SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 16930 / March 9, 2001
SEC SUES INTERNET COMPANY AND TWO OFFICERS FOR OFFERING FRAUD TARGETING FUNDAMENTALIST CHRISTIANS. U.S. ATTORNEY'S OFFICE SIMULTANEOUSLY UNSEALS INDICTMENTS AGAINST THE TWO OFFICERS FOR SECURITIES FRAUD.
SECURITIES AND EXCHANGE COMMISSION V. FAMILIES ON LINE CORPORATION, MARK C. THURMAN, AND ROBERT D. FIENE, Case No. 01-6369-CIV-LENARD (S.D. Fla., filed March 9, 2001)
The Securities and Exchange Commission (SEC) announced that on March 9, 2001, it filed a complaint against a company and two individual defendants for allegedly fraudulently raising $3.9 million in an unregistered securities offering. The SEC's complaint alleges that Families On Line Corp. (FOL), Mark Thurman, and Robert Fiene conducted an affinity fraud designed to raise money from fundamentalist Christian investors. Along with its complaint, the SEC sought and obtained an asset freeze against FOL, Thurman, and Fiene. At the same time, the United States Attorney's Office for the Southern District of Florida announced that it had indicted the two individuals sued by the SEC for securities fraud and other criminal conduct.
According to the SEC's complaint, FOL is a Ft. Lauderdale, Florida based company that purports to offer subscribers "filtered" access to the Internet. FOL claims that its subscribers receive access to the Internet in a manner that filters out content involving, among other things, sexual or violent material or gambling. FOL, through Thurman and Fiene, raised $3.9 million from approximately 410 investors during the period from about July 1999 through December 2000, through unregistered sales of FOL stock and warrants. During that period, Thurman was FOL's Chief Executive Officer and Fiene was the company's Chief Operating Officer. Both Thurman and Fiene reside in Ft. Lauderdale.
The SEC's complaint alleges that the defendants used false and misleading information in FOL's private placement memoranda and on FOL's Internet web site to raise investor funds. Among other things, the SEC's complaint alleges that
Upon the SEC's motion, the Honorable Joan Lenard of the United States District Court of the Southern District of Florida entered an order freezing the assets of all of the named defendants.
The SEC's complaint charges all of the defendants with violating Sections 5(a), 5(c) and 17(a) of the Securities Act of 1933 [15 U.S.C. §§ 77e(a), 77e(c) and 77q] and Section 10(b) of the Securities Exchange Act of 1934 [15 U.S.C. §§ 78j(b)] and Rule 10b-5 thereunder [17 C.F.R. 240.10b-5]. Those sections and rules prohibit certain transactions in securities not registered with the Commission and prohibit fraud in the offer and sale, and in connection with the purchase and sale, of securities.
Investors are advised to read the SEC's "Affinity Fraud" Investor Alert and the SEC's "Pump&Dump.con" Investor Alert, which provide tips on how to avoid being a victim in an affinity fraud or Internet fraud. These and other investor alerts can be found on the SEC's web site, at www.sec.gov.
The SEC appreciates the cooperative efforts of the United States Attorney's Office for the Southern District of Florida and the Federal Bureau of Investigation in this coordinated action.