LITIGATION RELEASE NO. 17046 / June 21, 2001
SECURITIES AND EXCHANGE COMMISSION v. TRADAMAX GROUP, INC., PATTINSON HAYTON, AND CONRAD DIAZ, Civ. No. 01-589-GLT (USDC CD Cal)
The Commission announced today that it filed a federal court action against Tradamax Group, Inc., its control person, Pattinson Hayton, and its chief financial officer, Conrad Diaz. The action alleges that since November 2000 the defendants made numerous fraudulent public statements regarding: (1) the control of Tradamax by Hayton, who been found liable for securities law violations and other illegal conduct; (2) the identity of its chief executive officer; (3) the company's product, purportedly an Internet "portal" website designed to facilitate trading in, and track the shipment of, various commodities; (4) claimed business relationships; and (5) projected revenues and income.
The complaint alleges that the statements about the company's product were false because Tradamax did not have an Internet portal site and its technology was not able to track commodity shipments. The complaint further alleges that the financial projections lacked a reasonable basis because, among other reasons, they were predicated on the existence of technology that Tradamax did not possess and Tradamax has no earnings history. According to the complaint, these fraudulent statements were made in press releases, Internet websites, "spam" e-mail messages, Internet message boards, reports filed with the Commission, and promotional materials distributed to prospective investors.
Also according to the complaint, a Canadian corporation controlled by Hayton sold Tradamax stock into the resulting inflated market for profits of at least $114,408. Further, the complaint alleges that Tradamax has failed to maintain adequate books and records and file reports with the Commission, and that Hayton has sold securities in nonexempt and unregistered transactions and failed to file mandatory reports with the Commission disclosing his beneficial ownership of Tradamax.
On June 21, 2001, United States District Court Judge Gary L. Taylor issued a temporary restraining order prohibiting Tradamax and Hayton from violating the antifraud provisions of the federal securities laws and freezing their assets.
The Commission's complaint alleges that Hayton, Diaz, and Tradamax violated Sections 10(b) of the Securities Exchange Act of 1934 ("Exchange Act") and Rule 10b-5 thereunder. The Commission's complaint also alleges that Hayton violated Sections 17(a)(1), 17(a)(2), 17(a)(3), 5(a), and 5(c) of the Securities Act of 1933 ("Securities Act"), Sections 13(d) and 16(a) of the Exchange Act, and Rules 13d-1, 16a-2, and 16a-3 thereunder; that Tradamax violated Section 17(a) of the Securities Act, Sections 13(a) and 13(b)(2)(A) of the Exchange Act, and Rules 12b-20, 12b-25, 13a-1, 13a-11, and 13a-13 thereunder. The complaint further alleges that Hayton and Diaz aided and abetted Tradamax's reporting violations. The Commission seeks permanent injunctions against Hayton, Diaz, and Tradamax; disgorgement against Tradamax and Hayton; civil money penalties against Hayton and Diaz; and an officer and director bar against Hayton.
For tips on how to avoid Internet "pump-and-dump" stock manipulation schemes, visit http://www.sec.gov/investor/online/pump.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.