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U.S. Securities and Exchange Commission


Litigation Release No. 17020 / May 31, 2001

Securities and Exchange Commission v. International Heritage, Inc., Stanley H. Van Etten, Claude W. Savage, Larry G. Smith, and International Heritage, Incorporated. Civil Action No. 1:98-0803-CV-RWS (NDGA September 20, 1999)

Application for Show Cause Order Against Stanley H. Van Etten

The Securities and Exchange Commission announced today that, on May 25, 2001, the Commission filed an application for an order to show cause why Stanley H. Van Etten ("Van Etten") should not be held in contempt for his violation of the Court's order entered September 17, 1999, requiring him to pay disgorgement.

The Commission's complaint, filed on March 16, 1998, alleged that beginning in April, 1995, International Heritage, Inc. ("IHI") , a North Carolina corporation, through Van Etten and others, solicited individuals throughout the United States to invest in a pyramid scheme through misleading promotional materials, meetings, videotapes, internet web pages, and national conference calls to increase investor interest. IHI raised more than $150 million from over 155,000 investors. The complaint alleged that interests in the program, which were described by IHI as business centers, were securities. In addition to selling interests in the pyramid scheme, between July 17, 1997 and November 1, 1997, the defendants sold $5 million in notes convertible into shares of IHI common stock. The defendants knowingly misrepresented IHI's financial condition to investors and concealed the fact that IHI was operating a pyramid scheme. Van Etten was a founder and director of IHI.

On September 17, 1999, a final judgment of permanent injunction was entered against Van Etten, restraining and enjoining him from further violations of Sections 5(a), 5(c), and 17(a) of the Securities Act of 1933, and Sections 10(b) and 15(d) of the Securities Exchange Act of 1934 and Rules 10b-5 and 15d-1 thereunder. Further, the Court ordered disgorgement against Van Etten in the amount of $7,630,450, but due to a demonstrated inability to pay, the Court ordered him to pay $150,000, waived payment of the remaining disgorgement, pre-judgment and post-judgment interest, did not impose a civil penalty, and required him to waive certain claims against the bankruptcy estate of IHI. Van Etten consented to the entry of the judgment without admitting or denying the allegations of the Commission's complaint. On September 28, 2000, the Commission entered an Order Instituting Public Administrative Proceedings against Van Etten, to which he consented without admitting or denying the findings set forth therein. Van Etten has failed to pay $25,000 of the disgorgement.

See also: L.R. 15672 (March 17, 1998); L.R.16264 (August 26, 1999); L.R. 16330 (October 7, 1999); L.R. 16407 (January 10, 2000); and L.R. 16531 (May 1, 2000).


Modified: 05/31/2001