U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 17682 / August 15, 2002
SEC v. American Prometheus Corp., James P. Norville and Mabel R. Norville, Civ. Action No. 02-N-1586 (MJW) (District of Colorado)
Today, the Securities and Exchange Commission filed suit in the United States District Court for the District of Colorado against American Prometheus Corp., James P. Norville and Mabel R. Norville, all of Central City, Colorado, for violations of the antifraud and registration provisions of the federal securities laws. American Prometheus Corp. is a company purportedly in the business of developing a Holiday Inn franchise hotel and casino in Central City, where limited stakes gaming is legal. James Norville was the company's former president and director, and his wife, Mabel Norville, remains a director of the company and serves as its secretary.
The Complaint alleges that between April 1997 and April 2000, the Norvilles offered more than $3.6 million in securities and raised approximately $1.1 million from 79 investors nationwide through a series of five American Prometheus offerings and through the Norvilles' sale of their own shares of American Prometheus stock. The Complaint claims that in American Prometheus offering materials and oral presentations to investors, the Norvilles failed to disclose criminal securities fraud charges pending against James Norville relating to one of the Norvilles' previous companies, James Norville's subsequent guilty plea to one count of securities fraud in the same matter, or the existence of an administrative order prohibiting James Norville from selling securities in Wisconsin. In addition, the Complaint alleges that, contrary to the representations in the offering materials that proceeds would be used to develop the casino project, the Norvilles then misappropriated investor funds for their personal use. Finally, the Complaint contends that American Prometheus' securities offerings and the Norvilles' sale of their own American Prometheus stock were not registered transactions with the Commission and were not exempt from registration.
The Complaint alleges that American Prometheus violated 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. The Complaint further alleges that the Norvilles violated 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.