Change in the Meeting on January 15, 2009 at 1:00 p.m.: Additional Item
The following item was added to the Thursday, January 15, closed meeting agenda: a matter related to a financial institution
At times, changes in Commission priorities require alterations in the scheduling of meeting items. For further information and to ascertain what, if any, matters have been added, deleted or postponed, please contact the Office of the Secretary at (202) 551-5400.
Commission Issues Cease-and-Desist Order Against Future Reporting Violations by Kings Road Entertainment, Inc., and Dismisses Pending Administrative Proceeding Against the Issuer
On January 15, the Commission issued an Order Instituting Cease-and-Desist Proceedings, Making Findings, and Imposing a Cease-and-Desist Order Pursuant to Section 21C of the Securities Exchange Act of 1934 (Exchange Act) against Kings Road Entertainment, Inc. (Kings Road) as a result of its failure, over a period of more than three years, to file timely quarterly and annual reports as required by Section 13(a) of the Exchange Act and rules thereunder.
Also on January 15, the Commission dismissed with prejudice pending administrative proceedings instituted against Kings Road pursuant to Exchange Act Section 12(j) to determine whether it was necessary and appropriate for the protection of investors to suspend or revoke the registration of Kings Road's securities. (Rel. 34-59256; File No. 3-13075 and 34-59257; File No. 3-13342)
SEC Seeks Temporary Restraining Order to Halt Ponzi Scheme
On January 15, the Commission filed a Complaint For Injunctive and Other Relief (Complaint) in the United States District Court for the Northern District of Georgia against CRE Capital Corporation (CRE) and James G. Ossie (Ossie). The Complaint alleges that CRE is a Georgia corporation with offices in Alpharetta, Georgia. In addition, the Complaint alleges that Ossie represents himself to be CRE's president and chief executive officer.
The Complaint alleges that, since at least early 2008, CRE and Ossie have raised at least $25 million from over 120 investors. As alleged in the Complaint, CRE offers "30 Day Currency Trading Contracts," which promise a guaranteed ten percent (10%) return (ROI) in thirty days. The Complaint also alleges that CRE and Ossie claim that they generate profits sufficient to pay these guaranteed returns by trading United States and Japanese currency contracts as the exchange rate fluctuates. Further, the Complaint alleges that CRE and Ossie told investors that the program involves very little risk because CRE has established a large, defensive reserve fund from which to pay back the 10% ROI, plus redeemed principal. In fact, as alleged in the Complaint, CRE does not generate sufficient returns from currency trading to pay the promised returns. The Complaint alleges that the defendants claim CRE and its program were audited by an outside accounting firm which concluded that the investment program was not a Ponzi scheme. In fact, according to the complaint, CRE operated as a Ponzi scheme by paying all returns to investors from funds contributed by new investors.
The Complaint also alleges that CRE planned to launch a $100 million stock offering in early 2009, pursuant to which CRE intended to sell 50 million shares at $2 per share. In connection with that offering, the Complaint alleges that Ossie told potential investors that CRE business operations had been analyzed by an independent firm for estimation of stock value, and that the firm opined that CRE stock should be worth $40-$45 per share. The complaint alleges that these projections were misleading because CRE was insolvent.
The Complaint alleges that the defendants have violated the antifraud provisions of the federal securities laws, Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder.
On January 15, the defendants consented to the entry of an order granting the Commission's requests for (i) a temporary restraining order; (ii) an asset freeze; (iii) an accounting of all funds raised; (iv) the appointment of a receiver for defendant CRE; and (v) an order expediting discovery and preventing the destruction of documents. The Commission's Complaint also seeks (i) preliminary and permanent injunctions against future violations; (ii) disgorgement of ill-gotten gains plus prejudgment interest; and (iii) imposition of civil penalties.
The Commission thanks the Commodity Futures Trading Commission for its assistance in this matter. The CFTC filed today a related action against CRE and Ossie. [SEC v. CRE Capital Corporation and James G. Ossie, Civil Action No. 1: 09-CV-0114 (NDGA)] (LR-20853)
SEC v. BarrierMed, Inc., et al.
The Commission filed a Complaint For Injunctive Relief today in the United States District Court for the Middle District of Florida against BarrierMed, Inc. (BarrierMed) and BarrierMed Glove Co. (BarrierMed Glove) (collectively, the Companies) and their founder and former chief executive officer and president Victor J. Ragucci. BarrierMed and BarrierMed Glove purported to develop and sell latex-free gloves for use in the medical industry.
The Commission's complaint alleges that Ragucci and the Companies fraudulently raised over $11 million from hundreds of investors nationwide by offering and selling unregistered securities through a series of private offerings from at least 2003 through approximately February 2007. According to the complaint, Ragucci made materially false and misleading statements to investors concerning the Companies' operating results, revenues, future profits and the nature and impact of certain contracts. The Complaint also alleges that Ragucci misled investors regarding the Companies' production capabilities and announced product launches despite failing to obtain requisite United States Food and Drug Administration approvals to sell the gloves. The complaint further alleges that the defendants repeatedly misrepresented that the Companies were preparing to conduct an initial public offering, fabricated Ragucci's credentials, and misrepresented Ragucci's salary.
The complaint alleges that 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 and Rule 10b-5 thereunder. The Commission seeks permanent injunctions and disgorgement of ill-gotten gains with prejudgment interest against the defendants. The Commission also seeks the imposition of a civil money penalty and an officer and director bar against Ragucci. [[SEC v. BarrierMed, Inc., BarrierMed Glove Co. and Victor J. Ragucci, Case No. 6:09-CV-102-ORL-28KRS (M.D. Fla.)] (LR-20854)
INVESTMENT COMPANY ACT RELEASES
Allstate Financial Investment Trust, et al.
A notice has been issued giving interested persons until Feb. 6, 2009, to request a hearing on an application filed by Allstate Financial Investment Trust, et al., under Section 12(d)(1)(J) of the Investment Company Act for an exemption from Sections 12(d)(1)(A) and (B) of the Act, and under Sections 6(c) and 17(b) of the Act for an exemption from Section 17(a) of the Act. The order would permit certain registered open-end management investment companies to acquire shares of other registered open-end management investment companies and unit investment trusts that are within and outside the same group of investment companies. Rel. IC-28581- January 12)
The American Separate Account 5
An order has been issued pursuant to Section 8(f) of the Investment Company Act declaring that The American Separate Account 5 has ceased to be an investment company. ( Rel. IC-28583 - January 13)
Enterprise Accumulation Trust
An order has been issued on an application filed by Enterprise Accumulation Trust pursuant to Section 8(f) of the Investment Company Act declaring that it has ceased to be an investment company. (Rel. IC-28585 - January 14)
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