U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 17739 /September 24, 2002
Accounting and Auditing Enforcement Release No. 1630 / September 24, 2002
SECURITIES AND EXCHANGE COMMISSION v. ASTHMA DISEASE MANAGEMENT, INC., GEORGE H. YOUNG, RICHARD A. MANINI, RICHARD B. ANDERSON, AND COLLEEN ERIN KELLY BISHOP, Civil Action No. 02-CV-7436 CW (E.D.Pa.)
SEC BRINGS FRAUD CHARGES AGAINST ASTHMA DISEASE MANAGEMENT, INC., ITS FORMER PRINCIPALS AND ITS FORMER AUDITOR
The Securities and Exchange Commission ("Commission") filed a civil fraud suit against Asthma Disease Management, Inc. ("ADMI"), George H. Young of Leesburg, New Jersey (ADMI's former President, CEO and Chairman of the Board), Richard A. Manini of Harleysville, Pennsylvania (a former director of ADMI) and Richard B. Anderson of Reno, Nevada (one of ADMI's current directors), in connection with their involvement in a fraudulent marketing scheme to inflate the price and increase the sale of ADMI securities. Also named in the complaint is ADMI's former independent auditor, Colleen Erin Kelly Bishop of Canyon Lake, California, for her role in aiding and abetting the fraud.
ADMI was headquartered in Berlin, New Jersey until February 2001, when it ceased operating its allergy testing and physician training services. The Commission previously suspended trading in ADMI securities because of concerns about the accuracy and adequacy of publicly disseminated information concerning, among other things, purported contracts between ADMI and three HMOs. The false and misleading information relating to these purported contracts is one of the subjects of the current complaint. See Exchange Act Release No. 34-42763 (May 8, 2000).
In its complaint, the Commission alleges that:
In sum, the complaint charges that defendants ADMI, Young, Manini and Anderson violated the registration and antifraud provisions of the federal securities laws, namely, Sections 5(a), 5(c) and 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934, and Rule 10b-5 thereunder. Defendant Bishop is charged with aiding and abetting ADMI's and Young's primary violations of Section 10(b) of the Exchange Act and Rule 10b-5 thereunder. In addition, the complaint alleges that ADMI violated - and that Young and Bishop aided and abetted ADMI's violations of - the reporting provisions set forth in Section 15(d) of the Exchange Act and Rules 12b-20, 15d-1 and 15d-13. Finally, the complaint alleges that Manini also violated the broker-dealer registration provisions of Section 15(a) of the Exchange Act.
The Commission seeks permanent injunctions against all defendants, as well as disgorgement, prejudgment interest and civil penalties from Young, Manini and Anderson; and civil penalties from Bishop. The Commission also seeks to bar Young, Manini and Anderson from serving as officers or directors of any public company.
In a related matter, the Commission simultaneously instituted and settled cease-and-desist proceedings against Martin P. Jostwick of Palmetto, Florida, for touting ADMI securities on the Internet's Raging Bull Message Board. See Securities Act Release No. 33-8133.