U.S. SECURITIES AND EXCHANGE COMMISSION

Litigation Release No. 18970 / November 15, 2004

Securities and Exchange Commission v. Investment Technology, Inc. et al., Case No. CV-S-03-0831-KJD-RJJ (D. Nev.).

SEC Obtains Final Judgment in On-line Casino Stock Fraud Case

The Securities and Exchange Commission announced today that on October 22, 2004, the Honorable Kent J. Dawson, U.S. District Judge, District of Nevada, entered a final judgment by default against all Defendants as a sanction for repeated misconduct by Ulysses "Thomas" Ware ("Ware"), a Defendant who also acted as attorney for himself and other Defendants. In its order, the Court noted that Ware had continued to act in bad faith, even after the Court had imposed multiple monetary sanctions on him.

In its complaint, filed July 14, 2004, the Commission alleged that the Defendants conducted a fraudulent scheme involving the stock of Investment Technology, Inc., a Las Vegas, Nevada publicly-traded company, with a purported on-line gambling casino. The complaint charged that Thomas D. Vidmar ("Vidmar"), of Las Vegas, Nevada, the company's CEO and chairman, and Ware, of Atlanta, Georgia, the company's investment banker and securities counsel, caused Investment Technology to file two false and misleading registered securities offerings with the Commission. Thereafter, the complaint alleged, the Defendants issued numerous press releases and "analyst reports" recommending the purchase of Investment Technology stock based on various unfounded claims regarding the company's purported on-line gambling casino operation. According to the Complaint, Ware used Defendants Rosenfeld, Goldman & Ware ("RGW"), Small Cap Research Group, Inc. ("Small Cap"), and Centennial Advisors, LLC ("Centennial") to perpetrate various aspects of the fraudulent scheme.

For example, a February 7, 2002, press release claimed that the casino's website had "accepted over 100,000 wagers on the Super Bowl, for more than $4 million." Other releases and reports described Investment Technology, which had no history of operations or revenue, as "a leader" in the online gaming industry. However, no bets were ever placed on the company's casino website.

The complaint further alleged that Vidmar and Ware dumped millions of Investment Technology shares into the manipulated market, amassing unlawful profits. In addition, according to the complaint, the company and Vidmar filed materially misleading reports with the Commission and that Vidmar, Ware and RGW failed to file required reports with the Commission disclosing their Investment Technology stock holdings.

Based on the conduct set forth above, the Court's final judgment:

  • Permanently enjoins Investment Technology from further violation of Sections 5(a), 5(c) and 17(a) of the Securities Act of 1933 ("Securities Act"), and Sections 10(b) and 13(a) of the Securities Exchange Act of 1934 ("Exchange Act") and Rules 10b-5, 12b-20, 13a-1, 13a-11 and 13a-13 thereunder;
     
  • Permanently enjoins Vidmar from further violation of Sections 5(a), 5(c) and 17(a) of the Securities Act, and Sections 10(b) and 16(a) of the Exchange Act and Rules 10b-5 and 16a-3 thereunder, and aided and abetted violations of Section 13(a) of the Exchange Act and Rules 12b-20, 13a-1, 13a-11 and 13a-13 thereunder;
     
  • Permanently enjoins Ware and RGW from further violations of Sections 5(a), 5(c), 17(a) and 17(b) of the Securities Act, and Sections 10(b) and 13(d) of the Exchange Act and Rules 10b-5 and 13d-1 thereunder; and
     
  • Permanently enjoins Small Cap and Centennial Advisors from further violations of Section 17(a) of the Securities Act, and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder.
     
  • Orders that Vidmar and Ware are permanently barred from participating in an offering of penny stock.
     
  • Orders that Vidmar is prohibit from acting as an officer or director of a public company.
     
  • Orders Vidmar and Ware disgorge the profits they obtained by selling Investment Technology stock during their manipulative conduct, by requiring Vidmar to pay disgorgement of $31,000 plus prejudgment interest of $3,811 and requiring Ware to pay disgorgement of $171,000 plus prejudgment interest of $21,025.
     
  • Order Vidmar and Ware each pay civil penalties in the amount of $120,000 and Investment Technology, RGW, Small Cap and Centennial each pay civil penalties in the amount of $600,000.
     

For more information on earlier action in this case, see Litigation Release No. 18249 (July 24, 2003).