U.S. SECURITIES & EXCHANGE COMMISSION
Litigation Release No. 17773/ October 7, 2002
SEC v. Jamie P. Piromalli, et al., Civil Action No. C-2-00 622, (S.D. Ohio 2000).
The Securities and Exchange Commission (SEC) announced that on September 27, 2002, it filed with the U.S. District Court for the Southern District of Ohio, a Motion for an Order to Show Cause why Richard Mann should not be held in contempt for failing to comply with the Court's Order of April 8, 2002. That order, among other things, required Mann to make disgorgement and prejudgment interest payments totaling $2,116,870.
In addition, the SEC announced that on September 30, 2002, it filed with the U.S. District Court for the Southern District of Ohio, a similar motion against Jamie P. Piromalli, Steven Brewer, and A. Michael Jaillett for their failure to comply with the Court's Orders of November 13, 2001 and January 22, 2002. Combined, the November 13, 2001 and January 22, 2002 Orders, among other things, required Piromalli, Brewer, and Jaillett to make disgorgement and prejudgment interest payments totaling $5,218,531.61, $651,933, and $346,689, respectively.
The Honorable James L. Graham, U.S. District Court for the Southern District of Ohio, ordered Mann, Piromalli, Brewer, and Jaillett (collectively, "the Defendants") to make the described disgorgement and prejudgment interest payments based on their roles in the World Vision Entertainment, Inc. ("World Vision") Ponzi scheme. The SEC's Complaint, filed June 1, 2000, alleged that the Defendants offered and sold securities in the form of nine-month promissory notes without registering them with the SEC. In furtherance of the scheme, the Complaint alleged that the Defendants, directly and indirectly, through a nationwide sales network, made numerous false and misleading statements to investors about the World Vision notes. The Defendants misrepresented that the notes were unconditionally guaranteed and insured and that all of the proceeds of the offering would be used to develop World Vision's products. In reality, the Defendants allegedly used the proceeds of the note offering to pay for the personal and business expenses of company officers and directors, to cover interest and principal payments to investors and to pay large, undisclosed commissions to the sales network. Through World Vision, the Defendants, and others acting in concert with them, raised at least $64 million from approximately 1,200 investors in 33 states from the sale of World Vision promissory notes. As a result, when World Vision filed for bankruptcy protection in September 1999, investors lost approximately $52 million.
For additional information, see Litigation Release No. 16577 (June 1, 2000), Litigation Release No. 17188 (October 15, 2001), Litigation Release No. 17413 (March 14, 2002), and Litigation Release No. 17431 (March 22, 2002).