SECURITIES AND EXCHANGE COMMISSION
LITIGATION RELEASE NO. 16944 / March 23, 2001
UNITED STATES SECURITIES AND EXCHANGE COMMISSION v. Gateway Technologies, Inc., The Cheyenne Holding Corp., Randolph S. Ross and Timothy J. Kavanagh, Case No. 99-8378-CIV-ZLOCH, U.S. District Court, Southern District of Florida.
The Securities and Exchange Commission ("Commission") announced today that the U.S. District Court for the Southern District of Florida entered final judgments imposing permanent injunctive and other relief against all defendants in a case the Commission filed in May 1999 against Gateway Technologies, Inc. ("Gateway"), The Cheyenne Holding Corp. ("Cheyenne"), Randolph S. Ross and Timothy J. Kavanagh. The Commission alleged that all defendants violated 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 by offering and selling investments in Gateway -- a company purportedly building an internet telephone system -- by way of false, misleading and incomplete information. It also alleged that defendants Cheyenne, Ross and Kavanagh violated Section 15(a) of the Exchange Act by acting as brokers while not registered with the Commission.
The Court entered a default final judgment against Gateway on June 30, 2000, permanently enjoining Gateway from violating Securities Act Section 17(a) and Exchange Act Section 10(b) and Rule 10b-5, and ordering payment of $3.3 million in disgorgement, over $300,000 in prejudgment interest, and a civil penalty of $110,000. The Court entered final judgments against Cheyenne, Ross and Kavanagh by consent on August 7, 2000, permanently enjoining these defendants from violating Section 17(a) of the Securities Act and Sections 10(b) and 15(a) of the Exchange Act and Rule 10b-5. The judgments against Cheyenne and Ross further order that these defendants are jointly and severally liable for disgorgement of $1,373,378.21 plus prejudgment interest, but payment of all but $70,805.47 of that amount was waived as to Cheyenne, and payment of the entire amount was waived as to Ross, and no civil penalties were imposed based upon the demonstrated inability of Cheyenne and Ross to pay. The judgment against Kavanagh orders that Kavanagh is liable for disgorgement of $20,000 plus prejudgment interest, but payment of the disgorgement was waived and no civil penalties were imposed based upon Kavanagh's demonstrated inability to pay.
The Commission filed its complaint in the United States District Court for the Southern District of Florida, since Cheyenne was located in Delray Beach, Florida and Ross and Kavanagh lived in the Delray Beach area. Gateway was based in Santa Monica, California. The Court entered temporary restraining orders and preliminary injunctions against all defendants in May and June of 1999.http://www.sec.gov/litigation/litreleases/lr16944.htm