreements were Clean X-Press, of San Francisco, California; Pacific Diagnostic Technologies, of Westlake Village, California; and Casino Airlink, of Fort Lauderdale, Florida. At the time, each of the companies traded on the OTC Bulletin Board.
In addition to suing Williams, formerly of Oakland, California, the Commission also sued John G. Wright, formerly of Mill Valley, California, who assisted in issuing the stock repurchase agreements; James Bingham Dean, formerly of San Francisco, California, a registered representative at Global who sold many of the agreements; and Conrado B. Topacio, of Walnut Creek, California, who assisted in the sales in violation of a Commission order barring him from working in the brokerage industry. Topacio also has a criminal history. The Commission filed its action in the United States District Court for the Northern District of California.
The complaint seeks injunctions against Williams, Wright, and Dean prohibiting them from future violations of the antifraud provisions of the federal securities laws, Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 ("Exchange Act"), and Rule 10b-5 thereunder; an injunction pursuant to Sections 15(b)(6)(B)(i) and 21(e) of the Exchange Act compelling Topacio to comply with the prior Commission order barring him from working in the brokerage industry; an order compelling the defendants to account for and disgorge illegal profits they received from the scheme; and civil monetary penalties.http://www.sec.gov/litigation/litreleases/lr16449.htm