LITIGATION RELEASE NO. 17497 /April 30, 2002
UNITED STATES OF AMERICA v. BRETT MALLORY (Criminal No. 02M-CR-1013-JGD (USDC., D.MA))
MASSACHUSETTS MAN ARRESTED AND CHARGED IN CONNECTION WITH FRAUDULENT STOCK OFFERING
The Commission announced today that, on April 25, 2002, Brett R. Mallory, of Boston (Dorchester), Massachusetts was arrested and charged by the U.S. Attorney for the District of Massachusetts in a criminal complaint with securities and mail fraud in connection with a $131,500 fraudulent stock offering which he allegedly conducted between at least October 2001 and February 2002. Magistrate Judge Judith G. Dein of the United States District Court for the District of Massachusetts presided over the arraignment hearing and set the date for a probable cause hearing for May 15, 2002. Mallory was released on a $25,000 bond pending his appearance at the probable cause hearing.
According to the criminal complaint, Mallory allegedly conducted a fraudulent stock offering whereby he made material oral and written misrepresentations to potential investors to induce them to purchase shares in his company, Anamar Communications, Inc. Specifically, the complaint alleges that Mallory falsely told investors that he had entered into a contract with Verizon Communications whereby Verizon agreed to purchase 80% of Anamar at $.10 per share. According to the complaint, Mallory offered the investors the opportunity to purchase Anamar stock at $.05 per share and told them that they would double their money and that their investment would be virtually risk-free, because if for any reason Verizon decided not to go through with "the deal," Anamar would receive an opt-out fee and would then be free to sell to another bidder. The stockholders, in turn, could decide to "stay in" or sell their shares back to Anamar for their original purchase price. The complaint alleges that at least ten or eleven investors paid Mallory a total of $131,500 for their Anamar stock based upon Mallory's misrepresentations. If convicted, Mallory faces up to five years imprisonment, to be followed by three years of supervised release and a $250,000 fine.
In an earlier, related proceeding, the Securities and Exchange Commission obtained an ex parte temporary restraining order and asset freeze against Mallory and Anamar on March 15, 2002 and a preliminary injunction on April 1, 2002 from the United States District Court for the District of Massachusetts based on the Commission's prima facie showing that Mallory and Anamar had violated the antifraud provisions of the federal securities laws by fraudulently offering and selling shares of Anamar stock via the Internet and other means in connection with the scheme described above.
For further information, please see Litigation Release Numbers 17452 (April 1, 2002) and 17419 (March 15, 2002).