Douglas Norman
LITIGATION RELEASE NO. 17993 / February 21, 2003
SEC v. DOUGLAS NORMAN, Civil Action No. 03-CV-1159 (NB) (S.D.N.Y. February 21, 2003)
SEC FILES FRAUD ACTION AGAINST DOUGLAS NORMAN,
FOUNDER OF WORLD TRANSPORT AUTHORITY, INC.
The Securities and Exchange Commission today filed suit in the United States District Court for the Southern District of New York against Douglas Norman, the self-described founder and de facto chief executive of World Transport Authority, Inc. ("WTA"). According to the Complaint, WTA, a Canadian corporation headquartered in the San Diego area, claims to have designed a revolutionary car, called the WorldStar, and a unique system for manufacturing the car, called a "micro-factory," which can be set up in 90 days and thereafter produce a single car per day. The Complaint alleges that beginning no later than calendar year 2000, and continuing into 2001, Norman knew of and approved materially false or misleading press releases issued by WTA, made or knowingly permitted the posting of materially false or misleading statements on the Internet, failed to file required reports concerning his beneficial ownership and holdings of WTA stock, and permitted WTA to file materially false or misleading quarterly and annual reports with the Commission. Also, the Complaint alleges that during the period when the false or misleading statements were being made, Norman sold, at inflated prices, at least 5.5 million shares of WTA stock without registration, realizing at least $1.8 million from the sales.
The Complaint alleges, among other things, that in the year 2000 and into 2001, WTA issued numerous materially false or misleading press releases and other statements concerning licenses for production of the WorldStar in underdeveloped countries and regions, and revenue expected from the license deals. In September 2000, for example, WTA announced the issuance of the license for China for $40 million, and projected revenues from the license over three years at $900 million. The Complaint alleges that Norman knew, or was reckless in not knowing, that there was no reasonable basis for the revenue projection, and that the statement concerning the license price was also materially false or misleading.
The U.S. Attorney's Office for the Southern District of New York, on the same day, announced that an indictment had been handed up against Norman charging one count of securities fraud.
In its Complaint, the Commission requests that the Court issue a final judgment of permanent injunction and other relief against Norman based upon violations he committed, or for which he is liable as a controlling person of WTA, of Sections 5(a), 5(c), and 17(a) of the Securities Act of 1933 ("Securities Act"), Sections 10(b), 13(a), 13(d), and 16(a) of the Securities Exchange Act of 1934 ("Exchange Act"), and Exchange Act Rules 10b-5, 12b-20, 13a-1, 13a-13, 13d-1, and 16a-3. The Commission also is seeking an order that Norman be prohibited from acting as an officer or director of a public company and from participating in any offering of penny stock, that he provide an accounting, that he disgorge, with prejudgment interest, certain trading profits and other remuneration, and that he pay civil penalties under the Securities Act and the Exchange Act.
The Commission's investigation in this matter is continuing.
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The Commission is cooperating with a separate investigation in this matter carried on by the U.S. Attorney's Office for the Southern District of New York.
The Commission staff acknowledges the assistance of NASD in connection with this matter.
For tips on how to avoid Internet "pump-and-dump" stock manipulation schemes, visit http://www.sec.gov/investor/online/pump.htm.
For more information about Internet fraud, visit http://www.sec.gov/divisions/enforce/internetenforce.htm.
To report suspicious activity involving possible Internet fraud, visit http://www.sec.gov/complaint.shtml.
