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ENFORCEMENT PROCEEDINGSIn the Matter of iWorld Projects & Systems, Inc.On July 2, the Commission issued an Order Instituting Public Administrative Proceedings and Notice of Hearing Pursuant to Section 12(j) of the Securities Exchange Act of 1934 against iWorld Projects & Systems, Inc., a now-defunct Nevada business development company. In the Order, the Division of Enforcement alleges that iWorld has failed to file certain reports required under the Exchange Act and has failed to comply with Section 13(a) of the Exchange Act and Rules 13a-1 and 13a-13 thereunder. A hearing will be scheduled before an administrative law judge to: (1) determine whether the allegations contained in the Order are true; (2) provide iWorld an opportunity to dispute the allegations; and (3) to determine whether to suspend for a period not exceeding 12 months or to revoke the registration of each class of iWorld's securities pursuant to Section 12 of the Exchange Act. The Order requires the Administrative Law Judge to issue an initial decision no later than 120 days from the date of service of the Order, pursuant to Rule 360(a)(2) of the Commission's Rules of Practice. (Rels. 34-60237A; File No. 3-13536) In the Matter of David Lloyd PellsOn July 2, the Commission issued an Order Instituting Cease-and-Desist Proceedings Pursuant to Section 21C of the Securities Exchange Act of 1934 and Section 9(f) of the Investment Company Act of 1940, Making Findings and Imposing a Cease-and-Desist Order (the Order) against David Lloyd Pells, a Dallas, Texas resident, and former COO of iWorld Projects & Systems, Inc., a now-defunct Nevada business development company. The Commission finds that Pells caused iWorld's violations of Sections 13(a), 13(b)(2)(A) and 13(b)(2)(B) of the Exchange Act and Rules 13a-1, 13a-13 and 12b-20 thereunder, and Section 31(a) of the Investment Company Act and Rule 31a-1 thereunder, by causing iWorld's reporting of its portfolio companies at an inflated value, iWorld's failure to file quarterly and annual reports, its failure to make and keep requisite books and records, and to maintain a system of sufficient internal accounting controls. Based on the above, the Order requires Pells to cease and desist from causing any violations and any future violations of Sections 13(a), 13(b)(2)(A) and 13(b)(2)(B) of the Exchange Act, and Rules 13a-1, 13a-13 and 12b-20 thereunder, and Section 31(a) of the Investment Company Act and Rule 31a-1 thereunder. Pells has consented to the issuance of the Order without admitting or denying any of the Order's findings. (Rels. 34-60238; IC-28809; AAE Rel. 3005; File No. 3-13537) In the Matter of Conversion Solutions Holdings Corp.On July 2, the Commission issued an Order Instituting Administrative Proceedings and Notice of Hearing Pursuant to Section 12(j) of the Securities Exchange Act of 1934 (Order). In this Order, the Division of Enforcement (Division) alleges that Conversion Solutions Holdings Corp. is delinquent in its required periodic filings with the Commission. In this proceeding, instituted pursuant to Exchange Act Section 12(j), a hearing will be scheduled before an Administrative Law Judge. At the hearing, the Administrative Law Judge will hear evidence from the Division and the Respondent to determine whether the allegations of the Division contained in the Order, which the Division alleges constitute failures to comply with Exchange Act Section 13(a) and Rules 12b-25, 13a-1 and 13a-13 thereunder, are true. The Administrative Law Judge in the proceeding will then determine whether the registration pursuant to Exchange Act Section 12 of each class of the securities of Respondent should be revoked or suspended for a period not exceeding twelve months. The Commission ordered that the Administrative Law Judge in this proceeding issue an initial decision not later than 120 days from the date of service of the order instituting proceedings. (Rel. 34-60240; File No. 3-13538) In the Matter of Christopher M. KunkelOn July 2, the Commission issued an Order Instituting Administrative Proceedings Pursuant to Rule 102(e) of the Commission's Rules of Practice, Making Findings and Imposing Remedial Sanctions (Order) against Christopher M. Kunkel. The Order finds that on June 10, 2009, Kunkel was permanently enjoined from future violations of Sections 5(a), 5(c) and 17(a) of the Securities Act of 1933 (Securities Act) and Section 10(b) of the Securities Exchange Act of 1934 (Exchange Act) and Rule 10b-5 thereunder, in the civil action entitled SEC v. Christopher M. Kunkel, Civil Action Number 1:09-cv-1481 in the United States District Court for the Northern District of Georgia. The Order finds that the Commission's complaint alleged, among other things, that Pinnacle engaged in a fraudulent and unregistered offering of securities in the form of real estate development partnerships through a nationwide advertising campaign. The complaint alleged that, beginning in October 2005 and continuing until September 2006, more than 2,000 investors throughout the United States invested approximately $62 million in the Pinnacle partnerships. According to the complaint, Pinnacle offered its investments through an extensive national advertising campaign offering a 25% return in 60 days through investments in Atlanta real estate. The complaint alleged that Kunkel knew, or was reckless in not knowing, that the representations he made to investors that Pinnacle had a sound business plan and was making timely payments to investors were false. Based on the above, the Order suspends Kunkel from appearing or practicing before the Commission as an attorney. Christopher M. Kunkel consented to the issuance of the Order without admitting or denying any of the findings in the Order, except with respect to the entry of the injunction, which he admitted. (Rel. 34-60241; File No. 3-13539) In the Matter of Vernon Jeffrey HarrellOn July 2, the Commission issued an Order Instituting Public Administrative Proceedings and Imposing Temporary Suspension Pursuant to Rule 102(e)(3) of the Commission's Rules of Practice (Order) against Vernon Jeffrey Harrell. The Order finds that Harrell served as the Chairman of the Board, President, CEO, Secretary, and Principal Financial and Accounting Officer for Video Without Boundaries, Inc. (Video), whose common stock is registered with the Commission pursuant to Section 12(g) of the Securities Exchange Act of 1934 (Exchange Act). The Order further finds that on April 6, 2009, the U.S. District Court for the Southern District of Florida entered by consent a judgment against Harrell, permanently enjoining him from future violations of Sections 5(a) and 5(c) of the Securities Act of 1933 (Securities Act), and Sections 10(b), 13(b)(5), 13(d), and 16(a) of the Exchange Act and Rules 10b-5, 13a-14, 13b2-1, 13d-1, 13d-2, and 16a-3 thereunder, in the civil action entitled SEC v. Video Without Boundaries, Inc., et al., Civil Action Number 08-61517-CIV-GOLD/McALILY. The Commission's complaint alleged that, from at least April 2003 through November 2005, Video, at the direction of Harrell, filed annual and quarterly reports with the Commission that, among other things, materially overstated the company's revenues and assets and understated its net losses. The complaint further alleged that Harrell falsely certified numerous annual and quarterly reports Video filed with the commission that he knew, or was severely reckless in not knowing, contained material misstatements and omissions. Moreover, according to the complaint, from November 2003 to September 2006, Harrell, along with Video's largest shareholder and creditor, issued false and misleading press releases announcing its acquisition of another company, the availability of large credit facilities, and that it was operating an international subsidiary. Based on the above, the Order temporarily suspends Harrell from appearing or practicing before the Commission. The Order also provides that if Harrell does not file a petition within 30 days of institution of the Order to lift the suspension, it will become permanent. (Rel. 34-60242; AAER-3006; File No. 3-13540) In the Matter of Craig Alan RileyOn July 6, the Commission issued an Order Instituting Administrative Proceedings Pursuant to Section 15(b)(6) of the Securities Exchange Act of 1934 and Section 203(f) of the Investment Advisers Act of 1940 (Order) against Craig Alan Riley. The Order finds that on February 23, 2009, Riley pleaded guilty to one count of mail fraud in violation of Title 18, Section 1341 of the United States Code before the United States District Court for the Central District of California in United States v. Craig Alan Riley, Case No. SA CR 09-0001. The Order also found that as part of his criminal plea agreement, Riley acknowledged and agreed to pay restitution in the amount of $3,044,384.59. Based on the above, the Order bars Riley from association with any broker, dealer or investment adviser. Riley consented to the issuance of the Order without admitting or denying any of the findings in the Order; however, Riley did admit to the entry of his plea agreement. (Rels. 34-60244; IA-2899; File No. 3-13541) In the Matter of Danny E. LandauOn July 6, the Commission issued an Order Instituting Administrative and Cease-and-Desist Proceedings, Pursuant to Section 8A of the Securities Act of 1933 and Section 15(b) of the Securities Exchange Act of 1934, Making Findings, and Imposing Remedial Sanctions and a Cease-and-Desist Order as to Danny E. Landau (Order). The Order finds that, from October 2002 through August 2005, Landau willfully violated Sections 5(a) and 5(c) of the Securities Act of 1933 (Securities Act) by selling billions of shares in unregistered offerings under purported employee stock option programs implemented by thirty-five microcap issuers. According to the Order, Landau, as a registered representative of broker-dealer Finance 500, Inc. located in Irvine, California, administered the brokerage aspects of the employee stock option programs that functioned as public distributions of securities. The programs were implemented in a way that ensured that the options were exercised, and the underlying shares simultaneously sold, to the public at or near the time the options were granted. This near-immediate sale of shares resulted in millions and, in some cases, billions of shares in each issuer's stock being sold to the public, severely diluting the ownership interests of existing shareholders. By using their employees as conduits, the issuers, who received at least 85% of the shares' sales proceeds, raised millions of dollars of capital through the programs. The issuers, however, did not comply with the registration requirements of the securities laws because they improperly registered the shares underlying the options on Form S-8 registration statements. In administering the brokerage aspects of the employee stock option programs, Landau encountered red flags indicating that the issuers' employees were underwriters to unregistered offerings, which should have prompted him to inquire further as to the true nature of the sales. Based on the above, the Order suspends Landau from associating with any broker or dealer for a period of six months, orders him to cease and desist from committing or causing violations of Sections 5(a) and 5(c) of the Securities Act, orders him to pay disgorgement of $2,972,367 and prejudgment interest of $966,541 and, based upon his financial condition, waives payment of all disgorgement and prejudgment interest but $275,000, which will be paid over three years. Landau consented to the issuance of the Order without admitting or denying any of the Commission's findings. (Rels. 33-9048; 34-60245; File No. 3-13542) SEC Charges Geotec, Inc. and Three Individuals in Connection with False Filings and Accounting ImproprietiesThe Securities and Exchange Commission filed a complaint today against Geotec, Inc. a/k/a Geotec Thermal Generators, Inc., its former CEO William Richard Lueck, its current CEO Bradley T. Ray and current CFO Stephen D. Chanslor in the United States District Court for the Southern District of Florida charging them with fraud and reporting, books and records, and internal controls violations arising from two distinct securities schemes. The SEC's complaint alleges that in the first scheme, Lueck directed Geotec to issue 100,000 shares of company stock to a purported stock promoter. The complaint alleges that Geotec and Lueck falsely stated in an April 2005 SEC filing that the stock was issued to a company employee. The SEC's complaint further alleges that in a second scheme, Geotec, Lueck, Ray and Chanslor made false statements in one or more Geotec 2005 SEC filings concerning the company's acquisition of millions of tons of coal. Specifically, the complaint alleges that Geotec falsely stated that another company had obtained a permit for the coal Geotec acquired and failed to disclose that the coal was under a state receivership. The complaint also alleges that Geotec improperly reported the coal as inventory valued at $18.9 million, improperly reported $4.6 million in revenue from a sale of a portion of the coal, and failed to have its quarterly reports filed with the SEC reviewed by an independent accountant. The SEC's complaint charges Geotec with violating Sections 10(b), 13(a), 13(b)(2)(A) and 13(b)(2)(B) of the Securities Exchange Act of 1934 ("Exchange Act") and Rules 10b-5, 12b-11, 12b-20, 13a-1, 13a-11 and 13a-13 thereunder, and charges Lueck, Ray and Chanslor with violating Sections 10(b) and 13(b)(5) of the Exchange Act and Rules 10b-5, 13b2-1 and 13a-14 thereunder. The complaint further charges Lueck, Ray and Chanslor with aiding and abetting Geotec's violations of Sections 13(a), 13(b)(2)(A) and 13(b)(2)(B) of the Exchange Act and Rule 12b-20 thereunder. Additionally, the complaint charges Lueck with aiding and abetting Geotec's violations of Rules 13a-1 and 13a-11 of the Exchange Act; Ray with aiding and abetting Geotec's violations of Rules 13a-1 and 13a-13 of the Exchange Act; and Chanslor with aiding and abetting Geotec's violations of Rule 13a-13 of the Exchange Act. The Commission seeks permanent injunctive relief against all defendants, and the imposition of civil money penalties and an officer and director bar against Lueck, Ray and Chanslor. [SEC v. Geotec, Inc. a/k/a Geotec Thermal Generators, Inc., Bradley T. Ray, William Richard Lueck, and Stephen D. Chanslor, Case No. 09-80986 CIV-COHN (S.D.Fla.)] (LR-21116) SELF-REGULATORY ORGANIZATIONSApproval of Proposed Rule ChangeThe Commission approved a proposed rule change (SR-NYSE-2006-92) submitted by New York Stock Exchange to amend NYSE Rule 452 and corresponding Listed Company Manual Section 402.08 to eliminate broker discretionary voting for the election of directors, except for companies registered under the Investment Company Act , and to codify two previously published interpretations that do not permit broker discretionary voting for material amendments to investment advisory contracts with an investment company. Publication is expected in the Federal Register during the week of July 6. (Rel. 34-60215) SECURITIES ACT REGISTRATIONSRECENT 8K FILINGS
http://www.sec.gov/news/digest/2009/dig070609.htm
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