Litigation Release No. 17202 / October 24, 2001
JUDGMENT OF PERMANENT INJUNCTION AND OTHER RELIEF ENTERED AGAINST KENNETH R. GROSSFELD
SECURITIES AND EXCHANGE COMMISSION V. WEB HOSTING HEADQUARTERS PARTNERSHIP, DONALD E. RHOADES, KENNETH R. GROSSFELD, WAYNE L. PRICHASON, EDUARDO VILLAR, AND KARYN MILLER, ET AL., Case No. 00-4975-CIV-HIGHSMITH-GARBER (S.D. Fla., filed Dec. 28, 2000)
The Securities and Exchange Commission (SEC) announced that on October 15, 2001, the United States District Court for the Southern District of Florida entered a Judgment of Permanent Injunction and Other Relief ("final judgment") against Kenneth R. Grossfeld ("Grossfeld"), ordering him to pay disgorgement in excess of $697,000. Grossfeld was a principal of a company involved in the alleged fraudulent offering of securities conducted from a classic "boiler-room" operation in Miami, Florida. Grossfeld consented to the entry of the final judgment, without admitting or denying the allegations in the SEC's Complaint, in connection with his settlement of the SEC's injunctive action.
On December 28, 2000, the SEC filed an emergency action against Grossfeld and others seeking to enjoin the alleged ongoing fraudulent securities offering being conducted by a Miami, Florida boiler-room and its principals and telemarketers. Among other things, the SEC's Complaint alleges that the boiler-room, Web Hosting Headquarters Partnership (Web Hosting or the Company), failed to disclose to investors that it was controlled by individuals with a prior history of defrauding investors, and that it had diverted at least 62% of funds raised from investors to pay its principals and telemarketers.
Grossfeld, without admitting or denying the allegations of the SEC's Complaint, consented to the entry of a Final Judgment of Permanent Injunction and Other Relief that enjoins him from 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 Sections 10(b) and 15(a)(1) of the Securities Exchange Act of 1934 [15 U.S.C. §§ 78j(b) and 78o(a)(1)] and Rule 10b-5 thereunder [17 C.F.R. 240.10b-5]. The Final Judgment also imposes disgorgement and prejudgment interest on disgorgement against Grossfeld in the amounts of $1,630,000 and $36,675, respectively, but waives payment of disgorgement and interest in excess of $697,533 based upon his demonstrated inability to pay. The Final Judgment also does not impose a civil penalty based upon Grossfeld's demonstrated inability to pay a civil penalty.