SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 17277 / December 17, 2001
SEC SUES PRESIDENT OF PACKAGE DELIVERY COMPANY, OWNER OF BROKER-DEALER, AND TWO SALES AGENTS FOR OFFERING FRAUD. SEC ALLEGES MASSIVE THEFT OF INVESTOR FUNDS.
SECURITIES AND EXCHANGE COMMISSION V. PAUL R. JOHNSON, ET AL., Case No. 01-7874-CIV-HURLEY (S.D. Fla., filed December 12, 2001)
The Securities and Exchange Commission (SEC) announced that on December 12, 2001, it filed a complaint against the president of a South Florida package delivery company, the owner of a Florida-based broker-dealer, and two sales agents for their roles in an allegedly fraudulent stock offering that raised over $15.5 million from nearly 400 investors. The SEC's complaint alleges that defendants Paul R. Johnson, John Cook, Emanuele Cardaci, and Scott Schoenbauer raised funds for Link Express Delivery Solutions, Inc. ("Link").
Along with its complaint, the SEC sought and obtained an asset freeze against Johnson and relief defendants Caterina Johnson (Johnson's mother) and J & J Management Consulting ("J & J").
According to the SEC's complaint, Link, which was based in Deerfield Beach and Ft. Lauderdale, Florida, and ceased operations in March 2000, was created to provide express package delivery services to commercial and individual accounts and compete with package delivery companies such as United Parcel Service and FedEx. Between October 1997 and March 2000, Link conducted a series of five fraudulent private placement offerings, which raised over $15.5 million from nearly 400 unsuspecting investors. During that period, Johnson was Link's president and Chief Executive Officer. Johnson, a Canadian citizen, resides in South Florida.
The SEC's complaint alleges that Johnson and Cook provided investors and potential investors with false and misleading offering documents and made material misrepresentations and omissions to investors concerning the use of investor funds, Link's projected revenues and anticipated returns, Johnson's business experience, and Johnson's control over Argus Securities, Inc. ("Argus"), a broker-dealer that sold certain Link securities. Among other things, the SEC's complaint alleges that
Upon the SEC's motion, the Honorable Judge Daniel T. K. Hurley of the United States District Court of the Southern District of Florida entered an order freezing the assets of Johnson, Caterina Johnson, and J & J.
The SEC's complaint charges all of the defendants with violating Sections 5(a) and 5(c) of the Securities Act of 1933 ("Securities Act") [15 U.S.C. §§ 77e(a) and 77e(c)], Johnson and Cook with violating Section 17(a)(1) of the Securities Act [15 U.S.C. § 77q(a)(1)], Section 10(b) of the Securities Exchange Act of 1934 ("Exchange Act") [15 U.S.C. §§ 78j(b)] and Rule 10b-5 thereunder [17 C.F.R. 240.10b-5], Johnson and Cook with violating Sections 17(a)(2) and 17(a)(3) of the Securities Act [15 U.S.C. §§ 77(q)(a)(2) and 77(q)(a)(3)], and Cook, Cardaci and Schoenbauer with violating Section 15(a)(1) of the Exchange Act [15 U.S.C. § 78o(a)(1)]. Those sections and rules prohibit the offer or sale of securities not registered with the Commission and prohibit fraud in the offer and sale, and in connection with the purchase and sale, of securities.