Litigation Release No. 17445 / March 27, 2002

United States of America v. David A. Colvin, John Larson a.k.a. John St. John and Aldo Tarallo a.k.a. Al Tarall, CR 00-186 (C.D. Cal.)

On March 25, 2002, the United States Attorney for the Central District of California announced that John Larson a.k.a. John St. John, was sentenced by United States District Judge Audrey B. Collins to forty-two months in prison and three years supervised release based upon his September 17, 2001, plea of guilty to securities and mail fraud charges. Previously, David A. Colvin was sentenced to seventy-eight months in prison based upon his plea of guilty to securities fraud, mail fraud, and money laundering charges. Both Colvin and Larson have also been ordered to pay restitution.

Colvin and Larson, operating out of offices in the San Fernando Valley in Southern California, raised over $5.6 million from hundreds of investors nationwide from January 1997 until the Commission filed an action, SEC v. David A. Colvin; Intellinet Publishing, Inc.; Intellinet Holding Group, Inc.; Medical Advantage, Inc.; Lamelli, Inc. a/k/a Lamelli Medical Technology, Inc.; Wall Street Research Company, Inc.; Job Kjell Hovik; Lamar Ellis; and John Larson a/k/a John St. John, Civil Action No. SA98-135 AHS (EEx) (C.D. Cal.) on February 19, 1998, and obtained a temporary restraining order, asset freeze order and appointment of a receiver over the entity Defendants on February 20, 1998.

Colvin and Larson offered and sold investments in various of the entity Defendants in the Commission action. They claimed Intellinet Publishing, Inc. was a book publishing company. They also claimed that Medical Advantage, Inc. operated a chain of weight loss clinics. Finally, they claimed that Lamelli, Inc. a/k/a Lamelli Medical Technology, Inc. had developed a "detoxification system" by which a person could be detoxified of drugs or alcohol in as little as fifteen minutes. In fact, Intellinet had no products, had never sold any books or other products, and had never produced a profit. Similarly, Medical Advantage was not profitable, as represented, and was unable to meet expenses and pay clinic employees. Representations that former U.S. Surgeon General C. Everett Koop and television journalist Tom Brokaw were affiliated with Medical Advantage were also false, as were claims that Lamelli had received approval of its detoxification system from the National Institutes of Health (NIH) and a grant from the Food and Drug Administration (FDA).

Colvin and Larson falsely represented that each company would be the subject of an initial public offering (IPO), which offerings never in fact took place. Instead, the Defendants misappropriated all but approximately $360,000 of the $5.6 million raised.

Colvin was President and CEO of Intellinet, which he owned and operated. Undisclosed to investors, Colvin also controlled each of the trust entities into which investor monies were deposited, as well as Defendant Wall Street Research Company, Inc., which was falsely claimed to provide "independent" research and investment recommendations about Intellinet, Medical Advantage and Lamelli. Larson was employed as the sales manager by Colvin and Intellinet.

Prior to their indictments, the Commission had obtained judgments on April 14, 1999, and April 27, 1998, against Colvin and Larson, respectively, permanently enjoining them from violating the securities registration, antifraud and broker-dealer registration provisions of Sections 5(a), 5(c) and 17(a) of the Securities Act of 1933 and Sections 10(b) and 15(a) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. On April 14, 1999, Colvin and Larson were also ordered in the Commission action to disgorge their ill-gotten gains of $939,459 and $224,513, respectively, plus interest, and to pay civil penalties equaling their ill-gotten gains.

Larson has also been enjoined, ordered to pay disgorgement and ordered to pay penalties in two other Commission actions, SEC v. Internet Telecommunications Albany System SMR, et al., CA 99CV00539 (CKK) (D.D.C.) and SEC v. Internet Broadcast Group, et al., CA 96CV02226 (RCL) (D.D.C.).

A third Defendant in the Commission's action, Job Kjell Hovik, was indicted on August 2, 2001, for mail fraud, wire fraud and criminal contempt. The criminal case against Hovik remains pending. Finally, three salespeople, Aldo Tarallo a.k.a. Al Tarall, Benjamin Raetz and Paul Coynes were also criminally prosecuted by the United States Attorney's Office. Raetz and Coynes, who cooperated in the criminal case and who pled guilty to securities fraud and mail fraud charges, were sentenced to ten months and four months home detention respectively, subsequent periods of probation and supervised release, and to pay restitution. Tarallo, who was convicted in a jury trial of securities fraud and mail fraud, is awaiting sentencing.

For additional information, see Litigation Release Nos. 15651 (February 24, 1998); 15683 (March 25, 1998); 16142 (May 13, 1999); 16255 (August 19, 1999); and 17098 (August 9, 2001).