U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 17779 / October 9, 2002
Accounting & Auditing Release No. 1647 / October 9, 2002
SEC v. LAS VEGAS ENTERTAINMENT NETWORK, INC., JOSEPH A CORAZZI, CARL A. SAMBUS, AND JAY I. GOLDBERG, Civil Action No. CV 02-7852-JFW (FMOx) (C.D. Cal.)
SEC CHARGES GAMING COMPANY WITH FINANCIAL FRAUD
The Securities and Exchange Commission today filed and settled charges against Las Vegas Entertainment Network, Inc. and its CEO and CFO for fraudulently overstating its assets. The Commission's complaint, filed in U.S. District Court in Los Angeles, alleges that the Los Angeles-based company, and two executives -- CEO Joseph A. Corazzi, 52, of Albuquerque, New Mexico, and CFO Carl A. Sambus, 51, of Garden City, New York -- made false statements about certain assets in its 1999 filings with the Commission. For instance, the company stated that it had a $3 million "gold certificate," when in fact the certificate was counterfeit. Additionally, the Commission filed and settled anti-touting charges against Las Vegas Entertainment's investor relations consultant Jay I. Goldberg, 71, of Las Vegas, Nevada. The complaint alleges that Goldberg hyped or "touted" Las Vegas Entertainment's stock on the Internet in September and October 1999 without disclosing that he had previously received 85,000 company shares as compensation.
In a related administrative proceeding, the Commission revoked the registration of Las Vegas Entertainment's common stock, finding that the company had fraudulently overstated its assets and had failed to file reports with the Commission since the quarterly report filed on September 24, 1999. The company consented to the entry of the Commission order without admitting or denying its findings.
Las Vegas Entertainment trades on the over-the-counter market (symbol: LVEN.PK) and claims to be in the gaming industry. Previously, the Commission suspended the trading of Las Vegas Entertainment's stock in October 1999. In addition to the counterfeit gold certificate listed on its balance sheet, the complaint alleges that Las Vegas Entertainment falsely reported that it had $3.5 million worth of "marketing rights" for the El Rancho Hotel in Las Vegas, Nevada when in fact those rights had expired. The expired rights and counterfeit gold comprised virtually all of the company's assets in 1999. Also, the company stated that it had received a $190 million cash investment and then made a tender offer in October 1999 for an NYSE-listed gaming company. The cash investment, however, was based on counterfeit Indonesian bank guarantees and the tender offer was therefore fraudulent and subsequently withdrawn.
The complaint charges Las Vegas Entertainment, Corazzi and Sambus with violating the antifraud provisions (Sections 10(b) and 14(a) of the Securities Exchange Act of 1934 and Rules 10b-5 and 14a-9 thereunder) and reporting provisions (Section 13(a) of the Exchange Act and Rules 12b-20 and 13a-13 thereunder), and Goldberg with violating the anti-touting provision (Section 17(b) of the Securities Act of 1933), of the federal securities laws. Simultaneously, all of the defendants settled the Commission's action without admitting or denying the allegations in the complaint. All agreed not to commit future violations of the charged federal securities laws. In addition, Corazzi and Sambus agreed to be barred from serving as an officer or director of a public company. Finally, Corazzi, Sambus and Goldberg agreed to pay civil penalties in the amounts of $75,000, $25,000, and $10,000, respectively.