United States Securities and Exchange Commission
LITIGATION RELEASE NO. 17111 / August 30, 2001
SECURITIES AND EXCHANGE COMMISSION v. ROBERT D. POIRIER, ROBERT J. PALM, JAMES R. VINCENT and RICHARD E. WENSEL, Defendants; Civil Action No. CV-96-2243-PHX-EHC (USDC/AZ)
SEC OBTAINS $3 MILLION AND OTHER RELIEF AGAINST FOUR DEFENDANTS IN "PUMP AND DUMP" CASE
The Securities and Exchange Commission announced today that on August 13, 2001, the Honorable Earl H. Carroll, United States District Judge for the District of Arizona, having previously found that two undisclosed controlling shareholders of Garcis, U.S.A., Inc., Robert D. Poirier and Robert J. Palm, and their offshore nominee, James R. Vincent, had committed securities fraud, entered final judgments against the three, and ordered them to pay disgorgement and prejudgment interest in the amount of $2,660,161. The Court also ordered Poirier, Palm and Vincent to each pay a civil penalty of $100,000. In addition, the Court entered final judgment against Richard E. Wensel. Without admitting or denying the Commission's allegations, Wensel agreed to the entry of the order, which (1) permanently enjoins him from future violations of Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, (2) requires him to pay a $25,000 civil penalty, and (3) bars him from serving as an officer or director of any publicly held company.
Previously, on March 29, 2001, the Court had entered summary judgment against Poirier, Palm and Vincent. The Court found that Poirier and Palm assumed substantial control over the operations of Garcis, a distributor of athletic supplies and apparel, obtained a controlling block of unregistered shares of Garcis and promoted Garcis and its securities to the public using materially false and misleading information. The Court also found that Poirier and Palm intentionally concealed their control over Garcis and caused press releases to issue that misstated revenue and sales and made false claims about non-existent business contracts.
The Court found that Vincent helped Poirier and Palm obtain control of a substantial block of unregistered Garcis shares, avoid the registration requirements of the federal securities laws and sell those shares into the market at a profit. In addition, the Court found that Poirier, Palm and Vincent failed to file with the Commission certain forms required of shareholders owning more than five and ten percent of a class of stock registered under § 12 of the Exchange Act, and obtained an extension of credit from their broker for purchases of Garcis when they had no intention of paying for the stock. In the settled action against Wensel, the Commission alleged that Wensel, who was an officer and director of Garcis, approved false and misleading promotional material.
After finding repeated egregious violations and that the defendants are likely to violate the securities laws in the future, the Court permanently enjoined Poirier, Palm and Vincent from future violations of Sections 5(c) and 13(d) of the Securities Act of 1933 ("Securities Act"), and Sections 7(f) and 16(a) of the Exchange Act of 1934 ("Exchange Act"), and Rules 16a-2 and 16a-3 thereunder. The Court also permanently enjoined Poirier and Palm from future violations of Section 17(a) of the Securities Act and Section 10(b) of the Exchange Act, and Rule 10b-5 thereunder. (See also Litigation Release No. 15091, Sept. 30, 1996).