SECURITIES EXCHANGE ACT OF 1934
Release No. 49168/ February 2, 2004
Admin. Proc. File No. 3-11347
In the Matter of VALENTIN FERNANDEZ, JUAN FERNANDEZ, DANIEL J. PHILLIPS, HASKEL P. STONE, and MATTHEW D. STONE Respondent. |
: : : : : : : : : : |
ORDER MAKING FINDINGS AND IMPOSING SANCTIONS BY DEFAULT ON VALENTIN FERNANDEZ AND JUAN FERNANDEZ |
The Securities and Exchange Commission ("Commission") initiated this proceeding on December 1, 2003, pursuant to Section 15(b) of the Securities Exchange Act of 1934 ("Exchange Act").
Respondents Valentin Fernandez and Juan Fernandez were served with the Order Instituting Proceedings ("OIP") on December 8, 2003, and December 6, 2003, respectively. Delivery to Valentin Fernandez was accomplished by delivery to an authorized person at a Federal Correctional Institution in Miami, Florida ("FCI Miami"). Delivery to Juan Fernandez was accomplished by delivery to an authorized person at a Salvation Army Half-Way House in West Palm Beach, Florida. Respondents did not answer the OIP within twenty days after service as required by Rule 220 of the Commission's Rules of Practice. See 17 C.F.R. § 201.220.
The Commission's Office of the Secretary sent copies of my Order Postponing Hearing and Setting Prehearing Conference to Respondents by first-class mail. In addition, the Division of Enforcement ("Division") served Respondents either personally or by Federal Express to their address. (January 13, 2004, prehearing conference, Tr. 12-13.) On January 13, 2004, an administrator at FCI Miami informed counsel for the Division that Respondent Valentin Fernandez was aware of the prehearing conference and would do nothing. (Teresa J. Verges Declaration.) Neither Respondent was present at the prehearing conference conducted by telephone on January 13, 2004.
On January 21, 2004, the Division filed a Motion for Entry of Default Orders Against Valentin Fernandez and Juan Fernandez ("Motion") pursuant to Rules 155(a) and 220(f) of the Commission's Rules of Practice, 17 C.F.R. §§ 201.155(a), .220(f).
Rule 154(b) of the Commission's Rules of Practice requires that replies to a motion be filed within five days after service of the motion. 17 C.F.R. § 201.154(b). Respondents have not replied to the Motion.
Findings
The Commission's Rules of Practice provide that Respondents, who fail to file an answer, appear at a prehearing conference, or answer a dispositive motion may be deemed to be in default and the allegations in the OIP may be deemed true. 17 C.F.R. §§ 201.155, .220. Respondents Valentin Fernandez and Juan Fernandez have not answered the allegations in the OIP, did not appear at the prehearing conference on January 13, 2004, and did not respond to the Motion. Accordingly, I GRANT the Motion and FIND that the following allegations in the OIP are true.
At all relevant times, Respondent Juan Fernandez was a registered representative associated with registered broker-dealers, and Respondent Valentin Fernandez was an unassociated individual.
At all relevant times, Respondents Juan Fernandez and Valentin Fernandez participated in the offering of Lifekeepers International, Inc. ("Lifekeepers"), BIZ Holdings, Inc. ("BIZ"), and Piccard Medical Corp. ("Piccard"), collectively the ("Issuers"), which are penny stocks.
According to a criminal indictment filed on April 20, 2001, from approximately December 1998 through August 2000, Valentin Fernandez and Juan Fernandez knowingly and willfully conspired and agreed to commit securities fraud, mail fraud and wire fraud by manipulating the securities of Lifekeepers, BIZ, and Piccard. The indictment alleged that Valentin Fernandez acquired large blocks of the Issuers' stock and placed those shares at two separate registered broker-dealers controlled by his brother, Juan Fernandez. The indictment further alleged that Valentin Fernandez and Juan Fernandez conspired with others to artificially increase the share price of the Issuers' securities by making undisclosed cash payments to registered representatives who induced their clients to purchase the Issuers' securities. According to the indictment, the secret cash payments to the conspiring brokers boosted the price and demand for the Issuers' securities while Valentin Fernandez sold his shares into the market at artificially inflated prices. The indictment also alleged that once Valentin Fernandez sold his stock and ceased making secret cash payments to the co-conspirators, the demand and price for the Issuers' securities plummeted resulting in substantial losses to investors.
On March 6, 2002, Valentin Fernandez and Juan Fernandez pled guilty to conspiracy to commit securities fraud, mail fraud and wire fraud, and conspiracy to commit mail fraud and wire fraud. On May 17, 2002, Valentin Fernandez and Juan Fernandez were sentenced to fifty-one months in prison, three years' probation, and ordered to pay $8,936,761 in joint and several restitution. United States v. Valentin Fernandez, Case No. 01-8060-CR-Ferguson (S.D. Fla. 2001).
Order
Based on the findings set forth above, I ORDER, pursuant to Section 15(b)(6) of the Exchange Act, that:
Juan Fernandez is barred from association with a broker or dealer; and
Valentin Fernandez and Juan Fernandez are barred from participating in an offering of penny stock.1
Brenda P. Murray Chief Administrative Law Judge