UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 16540 / May 5, 2000
Securities and Exchange Commission v. Assured International, Inc., Sam E. Harris, Sharp Financial Corp., Max Becker and Tralana Lee, Civil Action No. 99-00530 FMC (BQRx) (C.D. Cal.)
On May 1, 2000, the Honorable Florence-Marie Cooper, United States District Judge for the Central District of California, granted the Commission's motion for summary judgment against Defendants Assured International, Inc. ("Assured"), Sam E. Harris ("Harris"), Sharp Financial Corp. ("Sharp"), Max Becker ("Becker") and Tralana Lee ("Lee") for violating the antifraud provisions of the securities laws, Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The Court permanently enjoined Assured and Sharp from future violations of the antifraud provisions and ordered them to disgorge $1,270,717.88 and $136,500, respectively, in fraudulently obtained investor funds, plus prejudgment interest. The Court also permanently enjoined Harris, Becker and Lee from future violations of the antifraud provisions, ordered Harris to disgorge $249,783, Becker to disgorge $54,341.47, and Lee to disgorge 73,164.02 in misappropriated investor funds, together with prejudgment interest, and imposed maximum third tier civil penalties of $110,000 against Harrris and Lee, and $54,341.47 against Becker.
It was undisputed that Assured, Harris, Becker and Lee operated a boiler room out of Woodland Hills, Southern California and raised $1,134,217.88 from investors nationwide from February 1998 through January 1999. Harris, Becker and Lee misappropriated for their own use $321,110.30 of investor monies. Harris claimed the title of Chief Executive Officer, among other titles, of Assured; and Becker and Lee claimed the titles of President and Secretary, respectively. It was also undisputed that from February 1999 to June 1999, Lee and Sharp raised an additional $136,500 from investors from the offer and sale of Assured stock in violation of the Temporary Restraining Order and Preliminary Injunction issued by the Court.
Assured, Harris, Becker and Lee represented to investors that Assured was controlled by three officers, Defendants Becker and Lee, and a third officer, and failed to disclose that Harris, a repeat securities laws violator, controlled all investor funds. Undisclosed to investors, seven states had issued orders against Harris for securities laws violations and the National Association of Securities Dealers censured, fined, and barred him from association with any NASD member. Assured, Harris, Becker and Lee also represented that investor money would be used to market and sell latex products, when, in fact, Assured never manufactured or distributed latex products and Harris, Becker and Lee misappropriated 28.3% of investor funds for their own personal use. Additionally, Lee and Sharp continued the fraudulent scheme to raise $136,500 in violation of the Court orders to cease, failed to disclose the lawsuit, temporary restraining order and preliminary injunction issued by the Court, and Lee misappropriated $52,733.19 of the additional monies raised.
For more information, see Litigation Release No. 16037 (January 21, 1999).