U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 18939 / October 25, 2004
SECURITIES AND EXCHANGE COMMISSION V. PLATFORMS WIRELESS INTERNATIONAL CORP., WILLIAM C. MARTIN, CHARLES B. NELSON, ROBERT D. PERRY, FRANCOIS M. DRAPER, and VICTOR L. ZILLER, Civil Action No. 04 CV 2105 JM (AJB)(S.D.CA)
SEC CHARGES PLATFORMS WIRELESS INTERNATIONAL CORPORATION AND FIVE OF ITS CURRENT AND FORMER OFFICERS AND DIRECTORS WITH SECURITIES FRAUD
On October 21, 2004, the Securities and Exchange Commission filed civil fraud charges against Platforms Wireless International Corporation ("Platforms") and five of its current and former officers and directors, including: William C. Martin, Chairman of the Board and Chief Executive Officer; Charles B. Nelson, Chief Financial Officer; Robert D. Perry, the former President; Francois M. Draper, the former Chief Operations Officer; and Victor L. Ziller, the former Vice President-Brazil ("Defendants"). The Commission's complaint charges that the defendants made materially false and/or misleading public statements in an effort to manipulate the public trading market for stock issued by Platforms.
The Commission's complaint, filed in the United States District Court for the Southern District of California, alleges that Platforms, Martin, 63, Nelson, 67, Perry, 65, Draper, 58, and Ziller, 52, violated the antifraud provisions of the federal securities laws. During 2000 and 2001, Defendants issued a series of fraudulent press releases as part of a scheme to falsely portray Platforms' business activities and support its stock price. Platforms claimed to have an aerial system, the ARC System, for transmitting cellular telephone calls and other types of electronic data, using either fixed-wing aircraft or a blimp to carry transmission equipment. Platforms used these press releases to convince investors to purchase its stock and to support its share price on the secondary market.
According to the Commission's complaint, Platforms' press releases were false. In reality Platforms never had a complete ARC System. It has never owned a blimp, nor has it ever had the money to manufacture or purchase one. Platforms did take several steps to create the false impression that it was producing an ARC System. It engaged a subcontractor to construct the antenna portion of the ARC System and conducted a demonstration of that equipment for investors and invited guests. However, nothing resembling the ARC System as described in Platforms' press releases was demonstrated. No actual telephone call was transmitted by the system, and the antenna portion of the ARC System hung indoors from a crane rather than being suspended from an airborne blimp. Despite its public statements to the contrary, Platforms never had any real prospect of manufacturing or selling an ARC System.
The complaint further alleges that during 2000 and 2001 Platforms, Martin, Nelson, Perry, Draper and Ziller intentionally misled investors for the purpose of unlawfully making a profit themselves. During this period, they were profiting from payments they received from the company, from illegal stock sales into the secondary market, and/or from stock sales made directly to investors.
The Commission's complaint charges Platforms and Draper with violations of Section 10(b) of the Securities Exchange Act of 1934 ("Exchange Act") and Rule 10b-5 thereunder, and Section 5 of the Securities Act of 1933 ("Securities Act"). It charges Martin with violations of Section 10(b) of the Exchange Act, Rule 10b-5 thereunder, and with causing Platforms' violations of Section 5 of the Securities Act. Finally, the Commission's complaint also charges Nelson, Perry, and Ziller with violations of Section 10(b) of the Exchange Act and Rule 10b-5 thereunder. The Commission seeks to enjoin all defendants from committing future violations of these provisions and to compel them to pay monetary penalties and disgorgement of their ill-gotten gains, with prejudgment interest. It also seeks to bar Martin, Nelson, Perry, Draper and Ziller from serving as officers or directors of any public company in the future, and from being associated with any penny-stock company.