800America.com, Inc., et al.
U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 20326 / October 10, 2007
SEC v. 800America.com, Inc., et al., Civil Action No. 02 Civ. 9046 (HB) (S.D.N.Y.)
800America.com Securities Registration Revoked and Final Judgment Entered Against Company
On September 6, 2007, the Securities and Exchange Commission (Commission), pursuant to an Order Instituting Proceedings Making Findings, And Revoking Registration Of Securities Pursuant To Section 12(j) of the Securities Exchange Act Of 1934, ordered that the registration of each class of 800America.com, Inc.'s (800America) securities registered pursuant to Section 12 of the Securities Exchange Act of 1934 (Exchange Act) be revoked. The Order was based in part on the Commission's findings that 800America has failed to comply with Section 13(a) and Rules 13a-1 of the Exchange Act and Rules 13a-13 thereunder while its securities were registered with the Commission in that it has not filed any periodic reports for any fiscal period subsequent to November 25, 2002.
On August 14, 2007, the United States District Court for the Southern District of New York (the Court) entered a Final Consent Judgment in favor of the Commission as to 800America, which permanently enjoined 800America's officers, directors and employees from violating Section 10(b) of the Exchange Act and Rule 10b-5 thereunder; Section 17(a) of the Securities Act of 1933 ("Securities Act"); Sections 5(a) and 5(c) of the Securities Act; and Sections 13(a) and 13(b)(2) of the Exchange Act and Rules 12b-20 and 13a-13 thereunder.
The Commission's Complaint, filed with the Court in November 2002, alleged that defendants Tillie Steeples (Steeples) and David Rabi (Rabi), among other things, falsified virtually all of 800America's reported earnings, expenses and assets and also sold more than one million shares of improperly registered 800America stock. Shortly after the Complaint was filed, the Court granted the Commission's request for a preliminary injunction, asset freeze and appointment of a receiver. In December 2002, a voluntary Chapter 7 petition was filed on behalf of 800America in U.S. Bankruptcy Court (800America's liabilities far exceeded it assets).
The deregistration of 800America securities and the entry of the final judgment against it follow the Court's entry of summary judgment against Steeples on December 8, 2006, which ordered Steeples to disgorge ill-gotten gains in the amount $2,731,760.27, and barred Steeples from serving as an officer or director of a public company. The Court's officer-and-director bar takes effect upon the completion of Steeples' 70 month prison sentence, which was imposed after Steeples pleaded guilty in September 2003 to making false statements to 800America's auditors and to the Commission and conducting a fraudulent S-8 stock offering. Steeples was also sentenced to 24 months supervised release and was ordered to pay restitution of more than $9 million.
Rabi was convicted on all counts relating to the 800America fraud in a trial in 2003, and was sentenced t0 120 months incarceration and ordered to pay restitution of $7 million. Rabi died in 2005 while incarcerated after appealing his conviction; accordingly, his indictment was subsequently dismissed.
For additional information, please see Litigation Release Nos. 17863 (Nov. 25, 2002) and 17835 (Nov. 13, 2002).