Robert G. Weeks

Securities Act of 1933
Rel. No. 8313 / October 23, 2003

Securities Exchange Act of 1934
Rel. No. 48684 / October 23, 2003

Admin. Proc. File No. 3-9952

In the Matter of ROBERT G. WEEKS c/o James N. Barber Suite 100, Bank One Tower 50 West Broadway Salt Lake City, Utah 84101

ORDER IMPOSING REMEDIAL SANCTIONS

On the basis of the Commission's opinion issued this day, it is

ORDERED that Robert G. Weeks cease and desist from committing or causing any violations or any future violations of Sections 5(a), 5(c), and 17(a) of the Securities Act of 1933, Sections 10(b) and 13(b)(5) of the Securities Exchange Act of 1934, and Exchange Act Rule 10b-5; and that Weeks cease and desist from causing violations or any future violations of Sections 13(a), 13(b)(2)(a), and 13(b)(2)(B)(ii) of the Exchange Act and Exchange Act Rules 13a-1, 13a-10, 13a-11, 13a-13, 12b-20, and 12b-25; and it is further

ORDERED that Robert G. Weeks disgorge $171,500 and pay prejudgment interest as described at 17 C.F.R. § 201.600(b), due from December 1, 1996, and that interest shall continue to accrue on all funds owed until they are paid; and it is further

ORDERED that Robert G. Weeks disgorge, jointly and severally with Kenneth Weeks, $16,294 and pay prejudgment interest as described at 17 C.F.R. § 201.600(b), due from December 1, 1996, and that interest shall continue to accrue on all funds owed until they are paid; and it is further

ORDERED that Robert G. Weeks pay a civil money penalty of $200,000; and it is further

ORDERED that Robert G. Weeks be barred from participating in any offering of penny stock, including acting as a promoter, finder, consultant, or other person who engages in activities with a broker, dealer, or issuer for purposes of the issuance or trading in any penny stock; or inducing or attempting to induce the purchase or sale of any penny stock.

Robert G. Weeks' payment of the civil money penalty and disgorgement orders shall be: (i) made by United States postal money order, certified check, bank cashier's check, or bank money order; (ii) made payable to the Securities and Exchange Commission; (iii) delivered by hand or courier to the Office of Financial Management, Securities and Exchange Commission, Operations Center, 6432 General Green Way, Stop 0-3, Alexandria, Virginia 22312 within thirty days of the date of this order; and (iv) submitted under cover letter which identifies Robert Weeks as the respondent in Administrative Proceeding No. 3-9952. A copy of this cover letter and check shall be sent to Thomas D. Carter, Counsel for the Division of Enforcement, Securities and Exchange Commission, 1801 California Street, Suite 1500, Denver, Colorado 80202; and it is further

ORDERED, that within sixty (60) days after payment of funds or other assets, in accordance with the disgorgement required by this Order, the Division of Enforcement shall submit a proposed plan for the administration and distribution of disgorgement funds in accordance with Rule 610 of our Rules of Practice.

By the Commission.

Jonathan G. Katz
Secretary

¹ The initial decision became final as to Kenneth Weeks and David Hesterman on October 22, 2002. David A. Hesterman, Securities Act of 1933 Rel. No. 8139 (Oct. 22, 2002), 78 SEC Docket 2313. That order makes final the law judge's findings that Kenneth Weeks and Hesterman violated the Securities Act, the Securities Exchange Act of 1934, and rules thereunder. It also makes final the law judge's order that Kenneth Weeks and Hesterman cease and desist from violation of specified provisions; that Kenneth Weeks disgorge $2,427,536, plus prejudgment interest, and an additional $16,294, plus prejudgment interest; that Hesterman disgorge $852,600, plus prejudgment interest; that Kenneth Weeks and Hesterman jointly and severally disgorge $273,513, plus prejudgment interest; that Kenneth Weeks and Hesterman pay civil money penalties of $200,000 and $250,000 respectively; and, finally, that Kenneth Weeks and Hesterman be barred from participating in any offer of penny stock.

² Specifically, the law judge found that Robert Weeks violated or caused the violation of the following provisions of the Exchange Act: Section 13(a) and rules thereunder, by failing to file timely periodic reports with the Commission, by filing reports that were materially false and misleading, and by failing to file other periodic reports; Section 13(b)(2)(A), by failing to make and keep required books and records; Section 13(b)(2)(B)(ii), by failing to devise and maintain satisfactory internal accounting controls; Section 13(b)(5), by willfully and knowingly failing to implement a system of internal accounting controls; and Sections 13(d), 13(g), and 16(a) and rules thereunder, by failing to report and update reports regarding his beneficial ownership of securities.

³ See note 1 supra.

⁴ See note 2 supra.

⁵ 15 U.S.C. § 78l(g).

⁶ In 1994, the Commission was investigating PanWorld. This investigation culminated in the Commission's June 1997 filing of a civil complaint seeking injunctive relief in the United States District Court for the District of Utah. The complaint alleged that Robert Weeks, president of PanWorld, violated registration and antifraud provisions of the federal securities laws from 1989 through 1995 by preparing promotional materials designed fraudulently to inflate the value of PanWorld's mineral properties and to misrepresent the viability of its business operations, by soliciting a network of "consultants" to tout fraudulently Pan World stock, and by selling shares of inflated Pan World stock to public investors. In May 1998, a grand jury indicted Robert Weeks on three counts of securities fraud in connection with the sale of PanWorld stock in 1992 and 1993. According to the record, the criminal case was closed administratively. In March 2003, Robert Weeks consented to the entry of a permanent injunction and officer and director bar, settling the Commission's civil action. SEC v. Pan World, Case No. 2:97CV-04255T (D. Utah), Lit. Rel. No. 18036 (March 14, 2003), 79 SEC Docket 3306.

⁷ The law judge credited Barlow's corroborated testimony and refused to credit Robert Weeks' disavowal of his statement. We see no basis to question the law judge's determination. Laurie Jones Canady, Securities Exchange Act Rel. No. 41250 (Apr. 5, 1999), 69 SEC Docket 1468, 1480, pet. denied, 230 F.3d 362 (D.C. Cir. 2000).

⁸ The actual dates of the transactions are not clear from the record.

⁹ The report is discussed infra at II.A.5.

¹⁰ See note 6 supra.

¹¹ The Commission ultimately revoked the registration of DACO's common stock in November 1999. See Dynamic American Corp., Rel. No. 42081 (Nov. 1, 1999), 70 SEC Docket 3187 (default order).

¹² See Description of Property by Issuers Engaged or to Be Engaged in Significant Mining Operations Industry Guide 7, at ¶¶ (a)(1), (2) ("Industry Guide 7").

¹³ Under Regulation S, 17 C.F.R. §§ 230.901 et seq., the registration provisions of Section 5 of the Securities Act do not apply to certain sales of securities that take place outside the United States.

¹⁴ Before the issuance occurred, the DACO board increased the number of authorized shares from 10 million to 50 million.

¹⁵ The stock was issued to Hamilton on July 1, 1996, although that name change had not yet taken effect.

¹⁶ The Division's evidence included details of a DACO share purchase by a Dr. Nielsen and his wife, who purchased 850 shares of DACO at $9.00 per share (the peak of the market) on August 14, 1995, after which DACO's stock price began a steady and steep decline. On January 2, 1996, the Nielsens purchased an additional 800 shares of DACO at $0.21 per share. The Nielsens ultimately lost their entire DACO investment.

¹⁷ An omission or misstatement is material if there is a substantial likelihood that a reasonable investor would have considered the omitted or misstated fact important to his or her investment decision, and disclosure of the omitted or misstated fact would have significantly altered the total mix of information available. Basic Inc. v. Levinson, 485 U.S. 224, 231-32 (1988); TSC Indus., Inc. v. Northway, Inc., 426 U.S. 438, 449 (1976).

¹⁸ Ernst & Ernst v. Hochfelder, 425 U.S. 185, 193 n.12 (1976). There is no scienter requirement for violations of Sections 17(a)(2) or 17(a)(3) of the Securities Act; negligence is sufficient. Aaron v. SEC, 446 U.S. 680, 701-02 (1980).

¹⁹ "Control" for Exchange Act Sections 12(b) and (g), 13 and 15(d) registration and reporting purposes, means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a person, whether through ownership of voting securities, by contract, or otherwise. Exchange Act Rule 12b-2, 17 C.F.R. § 240.12b-2.

²⁰ See Exchange Act § 3(a)(7), 15 U.S.C. § 78c(a)(7) (for Exchange Act purposes, "[t]he term <director' means any director of a corporation or any person performing similar functions with respect to any organization, whether incorporated or unincorporated."); 17 C.F.R. § 240.3b-7 (When used with reference to a registrant, the term "<executive officer" means a registrant's president, among others, who performs a policy making function, or any otherperson who performs policy making functions.)

²¹ See SEC v. Kimmes, 799 F. Supp. 852, 856 (N.D. Ill. 1992), aff'd sub nom. SEC v. Quinn, 997 F.2d 287 (7th Cir. 1993) (identity of public company's officers and directors is material information).

²² Compare SEC v. Enterprise Solutions, Inc., 142 F. Supp.2d 561, 574 (S.D.N.Y. 2001) (where putative consultant provided "management leadership" for company, negotiated acquisition by company, and hired CEO and negotiated compensation, evidence supported the conclusion that his activities on behalf of the corporation were "sufficiently similar to duties of an officer or director of the company that his involvement . . . ought to have been disclosed.").

²³ The affiliate relationship existed because Robert Weekscontrolled BTS (with others) before the acquisition of DACO, and also controlled DACO once Barlow relinquished control of DACO in mid-June 1995. Robert Weeks' control of DACO is exemplified by Barlow's June 15, 1995 approval of a corporate resolution that Robert Weeks and others put before him and that issued 600,000 shares of DACO stock to Stockton. See supra at II.B.

²⁴ This high valuation was reiterated in marketing materials for which Robert Weeks bears responsibility.

²⁵ Neither the Division nor Robert Weeks petitioned for review of the law judge's finding that "[g]iving Respondents the benefit of the doubt about the value of the new smelter," the smelter was worth $20 million; accordingly we do not consider that aspect of the valuation.

²⁶ Robert Weeks asserts that the law judge erred in disregarding a preliminary business plan prepared by two individuals which Burton's report reviewed, and which valued the tailings on the Bolivian property at $81.5 million. Even DACO disregarded this preliminary business plan,choosing instead to file Burton's report with its quarterly Commission filings.

²⁷ See note 12 supra.

²⁸ 17 C.F.R. § 229.801(g) (Securities Act filings); 17 C.F.R. § 229.802(g) (Exchange Act filings). Industry Guide 7 does not apply to less formal communications, such as promotional materials, containing disclosures from mining industry registrants. Industry Guide 7, among other things, provides standard terminology for reports and specifies what information registrants must disclose in Commission filings, what information registrants may disclose (and under what conditions), and what information registrants may not disclose.

²⁹ Instruction 2 to Industry Guide 7 ¶(b)(5). Reserve estimates that are not proven or probable must not be disclosed unless disclosure is required by foreign or state law. Instruction 3 to Industry Guide 7 ¶(b)(5).

³⁰ See note 28, supra.

³¹ See, e.g., Jacob Wonsover, Exchange Act Rel. No. 41123 (Mar.1, 1999), 69 SEC Docket 694, 701, pet. denied, 205 F.3d 408 (D.C. Cir. 2000); Michael A. Niebuhr, 52 S.E.C. 546, 549 (1995).

³² 15 U.S.C. § 77e(a).

³³15 U.S.C. § 77e(c).

³⁴ Gearhart & Otis, Inc., 42 S.E.C. 1, 4-5 n.3 (1964) (citing SEC v. Ralston Purina Co., 346 U.S. 119 (1953)), aff'd, 348 F.2d 798 (D.C. Cir. 1965).

³⁵ V.F. Minton Securities, Inc., 51 S.E.C. 346, 352 (1993) (and authority there cited), aff'd, 18 F.3d 937 (5th Cir. 1994) (Table).

³⁶ "Preliminary Note 2" to Regulation S specifies that the provisions of Regulation S do not apply to sales of securities that are part of a plan or scheme to evade the registration requirements, even if the sales technically are in compliance with Regulation S. 17 C.F.R. §§ 230.901 (Preliminary Note 2). We reiterated Regulation S's unavailability in connection with schemes to evade registration.

³⁷ Problematic Practices Under Regulation S, Securities Act Rel. No. 7190 (Jun. 27, 1995), 59 SEC Docket 1998.

³⁸ General Instruction A.1.(a) to Form S-8.

³⁹ Steven M. Scarano, Securities Act Rel. No. 7572 (Sep. 9, 1998), 67 SEC Docket 2794 (settled order).

⁴⁰ DACO had previously reported using a calendar year reporting period.

⁴¹ Having found significant violations of the antifraud, registration, and recordkeeping provisions of the federal securities laws, we have determined not to reach the additional charges of beneficial ownership reporting violations.

⁴² See, e.g. Canady, 69 SEC Docket at 1480-81; compare Kenneth R. Ward, Securities Act Rel. No. 8210 (Mar. 19, 2003), 79 SEC Docket 3035, 3055-56 (rejecting credibility findings when weight of the evidence is to the contrary), aff'd, 2003 WL 22213940 (5th Cir.) (unpublished disposition).

⁴³ See note 7 and accompanying text supra.

⁴⁴ This is the rule followed by the federal courts. See SEC v. Antar, 15 F. Supp.2d 477, 498 n.15 (D. N.J. 1998), and Zenith Radio Corp. v. Matsushita Elec. Ind. Co., Ltd., 513 F. Supp. 1100, 1135 (E.D. Pa. 1981) aff'd in part and rev'd in part on other grounds, 723 F.2d 238 (3d Cir. 1983), rev'd on other grounds, 475 U.S. 574 (1986).

⁴⁵ KPMG Peat Marwick LLP, Exchange Act Rel. No. 43862 (Jan. 19, 2001), 74 SEC Docket 384, 436, pet. denied, 2002 U.S. App. LEXIS 9119 (D.C. Cir. May 14, 2002).

⁴⁶ Id.

⁴⁷ Id. The traditional factors considered in determining appropriate sanctions in the public interest are identified in Steadman v. SEC, 603 F.2d 1126, 1140 (5th Cir. 1979), aff'd on other grounds, 450 U.S. 91 (1981).

⁴⁸ Exchange Act § 21B(a)(1) and (2), 15 U.S.C. § 78u-2(a)(1) and (2). Willfullness is established here. A "willfulviolation of the securities laws . . . means merely the intentional commission of an act which constitutes the violation and does not require that the actor "'also be aware that he is violating one of the Rules or Acts.'" Wonsover v. SEC, 205 F.3d 408, 414 (quoting Gearhart & Otis, Inc. v. SEC, 348 F.2d 798, 803 (D.C. Cir. 1965)). See also V.F. Minton Securities, Inc., 51 S.E.C. 346, 352 (1993), aff'd, 18 F.3d 937 (5th Cir. 1994) (Table) ("To have committed a 'willful' violation, a respondent need only have intentionally committed the act which constitutes the violation.").

⁴⁹ A security is excluded from the definition of "penny stock" if its market price is $5.00 or more per share. See Rule 3a51-1(d). Alternatively, if an issuer has been in continuous operation for more than three years and has net tangible assets in excess of $2 million, the issuer's stock is excluded from the definition of penny stock by Rule 3a51-1(g)(1). Current audited financial statements must demonstrate compliance with this minimum asset requirement. See Rule 3a51-1(g)(3)(1).

DACO's common stock traded at less than $5.00 per share throughout the period at issue, except for a period of a few weeks in July and August 1995. At the time Robert Weeks became involved with DACO, DACO's only tangible asset was the Pioche tailings pile. As concluded, supra, although DACO valued the tailings pile at $4.3 million, the tailings were worth no more than $1.6 million and Robert Weeks could not have relied on the accuracy of DACO's valuation. Moreover, as the law judge found, there was an irregularity on the face of DACO's "audited" financial statements for the fiscal year ended September 30 1995, which "precluded anyone from relying on these financial statements": the independent auditor's certification letter was dated July 5, 1995, an obvious impossibility for an issuer with more than two months still remaining in its fiscal year. Based on the foregoing, we conclude, as did the law judge, that DACO's stock was a penny stock throughout the relevant period, except for those days between July 7 1995 and August 22, 1995, when it traded at or above $5.00 per share.

⁵⁰ See supra note 48.

⁵¹ We have considered all of the parties' contentions. We have rejected or sustained them to the extent that they are inconsistent or in accord with the views expressed in this opinion.