U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 17436 \ March 26, 2002
Federal Judge Permanently Enjoins ETS Payphones, Inc.
Securities and Exchange Commission v. ETS Payphones, Inc. and Charles E. Edwards, Civil Action File No. 1:00-CV-2532-JTC (NDGA January 16, 2002)
The Securities and Exchange Commission ("Commission") announced that on January 16, 2002, Judge Jack T. Camp of the United States District Court for the Northern District of Georgia entered a final judgment of permanent injunction as to defendant ETS Payphones, Inc. ("ETS"), enjoining ETS from further violations of Sections 5(a), 5(c), and 17(a) of the Securities Act of 1933, and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. ETS consented to the entry of the judgment without admitting or denying the allegations of the Commission's complaint. Further, the Court ordered disgorgement against ETS in the amount of $190 million plus prejudgment interest, but waived this amount due to defendant's demonstrated financial inability to pay. The Court did not order ETS to pay a civil penalty.
The complaint, filed on September 30, 2000, alleged that ETS and its founder, Charles E. Edwards, engaged in fraud in the offer and sale of unregistered securities in the form of investment contracts, and alleged that the defendants promoted a massive fraudulent scheme through the use of insurance agents and over the Internet, in which ETS raised more than $300 million from more than 10,000 mostly elderly investors.
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.