UNITED STATES OF AMERICA Before the SECURITIES AND EXCHANGE COMMISSION SECURITIES EXCHANGE ACT OF 1934 Release No. 37111 / April 12, 1996 ADMINISTRATIVE PROCEEDING File No. 3-8931 --------------------------------- : In the Matter of : : ORDER MAKING FINDINGS P. MICHAEL GOODMAN, : AND IMPOSING REMEDIAL : SANCTIONS Respondent. : : -------------------------------- I In this public administrative proceeding ordered pursuant to Sections 15(b)(6) and 19(h) of the Securities Exchange Act of 1934 ("Exchange Act"), Respondent P. Michael Goodman ("Goodman") has submitted an Offer of Settlement, which the Commission has determined to accept.1 Solely for the purpose of these proceedings and any other proceedings brought by or on behalf of the Commission or in which the Commission is a party, and without admitting or denying the findings contained in this Order, except for the Commission's jurisdiction with respect to the matters set forth in this Order and those facts which are set forth in paragraphs II.1. and II.2. below, which he admits, Goodman consents to the entry of this Order. II On the basis of this Order, the Order Instituting Public Administrative Proceedings in this matter and the Offer of Settlement submitted by Goodman, the Commission finds2 that: 1. On September 27, 1994, the Commission filed an action against Goodman and others captioned Securities and Exchange Commission v. Michael J. Randy, et al, Civil Action No. 94 C 5902 in the United States District Court for the Northern District of Illinois, Eastern Division. On September 15, 1995, a 1 The Order Instituting Proceedings in this matter was issued on January 18, 1996. Exchange Act Release No. 36736 (Jan. 18, 1996). 2 The findings herein are made pursuant to Goodman's offer and are not binding on any other person or entity named as a respondent in this or any other proceeding. ==========================================START OF PAGE 2====== Final Judgment of Permanent Injunction was entered against Goodman, by default, permanently enjoining him from, directly or indirectly, violating Sections 5(a), 5(c), 17(a)(1), 17(a)(2) and 17(a)(3) of the Securities Act of 1933 ("Securities Act"), Sections 10(b) and 15(a)(1) of the Exchange Act and Rule 10b-5 promulgated thereunder. 2. On November 30, 1993, Goodman was convicted in the Superior Court of the State of California for the County of Merced of fraud based upon the same conduct alleged by the Commission in its complaint, and on December 29, 1993, he was sentenced to five years and eight months imprisonment. California v. Goodman, No. 17691 (Cal. Super. Ct.). 3. From at least July 1991 to November 1992, Goodman willfully violated Section 17(a) of the Securities Act in that, in the offer or sale of securities, by the use of the means or instruments of transportation or communication in interstate commerce or by the use of the mails, directly or indirectly, he employed devices, schemes or artifices to defraud; obtained money or property by means of untrue statements of material facts or omitted to state material facts necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading; or engaged in transactions, practices, or courses of business which operated or would operate as a fraud or deceit upon the purchaser. As part of this conduct, Goodman and his agents, in the offer and sale of Canadian Trade Bank, Ltd. ("CTB") certificates of deposit ("CDs"), misrepresented material facts and omitted to state material facts to investors concerning the legitimacy of CTB, the safety of the investment and the use of proceeds. Specifically, Goodman and his agents misrepresented to investors that the CDs were insured by the Bank of London and various insurance companies, were 100% safe and were guaranteed and that CTB invested depositor funds in foreign government securities. Furthermore, Goodman and his agents failed to inform investors that CTB was not a bank and was not legally licensed as a bank by any governmental agency, that Randy performed substantially all activities relating to CTB at his offices in Illinois and that Goodman received 10% commissions for selling the CDs. Goodman and his agents sold over $4.9 million worth of the CTB CDs to at least 75 investors from which Goodman personally received over $240,000 in commissions. 4. From at least July 1991 to November 1992, Goodman willfully violated Section 10(b) of the Exchange Act and Rule 10b-5 thereunder in that, directly or indirectly, by the use of the means or instrumentalities of interstate commerce, or of the mails, in connection with the purchase or sale of securities, he employed devices, schemes or artifices to defraud; made untrue statements of material facts or omitted to state material facts ==========================================START OF PAGE 3====== necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading; or engaged in acts, practices or courses of business which operated or would operate as a fraud or deceit. As part of this conduct, Goodman engaged in the activities described in paragraph II.3. above. 5. From at least July 1991 to November 1992, Goodman willfully violated Section 15(a) of the Exchange Act in that he made use of the mails or means or instrumentalities of interstate commerce to effect transactions in or induced the purchase of securities without being registered as a broker or dealer in accordance with Section 15(b) of the Exchange Act. As part of this conduct, Goodman effected transactions in and induced the purchase of CTB CDs without being registered as a broker or dealer in accordance with Section 15(b) of the Exchange Act. 6. From at least July 1991 to November 1992, Goodman willfully violated Section 5(a) of the Securities Act in that, directly or indirectly, he made use of the means or instruments of transportation or communication in interstate commerce or of the mails, through the use or medium of a prospectus or otherwise, to sell securities or carried or caused to be carried through the mails or interstate commerce, by the means or instruments of transportation, securities, for the purpose of sale or delivery after sale, without a registration statement being in effect with respect to such securities or while no exemption from registration was applicable. As part of this conduct, Goodman sold CTB CDs to investors without a registration statement being in effect with respect to such securities and while no exemption from registration was applicable. 7. From at least July 1991 to November 1992, Goodman willfully violated Section 5(c) of the Securities Act in that, directly or indirectly, he made use of the means or instruments of transportation or communication in interstate commerce or of the mails to offer to sell, through the use of a prospectus or otherwise, securities, without a registration statement being filed with respect to such securities and while no exemption from registration was applicable. As part of this conduct, Goodman offered to sell CTB CDs without a registration statement being filed with respect to such securities and while no exemption from registration was applicable. ==========================================START OF PAGE 4====== III In view of the foregoing, the Commission finds that it is in the public interest to impose the sanction specified in the Offer of Settlement. Accordingly, IT IS HEREBY ORDERED THAT: Respondent Goodman be, and hereby is, barred from association with any broker, dealer, investment company, investment adviser, or municipal securities dealer. For the Commission, by its Secretary, pursuant to delegated authority, Jonathan G. Katz Secretary