UNITED STATES SECURITIES AND EXCHANGE COMMISSION
LITIGATION RELEASE NO. 17377 / February 25, 2002
SECURITIES AND EXCHANGE COMMISSION v. MARK E. RICE D/B/A PRIMEX CAPITAL, Civ. No. 4:02CV00636 (USDC S.D. Texas)
The Commission announced today that it has filed a federal court action against Mark E. Rice d/b/a Primex Capital ("Rice"). The Commission's complaint alleges that between September 1999 and July 2000, Rice carried out "pump and dump" schemes to manipulate the stock of four microcap companies, including defendant Status Wines of Tuscany f/k/a Portalzone.com, Inc. ("Portalzone"). According to the Commission's complaint, the schemes for all four companies involved issuing unsolicited fraudulent "spam" e-mail messages. The Commission's complaint further alleges that for Portalzone and another company, the schemes also involved manipulative trading by Rice and issuing fraudulent press releases or promotional materials. According to the Commission's complaint, the false statements concerned, among other things, Portalzone's product (purportedly an advanced Internet search engine), its revenue sources and business relationships with third parties, as well as Rice's stock-picking track record and trading intentions. Moreover, the Commission's complaint alleges that the schemes enabled Rice, and his alter ego entities, proposed relief defendants Primex (USA), Inc. ("Primex") and Applegate Sentry, S.A. ("Applegate"), to sell restricted stock of three of the four companies into the resulting inflated market for total profits of approximately $900,367.
The Commission's complaint alleges that Rice violated Sections 5(a), 5(c) and 17(a) of the Securities Act of 1933 ("Securities Act"), Section 10(b) of the Securities Exchange Act of 1934 ("Exchange Act") and Rule 10b-5 thereunder, and Regulation M, Rule 101. As to Rice, the complaint seeks an injunction against Rice and disgorgement, prejudgment interest and third-tier civil penalties, and as to the two relief defendants, disgorgement and prejudgment interest. Without admitting or denying the Commission's allegations, Rice has consented to the entry of an order that would enjoin him from future violations of the foregoing provisions and directing him to pay disgorgement and prejudgment interest in an amount to be determined after the completion of the Commission's discovery in this action; and in which he would agree to the Court's continuing jurisdiction over the action for the purpose of determining whether to assess civil penalties against him.
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/investor/pubs/cyberfraud.htm. To report suspicious activity involving possible Internet fraud, visit http://www.sec.gov/complaint.shtml.