UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 17653 / August 2, 2002
Court Enters Final Judgments Against Desert Winds Entertainment Corp. and its Principals in Settled Securities Fraud Action
Securities and Exchange Commission v. Michael Paloma, Matthew Bardasian and Desert Winds Entertainment Corp. (United States District Court for the District of Columbia C.A. No. 1:02CV00645)
The Honorable Richard J. Leon of the United States District Court for the District of Columbia has entered final consent judgments against Desert Winds Entertainment Corp., formerly an entertainment production company headquartered in Mesa, Arizona and its principals, Michael Paloma and Matthew Bardasian. The judgment against Bardasian was filed on May 28, 2002 and the judgments against Paloma and Desert Winds were filed on June 6, 2002.
The Commission's complaint against the defendants alleged that Paloma, Bardasian and Desert Winds committed securities fraud when they issued numerous press releases falsely claiming that Desert Winds had signed a $25,000,000 contract with Warner Bros. Television. The Desert Winds' principals also filed a registration statement with the Commission on Form 10-12G, making the same false claim and recognized a receivable from the alleged contract as an asset of the Company. No such contract existed. The complaint further alleged that Paloma and Bardasian profited from their involvement with the company by illegally selling restricted shares of Desert Winds stock.
Without admitting or denying the allegations in the complaint, the defendants consented to entry of the final judgments permanently enjoining them from violating the registration and antifraud provisions of the securities laws [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]. The Court also permanently barred Paloma and Bardasian from acting as officers or directors of any public company, and ordered Paloma to pay $442,319 in disgorgement and a $65,000 civil penalty. Because of Bardasian's financial circumstances, including his monetary liability arising from his guilty plea in an unrelated pending criminal matter, the Commission did not seek disgorgement or civil money penalties from him.
See also Litigation Release No. 17462 (April 8, 2002).