U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 16550 / May 12, 2000
Securities and Exchange Commission v. Robert N. Rooks, John W. Duffell III and Charles E. Yost II, Civil Action No. 00-05045 CM (SHx) (C.D. Cal.)
The Securities and Exchange Commission ("Commission") announced today that it filed an enforcement action in federal court in Los Angeles against Robert N. Rooks ("Rooks"), of Los Angeles, California, John W. Duffell III ("Duffell") of Annecy, France, and Charles E. Yost II ("Yost"), of Dallas, Texas (collectively the "Defendants") for their involvement in the dissemination of false and misleading information regarding JDMC Global Corp. ("JDMC") in violation of the antifraud provisions of the federal securities laws.
The complaint alleges that Rooks, the chief executive officer of JDMC, and stock promoters Duffell and Yost disseminated false and misleading information regarding JDMC's efforts toward building affordable housing in South Africa and JDMC's financial condition. Duffell and Yost disseminated this false and misleading information to a stock touter in Washington, who thereafter touted JDMC stock on the radio. The Defendants also provided this false and misleading information to a retail brokerage firm in Florida, whose salesmen used the misinformation when selling JDMC stock to unsuspecting investors. The retail brokerage firm sold approximately 258,000 JDMC shares to individuals from June to September 16, 1996. The Commission further alleges that, while promoting JDMC and disseminating false and misleading information regarding JDMC, Duffell and Yost sold JDMC stock into the market.
The Commission has asked the Court to permanently enjoin the Defendants from future violations of the antifraud provisions of Section 17(a) of the Securities Act of 1933 ("Securities Act"), Duffell and Yost from future violations of the antifraud provisions of Section 10(b) of the Securities Exchange Act of 1934 ("Exchange Act") and Rule 10b-5 thereunder, and Duffell from future violations of the registration provisions of Sections 5(a) and 5(c) of the Securities Act. The Commission further asked the Court for disgorgement plus prejudgment interest thereon from Duffell and Yost and for civil penalties against all of the Defendants.
Duffell is a recidivist violator of the securities laws. In 1979, the United States District Court in Los Angeles enjoined Duffell in SEC v. John W. Duffell, III et al., Civil Action No. 78-4811 (C.D. Cal.) for securities violations. Duffell was subsequently convicted and sentenced to prison in 1982 for the same underlying conduct. United States v. John W. Duffell, III, Case No. CR-81-01075-01 (C.D. Cal.).
On September 16, 1996, the Commission suspended trading in the securities of JDMC, pursuant to Section 12(k) of the Exchange Act, due to concerns regarding the accuracy and adequacy of publicly disseminated information concerning, among other things, the value of certain JDMC assets listed in its financial statements and JDMC's housing project in South Africa.
The Commission wishes to acknowledge the assistance of the British Columbia Securities Commission and the Commission des Operations de Bourse in this matter.