U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No.16786 / October 31, 2000
SECURITIES AND EXCHANGE COMMISSION v. YES ENTERTAINMENT, LLC, YES ENTERTAINMENT NETWORK, LLC, YES ENTERTAINMENT NETWORK, INC., RONALD T. MULHALL and EUGENE M. CARRIERE a/k/a GENE CARRIER, Civil Action No. 99-11280 CAS (AJWx)
The Commission announced that on October 30, 2000, United States District Court Judge Christina A. Snyder, Central District of California, entered Judgment by Default against Yes Entertainment, LLC, Yes Entertainment Network, LLC, Yes Entertainment Network, Inc., Ronald T. Mulhall and Eugene M. Carriere for violating the antifraud provisions of the federal securities laws and ordered these Defendants to disgorge more than $14 million in ill-gotten gains. In addition, the Court ordered Mulhall and Carriere each to pay a civil money penalty in the amount of $110,000 for their respective roles in the Defendants' fraudulent scheme.
The Commission filed an emergency action against the Defendants one year ago, charging them with violating Section 17(a) of the Securities Act of 1933 (Securities Act) and Section 10(b) of the Securities Exchange Act of 1934 (Exchange Act) and Rule 10b-5 thereunder in connection with the offer and sale of securities in Yes Entertainment, LLC, a Nevada limited liability company that purported to operate Internet website-based "channels" of streaming media. At that time, the Court issued a temporary restraining order and imposed an asset freeze against the Defendants. The Commission charged that the Defendants had represented to investors (1) that sales commissions were 12% when, in fact, they were 45%, (2) that Mulhall, the President and Chief Executive Officer of Yes Entertainment Network, Inc., was a "highly successful lawyer" when, in fact, he had been disbarred by the State Bar of California for misappropriating client funds, and (3) that 85% of all investor proceeds would be used for advertising and marketing, website creation and design, and administrative and operating expenses when, in fact, almost $6 million was wired offshore and hundreds of thousands of dollars were diverted to Mulhall and Carriere for their personal use. The Defendants were also charged with selling unregistered securities in violation of Sections 5(a) and 5(c) of the Securities Act.
The Court ordered the Defendants to pay disgorgement in the amount of $13,794,265 and prejudgment interest in the amount of $752,543, a total of $14,546,808. The liability for the disgorgement and prejudgment interest amounts was imposed on the Defendants jointly and severally. In addition, the Court ordered Mulhall and Carriere each to pay a civil money penalty of $110,000 for their respective roles in the Defendants' fraudulent scheme.