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U.S. SECURITIES AND EXCHANGE COMMISSION

Litigation Release No. 18952 / October 29, 2004

SECURITIES AND EXCHANGE COMMISSION V. NEUROTECH DEVELOPMENT CORPORATION, ET AL., (United States District Court for the Eastern District of New York, No. 04-CV-4667 (Platt) (E.D.N.Y.)

SEC FILES FRAUD CHARGES AGAINST NEUROTECH DEVELOPMENT CORPORATION AND ITS FATHER-SON MANAGEMENT TEAM

The Securities and Exchange Commission filed a civil fraud action today against Neurotech Development Corporation, a Roslyn, New York-based corporation, and its father-son management team, Bernard Artz and Lawrence Artz, concerning false and misleading statements in its Commission filings and press releases. Neurotech is purportedly in the business of marketing rapid deployment healthcare systems, including prefabricated hospitals, in developing countries.

The Commission=s Complaint, filed in the United States District Court for the Eastern District of New York, alleges that, during the period from at least May 1999 through January 2003, Neurotech, acting through its officers, Bernard Artz and his son Lawrence Artz, violated the federal securities laws by making false and misleading statements in its Commission filings and press releases concerning its purported receipt of millions of dollars in Indonesian "bank guarantees" and billions of dollars in construction contracts. The statements concerning the "bank guarantees" were false and misleading because the purported instruments were, in fact, fraudulent. In addition, the statements concerning the construction contracts were false and misleading because the vast majority of the contracts were unenforceable. In fact, Neurotech received only $5.5 million in revenue from the $3.7 billion in construction contracts it claimed to have signed during the relevant period. The statements concerning the construction contracts were false and misleading because, taken both individually and collectively, they falsely suggested that Neurotech was an active, viable company with an imminent revenue stream. Bernard Artz, the company's chairman, chief executive officer and chief financial officer signed and certified Neurotech's Commission filings and reviewed the company's press releases. Lawrence Artz, the company's vice president, also signed the Commission filings and prepared the press releases.

The Complaint alleges that Neurotech and Bernard and Lawrence Artz violated Section 10(b) of the Securities Exchange Act of 1934 ("Exchange Act") and Rule 10b-5 thereunder (antifraud provisions) and that Neurotech violated, and that the Artzes aided and abetted its violations of, Section 13(a) of the Exchange Act and Rules 12b-20, 13a-1 and 13a-13 thereunder (reporting provisions). The Complaint also alleges that Bernard and Lawrence Artz violated Section 16(a) of the Exchange Act (failure to make change of beneficial ownership filings) and that Bernard Artz additionally violated Rule 13a-14 thereunder (false certification of Commission filings). The Commission is seeking injunctive relief, disgorgement of all ill-gotten gains, including those related to the Artzes' sales of Neurotech stock during the relevant period, civil penalties, and officer and director and penny stock bars against the Artzes.

The Commission today also instituted separate public administrative proceedings pursuant to Section 12(j) of the Exchange Act against Neurotech, to determine whether its common stock should be suspended or revoked given its failure to comply with Section 13(a) of the Exchange Act and Rules 13a-1 and 13a-13 thereunder by failing to file required annual and quarterly reports with the Commission since the period ended December 31, 2002.

SEC Complaint in this matter


http://www.sec.gov/litigation/litreleases/lr18952.htm


Modified: 10/29/2004