Wedgewood Financial Group, Inc., Colorado Paging Group Partners, JPI Site Management, Inc., Paul Iwankowski and William Scrak, Defendants, and Stonepine Holdings, Ltd., Robert Fabregas, Prime Tel Paging Group Partners, Randy Gilbert, Darrel Bauguess and Joanne Iwankowski, Relief Defendants

Litigation Release No. 17568 / June 17, 2002

SECURITIES AND EXCHANGE COMMISSION V. WEDGEWOOD FINANCIAL GROUP, INC., COLORADO PAGING GROUP PARTNERS, JPI SITE MANAGEMENT, INC., PAUL IWANKOWSKI and WILLIAM SCRAK, DEFENDANTS and STONEPINE HOLDINGS, LTD., ROBERT FABREGAS, PRIME TEL PAGING GROUP PARTNERS, RANDY GILBERT, DARREL BAUGUESS and JOANNA IWANKOWSKI, RELIEF DEFENDANTS, CASE NO. 97-6350-CIV-RYSKAMP (S. D. Fla.)

The Securities and Exchange Commission (SEC) announced that on August 9, 2001 the Honorable Kenneth A. Ryskamp of the United States District Court for the Southern District of Florida entered an order (Final Order), on the SEC's motion, in SEC v. Wedgewood Financial Group, Inc., et al.

The Final Order dismissed with prejudice the corporate defendants, Wedgewood Financial Group, Inc. (Wedgewood), Colorado Paging Group Partners (Colorado Paging), and JPI Site Management, Inc., all of which had been placed under the control of the Court appointed Receiver. The Final Order also dismissed with prejudice relief defendants Stonepine Holdings, Ltd. (Stonepine Holdings) and its president, Robert Fabregas. Finally, with the consent of defendant William Scrak (who consented without admitting or denying the SEC's allegations), the Final Order ordered that Scrak be jointly and severally liable with defendant Paul Iwankowski to disgorge $18,150 plus prejudgment interest thereon, and be jointly and severally liable with defendant Paul Iwankowski and relief defendant Joanna Iwankowski to disgorge $106,788, plus prejudgment interest thereon, provided, however, that Scrak's payment of those amounts was waived, and no civil money penalty imposed, based on Scrak's demonstrated financial inability to pay.

In its complaint filed in April 1997, the SEC alleged that defendants Paul Iwankowski, Scrak, and the corporate defendants were engaged in a fraudulent offering of securities in Colorado Paging in violation of the antifraud provisions of the federal securities laws. The complaint also alleged that Wedgewood was illegally operating as a broker-dealer. The SEC's complaint also sought relief from relief defendants Joanna Iwankowski (Paul Iwankowski's wife), Stonepine Holdings, Fabregas, Prime Tel Paging Group Partners, Randy Gilbert, and Darrell Bauguess. On April 4, 1997, the Court granted the Commission's motion for a temporary restraining order and other relief, and also appointed a Receiver over the corporate defendants.

In August 1997, the Court entered an Order of Permanent Injunction and Other Relief as to defendant Scrak, which enjoined him from further violations of Section 17(a) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5, there under. The Court also ordered that Scrak be jointly and severally liable with the corporate defendants and Iwankowski to disgorge all amounts fraudulently raised from investors, less any amount the Receiver distributed to investors. Scrak consented to injunction and other relief without admitting or denying the Commission's allegations.

In January 1999, the Commission obtained a final judgment of permanent injunction and other relief against defendant Paul Iwankowski. The Court ordered Paul Iwankowski individually to disgorge $18,150 in disgorgement and $2,903 in prejudgment interest and to pay a $50,000 civil money penalty. In addition, the Court ordered Paul Iwankowski to pay, jointly and severally with relief defendant Joanna Iwankowski, disgorgement of $106,788 and prejudgment interest of $17,082.

On the Commission's motion, on April 24, 1998, the Court entered an Order Dismissing Prime Tel, Gilbert, and Bauguess, from the action, with prejudice.

For further information, see Litigation Release No. 15458 (August 22, 1997)