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U.S. Securities and Exchange Commission

U.S. Securities and Exchange Commission

LITIGATION RELEASE NO. 18671 / April 19, 2004



The Securities and Exchange Commission today filed civil fraud charges against Vincent P. Iannazzo and Milton E. Stanson ("Defendants") for engaging in a fraudulent scheme to manipulate the public trading market for stock issued by Emex Corporation ("Emex"). At the time of Defendants' fraud, Emex essentially was a start-up company with no established operating business. Its two main subsidiaries claimed to be focused on developing innovative technologies for exploiting energy resources, and on mining gold and other metals and minerals. Defendants carried out the scheme, which operated from at least October 2000 through April 2001, in their roles as founders, directors and major shareholders of Emex.

The Commission's complaint, filed in the United States District Court for the Southern District of New York, alleges that Iannazzo, 46, and Stanson, 79, violated various antifraud provisions of the federal securities laws. As alleged in the complaint, Defendants devised and orchestrated a scheme to artificially inflate Emex's stock price by causing Emex to issue a series of false or materially misleading press releases as well as a false or materially misleading year 2000 Annual Report. Iannazzo and Stanson's illegal efforts were meant to deceive the investing public and others about the technology, financial prospects and value of Emex.

According to the complaint, in August 2000 Iannazzo and Stanson acquired a public "shell" corporation they soon named Emex, into which they placed the assets of certain of their private investments. Those investments included a company purportedly focused on developing innovative technologies for exploiting energy resources, in particular the conversion of natural gas to diesel fuel and other marketable products using a gas-to-liquids ("GTL") technology..

The complaint alleges that shortly after acquiring Emex, the Defendants caused the company, in several of its press releases and its annual report, to make false or materially misleading statements about the status of its GTL technology and the significance of a related financing agreement. Among other things, Emex announced that it possessed a commercially viable proprietary GTL technology, and that the company was ready to build a commercial plant utilizing that technology with a $100 million financing proposal it had obtained through the efforts of Credit Suisse First Boston. In fact, Emex's technology only was at the developmental stage and never had been proven to be commercially viable. Furthermore, Emex's financing agreement was with Fieldstone, Inc., a small investment bank whose name Emex intentionally omitted from its public statements on the subject while highlighting that of Credit Suisse First Boston, a much larger and well-known investment bank. In addition, due to various contingencies, Emex had little prospect of raising any money under its financing agreement with Fieldstone. Therefore, despite Emex's representations to the contrary, the company had neither the technology nor the money to build a commercial plant.

The complaint further alleges that during April and May 2001 Emex's stock price increased dramatically as a result of Defendants' fraudulent activities. Then, after publication of a May 23, 2001 news article that questioned the veracity of Emex's public statements, trading in Emex stock was halted. On May 30, 2001, the day trading in Emex stock was resumed, the company's stock price closed down more than 40%. A week later, Emex's stock price had dropped by another 50%, and from there it continued to slide. Emex currently is in the process of liquidating its assets in Chapter 7 bankruptcy.

The Commission's complaint charges Iannazzo and Stanson with violations of Section 10(b) of the Securities Exchange Act of 1934 ("Exchange Act") and Rule 10b-5 thereunder, and aiding and abetting violations of Sections 10(b) and 13(a) of the Exchange Act and Rules 10b-5, 12b-20 and 13a-1 thereunder. The Commission seeks to enjoin Iannazzo and Stanson from committing future violations of these provisions, to compel them to pay monetary penalties, and to bar Iannazzo and Stanson from serving as officers or directors of any public company in the future. The Commission also seeks to compel Mr. Stanson to pay disgorgement of his ill-gotten gains, with prejudgment interest thereon.

SEC Complaint in this matter



Modified: 04/19/2004