U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 16914 / February 28, 2001
SEC v. Kenneth W. Schilling, Civil Action No. 01-0382 PHX-EHC (D. Ariz.)
Today, the Securities and Exchange Commission ("Commission") sued Kenneth W. Schilling ("Schilling") in U.S. District Court for the District of Arizona, charging that Schilling disseminated false revenue and stock price projections on the Internet for iBIZ Technology Corp. ("iBIZ") a Florida computer company headquartered in Phoenix, Arizona.
In the Complaint, the Commission alleged that Schilling, president of iBIZ, provided false financial projections to a purported analyst for research reports recommending the purchase of iBIZ stock. The Complaint also stated that from February 1999 through June 1999, Schilling placed 17 press releases on iBIZ's website which contained direct hyperlinks to the analyst reports. As late as February 2000, iBIZ maintained press releases on its website which referenced and contained hyperlinks to the analyst reports. The Commission further alleged that in a February 19, 1999 press release, iBIZ characterized the analyst as "independent" even though iBIZ, through its investor relations firm, had agreed to pay the analyst 200,000 shares of iBIZ common stock for the report. Schilling reviewed and approved the press releases posted on iBIZ's website. The Commission alleged that the false financial projections which appeared on the Internet fueled a rise in both the price and the trading volume of iBIZ's common stock.
Simultaneous with the filing of the complaint, Schilling without admitting or denying the Commission's allegations against him to the entry of an Order enjoining him from violating Section 10(b) of the Securities Exchange Act of 1934 ("Exchange Act") and Rule 10b-5 thereunder and ordering him to pay a civil penalty of $20,000.
In a related action, the Commission today issued a cease-and-desist order against iBIZ from committing or causing any violation or any future violations of Section 10(b) of the Exchange Act and Rule 10b-5 thereunder. iBIZ consented to the cease-and-desist order without admitting or denying any of the Commission's findings. For more information, see Release No. 34-44022.
This action is brought as part of the SEC's Fifth Internet Fraud Sweep. For tips on how to avoid Internet investment schemes, visit http://www.sec.gov/investor/pubs/cyberfraud.htm. For more information about Internet fraud, visit http://www.sec.gov/divisions/enforce/internetenforce.htm. To report suspicious activity involving possible Internet fraud, visit http://www.sec.gov/complaint.shtml. For a description of other SEC enforcement actions involved in this Internet Fraud Sweep, visit http://www.sec.gov/news/press.shtml.http://www.sec.gov/litigation/litreleases/lr16914.htm