Securities and Exchange Commission
Litigation Release No. 17519 / May 15, 2002
Securities and Exchange Commission v. P. Joseph Vertucci, Bruce E. Straughn, Robert V. Petry, Roland R. Baughman, Richard M. Johnson, Edward Meyer, Jr., and Hazlet Investors, Inc. (Defendants), and Joanne C. Straughn (Relief Defendant), Civil Action No. 5:99CV426 (N.D. Ohio).
SEC Announces Settlements in Scheme to Pump-and-Dump Stock of Interactive Multimedia Publishers, Inc.
On May 15, 2002, the Securities and Exchange Commission filed a consent by Edward Meyer, Jr. and Meyer's now-defunct corporate alter-ego, Hazlet Investors, Inc. to the entry of a final judgment against them for their involvement in a 1996 scheme to pump and dump the stock of Interactive Multimedia Publishers, Inc. ("IMP"), an Akron, Ohio software development firm that is now defunct. Meyer and Hazlet Investors consented to permanent injunctions against violations of the registration, antifraud and antitouting provisions of the federal securities laws (Sections 5(a), 5(c) and 17(b) of the Securities Act of 1933 ("Securities Act") and Section 10(b) of the Securities Exchange Act of 1934 ("Exchange Act") and Rule 10b-5 thereunder). Meyer and Hazlet Investors agreed to disgorgement of $75,000 in stock sale proceeds. On the basis of their representations in sworn financial statements and other documents and information furnished to the Commission, payment of additional disgorgement by Meyer and Hazlet Investors was waived and civil penalties were not imposed.
The Commission instituted an administrative proceeding against defendant Bruce Straughn, a former stockbroker with the Chicago office of La Jolla Capital Corporation, based on allegations that he helped orchestrate the fraudulent scheme. Straughn consented to the issuance of a Commission Order requiring him to cease and desist from committing or causing violations of the registration and antifraud provisions, Sections 5(a), 5(c) and 17(a) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder. For further information on the cease-and-desist proceeding, see Exchange Act Release No. 45939. On the basis of the representations of Straughn and his wife in their sworn financial statements and other documents and information furnished to the Commission, civil penalties were not imposed and payment of disgorgement by Straughn was waived. In his consent to the issuance of the cease-and-desist order, Straughn waived any right he may have to appeal or to seek relief from an Order Making Findings and Imposing Sanction by Default that barred Straughn from association with any broker or dealer, pursuant to Section 15(b)(6) of the Exchange Act, on the basis of his guilty plea to a criminal charge of misprision of a felony and his subsequent criminal conviction in another matter arising from prior misconduct. See Exchange Act Release No. 45555 (March 13, 2002). On May 15, 2002, the Commission filed a stipulation for dismissal of the civil complaint against Straughn and his wife, relief defendant Joanne Straughn.
On January 22, 2002, the Honorable Dan Aaron Polster, United States District Judge for the Northern District of Ohio, Eastern Division, filed a consent judgment as to Defendant Robert Petry, permanently enjoining Petry from violating the registration provisions, Sections 5(a) and 5(c) of the Securities Act, and ordering him to pay a civil money penalty of $10,000. Judge Polster also filed a consent judgment as to defendant Raleigh R. Baughman, permanently enjoining him from violating the antifraud and antitouting provisions, Section 17(b) of the Securities Act of 1933 and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, and ordering him to pay disgorgement of $10,000. On the basis of his representations in sworn financial statements and other documents and information furnished to the Commission, payment of additional disgorgement by Baughman was waived and civil penalties were not imposed.
This enforcement action was part of the Commission's four-pronged approach to minimizing Microcap fraud: enforcement, inspections, investor education, and regulation. For more information about the SEC's response to Microcap fraud, visit the SEC's Microcap Fraud Information Center at: http://www.sec.gov/divisions/enforce/microcap.htm
See also Litigation Releases 16069 (February 24, 1999) and 16565 (May 25, 2000).