U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 19574 / February 23, 2006
SEC v. Edward S. Digges, Jr.; Nexstar Communications, LLC; TMT Equipment Company, LLC; TMT Management Group, LLC; POSA, LLC; POSA TMT, LLC; Televest Communications, LLC; Televest Group, LLC and Spin Drift, LLC; Civil Action No. 6:06-CV-137-ORL-19-KRS (MD Fla.)
The Securities and Exchange Commission announced today that the Honorable Patricia C. Fawsett, United States District Judge for the Middle District of Florida, entered an order permanently enjoining Edward S. Digges, Jr. (Digges), Nexstar Communications, LLC (Nexstar), TMT Equipment Company, LLC (TMT Equipment), TMT Management Group, LLC (TMT Management), POSA, LLC (POSA), POSA TMT, LLC (POSA TMT), Televest Communications, LLC (Televest Communications), Televest Group, LLC (Televest Group), and Spin Drift, LLC (Spin Drift) (collectively "defendants"). The order restrained and enjoined Digges, Nexstar, TMT Equipment, TMT Management, POSA, and POSA TMT from future violations of Sections 5(a), 5(c) and 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 (Exchange Act) and Rule 10b-5 thereunder. The order further enjoined the defendants from aiding and abetting violations of Section 10(b) of the Exchange Act and Rule 10b-5 thereunder. The order also appointed a receiver for Nexstar, TMT Equipment, TMT Management, POSA, POSA TMT, Televest Communications, Televest Group, and Spin Drift, LLC, and imposed other relief. The defendants consented to the order without admitting or denying any of the allegations of the Commission's Complaint.
The Complaint alleged that since April 2003, the defendants fraudulently sold to approximately 278 investors at least $15 million in securities consisting of an investment in which investors purchased a point-of-sale credit card terminal from one of the defendants and then leased the terminal to another defendant purportedly for placement in a retail store to generate service fee revenue. To sell the investments, Digges represented to the salespeople, and through them to investors, that these obligations were "assured," and that he would maintain a "reserve fund" to cover six months of monthly lease payments and a "sinking fund" to cover the eventual repurchase of the terminals. The Complaint alleged that Digges had no basis to assure investors of either their lease payments or the repurchase of the terminals. Since at least January 2004, the defendants' operation of the leased terminals has run a deficit, and the defendants never created or maintained a reserve fund or a sinking fund. Further, in an attempt to conceal his criminal record, Digges omitted his name from offering materials and falsely portrayed to potential investors that the venture was managed by individuals who had only nominal roles. Digges also failed to disclose that, since April 2003, the state securities commission of Maryland, Pennsylvania, and Ohio have issued orders finding that one or more of his entities violated state securities laws by participating in the offering, and the Maryland order found that the offering involved fraud.
See also: L.R. 19554 (February 3, 2006)