UNITED STATES OF AMERICA Before The SECURITIES AND EXCHANGE COMMISSION Securities Exchange Act of 1934 Release No. 37108 / April 12, 1996 Administrative Proceeding File No. 3-8985 -------------------------- : ORDER INSTITUTING PROCEEDINGS In the Matter of : PURSUANT TO SECTION 15(b)(6)(A) : OF THE SECURITIES EXCHANGE ACT : OF 1934, AND RULE 102(e) OF CARL E. LOVELL and : THE COMMISSION'S RULES OF DANNA WALE LOVELL : PRACTICE, MAKING FINDINGS AND : IMPOSING REMEDIAL SANCTIONS -------------------------- I. The Securities and Exchange Commission ("Commission") deems it appropriate and in the public interest that public administrative proceedings be instituted against Carl E. Lovell ("Lovell") and Danna Wale Lovell ("Wale"), Respondents. The Commission further deems it appropriate and in the public interest to institute an administrative proceeding against Lovell pursuant to Paragraph (3) of Rule 102(e) of the Commission's Rules of Practice [17 C.F.R.  201.102(e)(3)] II. In anticipation of the institution of these proceedings, Respondents have submitted Offers of Settlement ("Offers") to the Commission which the Commission has determined to accept. Solely for the purpose of these proceedings and any other proceedings brought by or on behalf of the Commission or to which the Commission is a party, and without admitting or denying the findings contained herein, except that Respondents admit the jurisdiction of the Commission over them and over the subject matter of these proceedings, and admit the entry of the injunction and the guilty plea set forth in Section III., paragraphs D., E. and F. below, the Respondents by their Offers, consent to the entry of the findings and to the imposition of the remedial sanctions as set forth below.-[1]- ---------FOOTNOTES---------- -[1]- The findings herein are made pursuant to the Respondents' Offers of Settlement and are not binding on any other person or entity named as a respondent in this or any other proceeding. ==========================================START OF PAGE 2====== Accordingly, IT IS ORDERED that administrative proceedings pursuant to Sections 15(b)(6)(A) of the Securities Exchange Act of 1934 ("Exchange Act"), and pursuant to Rule 102(e)(3) of the Commission's Rules of Practice, be, and hereby are, instituted. III. On the basis of this Order Instituting Proceedings Pursuant to Section 15(b)(6)(A) of the Securities Exchange Act of 1934, and Rule 102(e) of the Commission's Rules of Practice, Making Findings and Imposing Remedial Sanctions ("Order"), and the Offers submitted by Respondents, the Commission finds that: A. Lovell is an attorney licensed to practice law in the State of Nevada. B. On February 28, 1996, the Commission filed a Complaint in United States District Court for the District of Nevada seeking injunctive relief, disgorgement and prejudgement interest charging Lovell and Wale with violating Section 10(b) of the Exchange Act and Rule 10b-5 thereunder. C. The Commission's complaint alleged, among other things, that: 1. From in or about 1987 through in or about 1989, Lovell and Wale engaged in the business of creating shell corporations whose securities were sold pursuant to Rule 504. 2. Among the companies Lovell and Wale created were Triste Corporation ("Triste") and Venga, Inc. ("Venga"), both formed in early 1988. Triste was purportedly formed to fund expansion of the business of Southwest Business Institute, a state accredited business school in Nevada. Venga was purportedly formed to market novelty items bearing the logo and name of "Vegas Chips", a local potato chip manufacturing company. In actuality, the companies were spun-off from their original business purpose following each initial public offering thereby creating public shells available for other mergers. ==========================================START OF PAGE 3====== 3. Lovell and Wale conducted controlled initial public offerings and sales of the securities by having all of the shares purchased by a group of investors acting in concert under their instructions. Each company raised approximately $100,000. Part of the proceeds was paid to a corporation controlled by Lovell and Wale and the remainder was given to Southwest Business Schools and Vegas Chips respectively. Each public shell was then spun off from its original merger. 4. Philip Sindler ("Sindler"), a southern California promoter who was looking for public shell corporations to be merged with private companies he was promoting, was introduced to Lovell as a person who could provide him with public shell corporations whose securities he could control. 5. In late 1988, Sindler met with Lovell and Wale. At that meeting Lovell committed that he could provide one hundred percent of the purportedly publicly owned shares of Triste and Venga at prices of three to six cents per share. 6. Lovell told Sindler that all of his controlled shareholders had accounts at the Las Vegas branch office of Fitzgerald-Talman, Inc., a securities firm based in Denver, Colorado. The accounts were maintained by stockbroker Robert Glau ("Glau"). 7. Lovell told Sindler that Glau would deliver all of the stock of Triste and Venga to accounts Sindler controlled at Adams Securities, located in Las Vegas, Nevada, at the prearranged prices agreed to by Lovell and Sindler. 8. Pursuant to this agreement, in November 1988, all of the publicly owned shares of Triste and Venga were "sold" from Lovell's controlled shareholder's accounts at Fitzgerald-Talman, Inc. to Sindler's controlled accounts at Adams Securities at the pre-agreed prices. 9. Sindler then merged Triste and Venga with other corporations. Adams Securities sold the stocks to the public at prices in the $1 to $3 range. D. On January 31, 1996 and February 6, 1996, respectively, Respondents Lovell and Wale, without admitting or denying the allegations in the Complaint, except those allegations as to jurisdiction which they admitted, consented to the entry of a Final Judgement of Permanent Injunction and Disgorgement ("Final Judgement") which was entered by the United States District Court for the District of Nevada on March 18, 1996. ==========================================START OF PAGE 4====== E. Pursuant to the Final Judgement, Lovell and Wale are permanently enjoined from directly or indirectly violating Section 10(b) of the Exchange Act and Rule 10b-5 thereunder. F. On February 2, 1996, Lovell pleaded guilty in United States District Court for the District of Nevada to having willfully aided and abetted Robert Glau's violations of Sections 15(c)(2)(A) and (D) of the Exchange Act and Rule 15c2-11 thereunder. IV. In view of the foregoing, the Commission deems it appropriate and in the public interest to impose the sanctions specified in the Respondents' Offers of Settlement. Accordingly, IT IS HEREBY ORDERED that: A. Respondents Lovell and Wale be, and hereby are, barred from participating in an offering of any penny stock; and B. Respondent Lovell be, and hereby is, permanently suspended from appearing or practicing before the Commission purusant to Rule 102(e)(3) of the Commission's Rules of Practice, provided, however, that Respondent Lovell may, after a period of five (5) years, reapply to the Commission to have such suspension lifted. By the Commission. Jonathan G. Katz Secretary