U.S. SECURITIES AND EXCHANGE COMMISSION
LITIGATION RELEASE NO. 16827 / December 13, 2000
Securities and Exchange Commission v. Steven H. Schiffer, Joann R. Schulz, Gary S. Kramer, Jonathan Solow, Frank J. Cannata, and Peter G. Mintz, 97 Civ. 5853 (RO) (S.D.N.Y.)
JOANN R. SCHULZ PERMANENTLY ENJOINED FROM SECURITIES VIOLATIONS AND ORDERED TO PAY $282,516 IN DISGORGEMENT
The Securities and Exchange Commission ("Commission") announced today that a judgment was entered on December 8, 2000, by the United States District Court for the Southern District of New York against Joann R. Schulz, one of four remaining defendants in a civil action brought by the Commission and currently pending in the District Court. Schulz had agreed to settle the District Court action, as it pertains to her, by consenting to the entry of the judgment. The judgment permanently enjoins Schulz from violating Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 ("Exchange Act"), and Exchange Act Rule 10b-5 -- all anti-fraud provisions of the federal securities laws -- and Section 13(a) of the Exchange Act and Exchange Act Rule 13a-1 -- part of the corporate reporting provisions of the federal securities laws. The judgment also orders Schulz to pay $282,516 in disgorgement. The judgment waives payment by Schulz of a civil money penalty, additional disgorgement, and prejudgment interest on the disgorgement, based on Schulz' demonstrated inability to pay. Schulz consented to the entry of the judgment without admitting or denying the allegations in the Commission's complaint, except as to jurisdiction.
The Commission's complaint includes the following allegations: From March 1991 to November 1993, Schulz was the president and chief operating officer of Phoenix Laser Systems, Inc. ("Phoenix Laser"). As such, Schulz was a controlling person of Phoenix Laser pursuant to Section 20(a) of the Exchange Act. As a controlling person, Schulz was responsible for Phoenix Laser filing certain false and misleading annual reports on Form 10-K. Moreover, between December 1991 and September 1993, Schulz engaged in insider trading by selling 251,050 shares of Phoenix Laser common stock while in possession of material, nonpublic information regarding the following facts: (a) Phoenix Laser had received far fewer orders for its products than it had claimed in its filings with the Commission; (b) certain Food and Drug Administration applications of Phoenix Laser had been rejected or withdrawn; and (c) there was no reasonable basis for certain public statements Phoenix Laser had made concerning anticipated revenue from the sale of its products.
The Commission previously reached settlements with defendants Frank J. Cannata and Peter G. Mintz. See Lit. Rel. No. 15435 (Aug. 7, 1997); Exchange Act Rel. No. 42416 (Feb. 11, 2000); Exchange Act Rel. No. 42880 (June 1, 2000).