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U.S. Securities and Exchange Commission

United States Securities and Exchange Commission

Litigation Rel. No. 17768 / October 3, 2002

Commission Settles Fraud Charges Against Anamar Communications, Inc. and its Former CEO, Brett Mallory

SEC v. Anamar Communications, Inc. and Brett R. Mallory, (United States District Court for the District of Massachusetts, C.A. No. 02-10471DPW, filed March 15, 2002)

The Securities and Exchange Commission announced that, on September 3, 2002, the Honorable Douglas P. Woodlock, United States District Judge for the District of Massachusetts, entered, by consent, final judgments against Anamar Communications, Inc., a Nevada corporation located in Boston, Massachusetts, and Brett R. Mallory, a resident of Boston, Massachusetts and Anamar's former chief executive officer. In its complaint, filed on March 15, 2002, the Commission alleged that Mallory defrauded at least 14 investors of approximately $130,000 by promising them that they could double their money within 90 days if they purchased Anamar stock at five cents per share. According to the complaint, Mallory fraudulently induced investments in Anamar by, among other things, misrepresenting to potential investors that: (i) Verizon Communications, Inc., had agreed to purchase Anamar stock at ten cents per share; (ii) investing in Anamar was essentially risk-free because, even if the Verizon deal fell through, Verizon had agreed to pay an "opt-out" fee that would allow investors to sell their shares back to Anamar; (iii) Anamar was pursuing other lucrative deals that could potentially cause Anamar's stock price to increase one hundredfold, and (iv) Mallory had scheduled a meeting with Bill Gates of Microsoft.

On April 24, 2002, the United States Attorney's Office filed a criminal complaint against Mallory in connection with the scheme described in the Commission's complaint. Mallory pled guilty to two counts of mail fraud on May 28, 2002. On September 5, 2002, Mallory was sentenced in the criminal case to a prison term of 12 months followed by three years of supervised release, fined $200, and ordered to make restitution in the amount of $130,500.

Without admitting or denying the Commission's allegations against them, Anamar and Mallory consented to the entry of final judgments permanently enjoining them from future violations of Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities and Exchange Act of 1934 and Rule 10b-5 thereunder. The judgment also holds Anamar and Mallory jointly and severally liable for disgorgement and pre-judgement interest totalling $136,917, but waives payment of that amount and does not impose civil penalties against them based on the sworn representations in their statements of financial condition and other documents submitted to the Commission.

On September 30, 2002, based on the entries of the civil injunction and the criminal conviction against Mallory, the Commission instituted settled administrative proceedings against Mallory. Without admitting or denying the Commission's findings, Mallory consented to the entry of the Commission's order, which bars him from participating in any future offering of penny stock. For further information see Litigation Release Nos. 17419, 17452 and 17497.



Modified: 10/04/2002