U.S. SECURITIES AND EXCHANGE COMMISSION
LITIGATION RELEASE NO. 18560 / January 30, 2004
UNITED STATES vs. JEROME M. WENGER, (D. Utah, Case no. 2:99 CR 260)
SECURITIES AND EXCHANGE COMMISSION vs. PANWORLD MINERALS INTERNATIONAL INC., ROBERT G. WEEKS, KENNETH L. WEEKS, DAVID A. HESTERMAN, LARRY KRASNY, L.K. MANAGEMENT, INC., JOSEPH FABIILLI, PURITAN COMMUNICATIONS, INC., AND JEROME WENGER, (D. Utah, Case no. 2:97 CV 0425)
RADIO SHOW HOST WENGER SENTENCED TO 46 MONTHS FOR TOUTING STOCK AND FINED $1 MILLION
On January 28, 2004, the Honorable Judge Paul G. Cassell of the United States District Court for Utah sentenced Jerome M. Wenger, formerly of Bethesda, Maryland, to serve 46 months in federal prison and ordered him to pay $1,000,000 immediately as a fine for his conduct related to promoting the stock of PanWorld Minerals International Inc. on his radio show and in newsletters.
Previously on August 26, 2003, a federal jury convicted Wenger on criminal charges for failing to disclose in 1994 that he had been paid 2.1 million shares of PanWorld stock (PWLM) by the Utah company to recommend on his nationally-syndicated radio shows and newsletters titled "The Next SuperStock" that investors buy PanWorld's stock. The jury also found that Wenger failed to disclose that he was recommending investors should buy at the same time he was selling PanWorld stock that he owned. Wenger was convicted of two counts of violating Section 17(b) of the Securities Act of 1933, the provision that requires persons publishing information about stocks to disclose if they have received compensation from a public company to make the recommendation and the amount of compensation, and one count of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5, which prohibit persons from making false statements or omitting material facts in connection with the sale of securities.
During 1994 and continuing into 1997, Wenger, who was based in Bethesda, Maryland, recommended penny stocks and other low-price securities on his radio shows that were broadcast weekly in Washington D.C., New York, Miami, Phoenix, Chicago, Seattle and other locations. He also published bi-monthly newsletters to investors recommending his stock picks. Although he often disclosed he was a paid consultant, Wenger failed to disclose, in both the radio shows and the newsletters that discussed PanWorld, the amount of compensation that he had received to include the company in his recommendations. During 1994, Wenger sold over $100,000 of PanWorld stock at the same time he was telling investors to purchase it without disclosing his sales. PanWorld Minerals International, a now-defunct mining company, had offices located in Salt Lake City, Utah.
The Securities and Exchange Commission filed a civil injunctive action against Wenger and other defendants in June 1997 in the United States District Court for Utah, and alleged that Wenger violated the securities registration, touting, and anti-fraud provisions of Sections 5(a) and (c), 17(a) and (b) of the Securities Act, and Section 10(b) of the Exchange Act and Rule 10b-5. This civil case has been stayed until the pending criminal cases against Wenger and other defendants Robert Weeks, Kenneth Weeks, David Hesterman, Larry Krasny and Joseph Fabiilli have been resolved. For more information, see the SEC's earlier Litigation Releases No. 15380 / June 2, 1997 and 18317 / August 29, 2003.