UNITED STATES SECURITIES AND EXCHANGE COMMISSION
LITIGATION RELEASE NO. 16556 / May 16, 2000
SECURITIES AND EXCHANGE COMMISSION V. Y2K HIGHWAY, INC. AND ROBERT J. KUNTZ. Civil Action No. C-00-187 (S.D. Texas, Corpus Christi Division)
The Securities and Exhange Commission filed a complaint against Y2K Highway, Inc. and Robert J. Kuntz on May 12, 2000, in the United States District Court for the Southern District of Texas. The SEC's Complaint alleges that the defendants engaged in an Internet scheme in which they fraudulently offered and sold unregistered Y2K securities.
The Complaint alleges that since June 1999, Y2K and Kuntz made two fraudulent unregistered securities offerings over Y2K's Internet web site and through unsolicited, or "spam," e-mail messages. In connection with their first securities offering, Y2K and Kuntz sold securities to more than 360 investors located in 25 states and 6 foreign countries, raising approximately $275,000. Also, in connection with this first offering, Y2K and Kuntz made numerous misrepresentations and omissions of material fact, concerning, among other things, Y2K's business activities and prospects, its potential revenue and its available funding. For example, the defendants falsely told investors that Y2K was in partnership negotiations with major Internet and cable television companies such as HBO, Broadcast.com. and Peapod.Com ("$50 million deal"). In fact, no partnership negotiations had taken place or were even scheduled to take place. The Complaint further alleges that in connection with the second securities offering, the defendants made materially misleading statements and omissions about the Company's 1999 revenues, and the intended use of the offering proceeds.
Simultaneous with the filing of the Complaint, Y2K and Kuntz consented, without admitting or denying the allegations of the Complaint, to the entry of an order of preliminary injunction which: (1) enjoins each of them from violating Sections 5(a), 5(c) and 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder; (2) orders an immediate asset freeze on all funds and assets derived directly or indirectly from Y2K investors; and (3) orders Y2K and Kuntz to provide a sworn accounting of their assets and all funds raised from investors. The Complaint also seeks permanent injunctive relief, disgorgement with prejudgment interest and civil monetary penalties against the defendants.
Investors are advised to read the SEC's "Cyberspace" Alert before purchasing any investment promoted on the Internet. The free publication, which alerts investors to the telltale signs of online investment fraud, is available on the Investor Assistance and Complaints link of the SEC's Home Page on the World Wide Web www.sec.gov. It can also be obtained by calling 800-SEC-0330.
Investors are also encouraged to report suspicious Internet offerings (or other suspicious offerings) via e-mail to email@example.com. A user friendly form to assist you in making a report is available at the SEC Home Page www.sec.gov. Investors can also mail a report to SEC's Enforcement Complaint Center, Mail Stop 8-4, 450 Fifth Street, N.W., Washington, D.C. 20549.