Litigation Release No. 18101 / April 23, 2003
FINAL JUDGMENTS OF PERMANENT INJUNCTION AND OTHER RELIEF ENTERED AGAINST DONALD E. RHOADES AND KARYN MILLER
SECURITIES AND EXCHANGE COMMISSION V. WEB HOSTING HEADQUARTERS PARTNERSHIP, DONALD E. RHOADES, KENNETH R. GROSSFELD, WAYNE L. PRICHASON, EDUARDO VILLAR, AND KARYN MILLER, ET AL., Case No. 00-4975-CIV-HIGHSMITH-TURNOFF (S.D. Fla., filed Dec. 28, 2000)
The Securities and Exchange Commission (SEC) announced that on April 21, 2003, the United States District Court for the Southern District of Florida entered Final Judgments of Permanent Injunction and Other Relief ("Final Judgments") against Donald E. Rhoades ("Rhoades") and Karyn Miller ("Miller"), entered by their consent, without admitting or denying the allegations of the Commission's Complaint. The Final Judgments enjoin Rhoades and Miller from violations of Sections 5(a), 5(c) and 17(a) of the Securities Act of 1933 [15 U.S.C. §§ 77e(a), 77e(c) and 77q] and Sections 10(b) and 15(a)(1) of the Securities Exchange Act of 1934 [15 U.S.C. §§ 78j(b) and 78o(a)(1)] and Rule 10b-5 thereunder [17 C.F.R. 240.10b-5].
On December 28, 2000, the SEC filed an emergency action against Rhoades, Miller and others seeking to enjoin the alleged ongoing fraudulent securities offering being conducted by a Miami, Florida boiler-room and its principals and telemarketers. Among other things, the SEC's Complaint alleges that the boiler-room, Web Hosting Headquarters Partnership (Web Hosting), failed to disclose to investors that it was controlled by individuals with a prior history of defrauding investors, and that it had diverted at least 62% of funds raised from investors to pay its principals and telemarketers.
In addition to the permanent injunction, the Final Judgment entered as to Rhoades also orders him to pay disgorgement in the amount of $764,272, plus prejudgment interest thereon in the amount of $98,664, and imposes a civil penalty of $185,000. The penalty will be distributed to investors of Web Hosting pursuant to the Fair Funds provisions of Section 308(a) of the Sarbanes-Oxley Act of 2002. The Final Judgment entered as to Miller orders her to pay disgorgement in the amount of $154,015, plus prejudgment interest thereon, but waives payment of disgorgement and does not impose a civil penalty based upon Miller's sworn financial statement and supporting documentation submitted to the Commission.
See also, Litigation Release No. 16846 (December 29, 2000).