U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 18326 / September 8, 2003
SECURITIES AND EXCHANGE COMMISSION v. eCONNECT, THOMAS S. HUGHES, RICHARD EPSTEIN, AND ALLIANCE EQUITIES, INC., Civil Action No. CV 02-6156 NM (MCx) (C.D. Cal.)
JUDGMENT ISSUED AGAINST RECIDIVIST STOCK MANIPULATOR AFTER HE PLEADS GUILTY TO THREE COUNTS OF SECURITIES FRAUD AND ONE COUNT OF CRIMINAL CONTEMPT
The Commission announced today that on September 4, 2003, the Honorable Nora M. Manella, United States District Judge for the Central District of California, entered judgment, pursuant to his consent, against Thomas S. Hughes, 55, of Rancho Palos Verdes, California. The Court ordered Hughes to pay a civil penalty in the amount of $120,000, permanently enjoined him from future violations of the insider transactions reporting provisions of the federal securities laws, Section 16(a) of the Securities Exchange Act of 1934 and Rule 16a-3 thereunder, and prohibited Hughes from acting as an officer or director of a publicly traded company.
In its complaint, filed August 7, 2002, the SEC alleged that Glendale, California, based eConnect (OTCBB: ECNT) and Hughes, eConnect's former president, issued false and misleading press releases and posted false statements on eConnect's websites in July 2002. These statements concerned a purported $20 million investment of "AA" rated bonds that in fact were not rated, a nonexistent stock repurchase program, and a purported $964,000 purchase order for eConnect's principal product. The Commission obtained emergency relief against Hughes and others, including an asset freeze, on August 8, 2002, based on the Commission's prima facie showing that Hughes and others violated the federal securities laws. On August 16, 2002, Judge Manella granted the Commission's request for a preliminary injunction and continued the asset freeze.
In a related criminal matter, on August 11, 2003, Hughes pleaded guilty to three counts of securities fraud based on the same scheme in the SEC's action and one count of criminal contempt of the permanent injunction the Commission had previously obtained against him in SEC v. eConnect, et al., CV-00-2959-MMM (JWJx)( C.D. Cal.)(Lit. Rel. No. 16481).
This case is the product of an investigation by the Securities and Exchange Commission, the United States Attorney's Office in Los Angeles, and the Federal Bureau of Investigation, which received assistance from NASD Regulation, Inc.