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U.S. Securities and Exchange Commission

U.S. Securities and Exchange Commission

Litigation Release No. 18838 / August 19, 2004


Securities and Exchange Commission v. Brian Lee (aka Brian Lee Petrosian), Todd DiRoberto, Lonnie Dragon and Trevor Watson, Case No. 03-CV-1957-JAH (JFS) (Houston, J.)(S.D. Ca., filed October 2, 2003)

The Securities and Exchange today announced that on August 13, 2004, the Honorable John A. Houston of the United States District Court for the Southern District of California entered a final judgment against Trevor Watson, which permanently enjoins him from violating federal securities laws. The case against the other defendants remains pending.

The Commission's complaint alleges that between November 1998 and September 2000, Lee, DiRoberto, Dragon and Watson offered more than $10 million in securities and raised approximately $6 million from more than 200 investors nationwide in two purported private placement offerings of stock in Zandria Entertainment Networks, Inc. ("ZEN") and LevelRed Investments, Inc. The complaint further alleges that the ZEN and LevelRed Investments offerings were fraudulent because, among other things, the defendants failed to disclose that Lee and DiRoberto, both convicted felons, owned and controlled ZEN. In addition, the Complaint alleges that the defendants used high-pressure, "boiler-room" sales tactics and failed to disclose to investors the full extent of their commissions and other fees, which exceeded forty percent.

Watson, without admitting or denying the allegations, settled the action against him by consenting to entry of court orders that permanently enjoin him from violating Sections 5 and 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. Due to Watson's demonstrated inability to pay, he was not ordered to pay a civil penalty and disgorgement of $26,000 and prejudgment interest thereon of $7,063 were waived.



Modified: 08/19/2004