U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 19569 / February 17, 2006
Securities and Exchange Commission v. Lambert Vander Tuig, The Carolina Development Company, Inc. and Jonathan Carman, Case No. SACV06-172 AHS (ANx) (USDC CDCa)
SEC Obtains Temporary Restraining Order and Asset Freeze Against The Carolina Development Company, Lambert Vander Tuig and Jonathan Carman
The Commission has obtained an order temporarily restraining Lambert Vander Tuig, The Carolina Development Company, Inc. (a/k/a The Carolina Company at Pinehurst)("Carolina Company") and Jonathan Carman ("Carman") from making unregistered fraudulent offers, sales and purchases of securities in connection with an offering of stock in Carolina Company. The Court also froze the assets of Vander Tuig, Carolina Company and Carman and appointed a receiver for Carolina Company and its affiliates. Finally, the Court ordered that discovery in the matter be accelerated and a prohibition from the destruction of documents by the Defendants.
The complaint alleges the defendants have obtained investments of at least $30 million from the fraudulent unregistered offering of Carolina Company stock. Defendants allegedly made false claims including: 1) defendants claim Carolina Company will soon be going public and that stock will likely trade at a price many times the offering price, while in reality, the Carolina Company has taken no substantial steps to register its stock; (2) defendants fail to disclose that the same stock being offered through the boiler room operation is available to purchase through the Pink Sheet quotation system at prices well below the offering price; (3) defendants represent that shares purchased will be immediately available for trading as soon as Carolina Company goes public, while such shares are actually restricted and cannot be sold for at least one year; (4) defendants represent Carolina Company owns or is developing a number of properties that it does not actually own; (5) defendants claim the number of outstanding shares is substantially less than the number actually outstanding; and (6) defendants fail to disclose that Vander Tuig was previously enjoined by in an action brought by the Commission in federal district court and was subsequently barred from association with any broker or dealer. Defendants made these representations through private placement memoranda, calls to prospective investors, on Carolina Company's website and through other sales materials.
It is alleged that through this conduct the defendants violated Sections 5(a), 5(c) and 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 (Exchange Act) and 10b-5 thereunder. The complaint charges Vander Tuig and Carman with violating Section 15(a) of the Exchange Act and Vander Tuig with violating 15(b)(6)(B) of the Exchange Act.