U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 19133 / March 15, 2005
SECURITIES AND EXCHANGE COMMISSION v. THE HARTCOURT COMPANIES, INC., ALAN V. PHAN, AND YONGZHI YANG, Civil Action No. CV 03-3698 LGB (PLAx) (C.D. Cal.)
SEC OBTAINS FINAL JUDGMENTS AGAINST THE HARTCOURT COMPANIES, INC., ALAN V. PHAN, AND YONGZHI YANG FOR FRAUD AND REGISTRATION VIOLATIONS
The Securities and Exchange Commission announced that the Honorable Lourdes G. Baird, United States District Judge for the Central District of California in Los Angeles, entered final judgments against The Hartcourt Companies, Inc., a Utah corporation with executive offices in Shanghai, China, Alan V. Phan, Hartcourt's former chairman, president, and CEO, and Yongzhi Yang, a former consultant to Hartcourt and a resident of Irvine, California. The judgments against Phan and Yang were entered on February 28, 2005, while the judgment against Hartcourt was entered on March 11, 2005.
The final judgments imposed the following sanctions against Hartcourt, Phan, and Yang:
In its December 14, 2004 order granting the SEC's motion for summary judgment, the Court found that the defendants violated the registration and antifraud provisions of the federal securities laws in connection with a false Form S-8 registration statement filed by Hartcourt on September 7, 1999. The defendants used a Form S-8 registration statement to issue one million Hartcourt common shares to Yang's wife, purportedly to compensate her for providing bona fide consulting services to Hartcourt. Instead, Yang performed the actual consulting services and, at Phan's direction, improperly sold or transferred over 836,400 of those shares to provide a benefit of approximately $819,363 to Hartcourt. The Court also found that Yang received a personal benefit of $186,604 from the scheme.
For additional information about this matter, see Litigation Release No. 18187 (June 10, 2003).