U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 16622 / July 6, 2000
SECURITIES AND EXCHANGE COMMISSION v. ROBERT J. DALTON, JAMES L. MASINI AND GEORGE J. BODLAK, Civil Action No. 99-09826 RAP (AJWx) (C.D. Cal.)
The Securities and Exchange Commission ("Commission") announced that, on June 7, 2000, the Honorable Richard A. Paez, United States Circuit Judge sitting by designation for the Central District of California, issued Final Judgments of Permanent Injunction and Other Relief ("Final Judgments") against defendants Robert J. Dalton ("Dalton") and James L. Masini ("Masini"). The Final Judgments permanently enjoin Dalton and Masini from future violations of the antifraud and registration provisions of the federal securities laws they were alleged in the Complaint to have violated. The Final Judgments also order Dalton and Masini to pay disgorgement in the amounts of $677,339 and $179,500, respectively, representing their ill-gotten gains, but waive payment of disgorgement due to the defendants' financial inability to pay, except that Masini is required to disgorge $1,843. Dalton and Masini consented to the entry of the Final Judgments without admitting or denying the allegations in the Complaint.
The Commission alleged in its Complaint that, from 1995 to 1998, the defendants engaged in the fraudulent offer and sale of unregistered securities in connection with a California worm farming business operated by Ecology Farms Management, Inc. The defendants raised approximately $8.5 million from more than 250 investors nationwide and misused investor funds to pay for the securities sales effort and to pay some investor returns. The Complaint alleged that Dalton and Masini violated the antifraud provisions of Section 17(a) of the Securities Act of 1933 ("Securities Act"), Section 10(b) of the Securities Exchange Act of 1934 ("Exchange Act") and Rule 10b-5 thereunder and the securities registration provisions of Sections 5(a) and 5(c) of the Securities Act, and also alleged that Dalton violated the broker-dealer registration provisions of Section 15(a) of the Exchange Act.