SECURITIES AND EXCHANGE COMMISSION
LITIGATION RELEASE NO. 16795 / November 8, 2000
SEC SETTLES "HYPE AND DUMP" FRAUD CASE AGAINST STOCK PROMOTER STANLEY SCHULMAN, NEMDACO, INC., JEFFREY BENDER, AND GARY LARKIN.
Securities and Exchange Commission v. Nemdaco, Inc., Stanley Schulman, Jeffrey R. Bender and Gary J. Larkin, U.S.D.C. for the Central District of California, Eastern Division, Civil Action No. EDCV-00861 RT(SGLx)
The Securities and Exchange Commission ("Commission") today announced the filing of a settled injunctive action in the U.S. District Court of the Central District of California against Nemdaco, Inc., Stanley Schulman of Devore, California, Jeffrey R. Bender of San Gabriel, California and Gary J. Larkin of Oceanside, California, for the Ahype and dump@ of the stock of Nemdaco, a shell corporation that was once listed on the NASDAQ Bulletin Board. The Commission will also institute administrative proceedings against Schulman which will bar him from participation in any distribution of a penny stock.
The Commission's complaint alleges that Schulman took undisclosed control of Nemdaco and appointed Bender and Larkin to be figurehead officers of the company -- Chairman of the Board and President of the company, respectively. Schulman then proceeded, with the assistance of Bender and Larkin, to issue false and misleading press releases touting numerous phantom business opportunities that Nemdaco purportedly had secured. These included the purchase of steel mills and breweries in China, selling sports figure memorabilia, and the manufacture and marketing of a frozen foods shipping container. None of Nemdaco´s announced projects came anywhere near fruition. At the same time, and while the market price for the stock had risen because of the false publicity, Schulman fueled the scheme by selling millions of worthless Nemdaco shares through nominee brokerage accounts. The complaint alleges that Schulman, Nemdaco, Larkin and/or Bender thereby engaged in a fraudulent manipulation and an unregistered distribution of Nemdaco stock, failed to disclose publicly Schulman's ownership and control of Nemdaco, and made false public periodic filings with the Commission.
Prior to the filing of the complaint, all of the defendants consented, without admitting or denying the allegations of the complaint, to the entry of final judgments against them. Pending approval by the Court, the defendants will be enjoined permanently from violating the antifraud, registration, periodic reporting and stock ownership reporting provisions of the federal securities laws. Schulman will also be barred by the Court from acting as an officer or director of any public company. Payment of disgorgement, and the imposition of civil penalties, was waived, based on the defendants demonstrated inability to pay. Schulman also consented to a Commission Order, without admitting or denying the findings in the Order, barring him from any participation in a distribution of a penny stock.