U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 19278 / June 22, 2005
SEC v. Victor Industries, Inc., Ronald N. Pellett, Penny A. Sperry and Xion, Inc., Case No. CV 02-37-M-DWM (D. Mt.)
COURT AWARDS SEC OVER $200,000 IN MONTANA OFFERING SCAM
The Securities and Exchange Commission announced today that on June 15, 2005, the United States District Court for the District of Montana entered a Final Judgment against Montana residents Ronald N. Pellett and Penny A. Sperry and Xion, Inc., a shell company owned by Pellett. The Court ordered them to pay over $240,000 in disgorgement, prejudgment interest and penalties.
On February 26, 2002, the Commission charged Victor Industries, Inc., a Missoula, Montana company, Pellett, Sperry and Xion in a phony offering scheme that enabled Pellett and Sperry to obtain nearly 20 million shares of Victor stock without paying for the stock or complying with the federal securities registration laws. After acquiring control of the stock, Pellett and Sperry issued a series of optimistic press releases touting Victor's products. They then took advantage of the rising stock price to sell the stock through Xion at a profit. Subsequent purchasers, lacking the basis for making an informed investment decision, paid high prices for their Victor stock only to see the market price drop sharply not long after their purchases.
Simultaneous with the filing of the Commission's complaint, Victor, Pellett, Sperry and Xion, without admitting or denying the allegations in the complaint, consented to a court order enjoining them from future violations of the registration provisions of the federal securities laws. In addition, Pellett, Sperry and Xion agreed to disgorge the proceeds of their illegal stock sales and pay civil penalties in amounts to be determined by the court. The Final Judgment against Pellett, Sperry and Xion followed grant of the Commission's motion for summary judgment to establish the amount of disgorgement and penalties.
The Final Judgment orders Pellett, Sperry and Xion to disgorge their ill-gotten gains of $132,745 plus prejudgment interest of $9,580. Pellett also was ordered to pay a $50,000 penalty. Sperry and Xion each were ordered to pay a $25,000 penalty. In addition to the disgorgement and penalties, the Final Judgment permanently enjoins Pellett, Sperry and Xion from future violations of Sections 5(a) and 5(c) of the Securities Act of 1933, which prohibits the unregistered offer and sale of securities.
For additional information, see:
SEC v. Victor Industries, Inc., et al. -- Litigation Release LR 17383 (February 27, 2002)