U.S. Securities and Exchange Commission
Litigation Release No. 18785 / July 19, 2004
SECURITIES AND EXCHANGE COMMISSION v. GLOBAL TELECOM SERVICES L.L.C. d/b/a MEDICAL DISPOSAL DEVICES, ALBERT D. LATOUCHE and SALVATORE J. CARTELLI, JR. 3:03-CV-418 (PCD ) (D. Conn.) (July 19, 2004)
Federal District Court Grants Summary Judgment Against Medical Disposal, Albert D. LaTouche and Salvatore J. Cartelli, Jr.
The Securities and Exchange Commission announced that on July 15, 2004, the Honorable Peter C. Dorsey, United States District Court Judge for the District of Connecticut, granted the Commission's motion for summary judgment against Global Telecom Services, L.L.C. d/b/a Medical Disposal Devices, Medical Disposal's President, Albert D. LaTouche, and Salvatore J. Cartelli, Jr., a de facto officer of Medical Disposal.
In his order, Judge Dorsey found that between 1997 and 2000, Medical Disposal, LaTouche and Cartelli conducted a fraudulent offering of securities, selling investment contracts and notes to 47 investors, and defrauding them of $742,000. Medical Disposal claimed to manufacture and sell the "Needlyzer," a device which purportedly destroyed hypodermic needles safely. Medical Disposal, however, never successfully commercially manufactured or sold the Needlyzer. Judge Dorsey also found that Medical Disposal, LaTouche and Cartelli made false and misleading statements to induce investors to purchase investment contracts and notes. For example, the Defendants told investors that the FDA approved the Needlyzer, when, in fact, the FDA had not. The Defendants told investors that a company in New York manufactured the Needlyzer for Medical Disposal, when, in fact, no company was manufacturing the Needlyzer for Medical Disposal. The Defendants told investors that Medical Disposal had negotiated contracts with foreign companies to purchase the Needlyzer, when, in fact, no such contracts existed. The Defendants also told investors they would use their funds to manufacture Needlyzers, when, in fact, LaTouche and Cartelli used investors' funds for personal purposes and to operate Medical Disposal's other purported business.
Judge Dorsey permanently enjoined Medical Disposal, LaTouche and Cartelli from violating Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder and barred LaTouche and Cartelli from serving as officers or directors of a public company. Judge Dorsey also ordered the Defendants to pay disgorgement of $742,000 plus prejudgment interest of $189,369, and to pay civil penalties of $500,000 for Medical Disposal and $100,000 each for LaTouche and Cartelli.
For further information, see Litigation Release No. 18027 (March 11, 2003).