Stratcomm Media Ltd - Street Wire
SEC settles with four Stratcomm defendants
Stratcomm Media Ltd
SMMM
Shares issued 7,952,200
Fri 14 Apr 2000
Street Wire
by Brent Mudry
The United States Securities and Exchange Commission has reached a settlement with a former consultant to Stratcomm Media and its subsidiary Corporate Relations Group as part of a continuing touting and securities fraud prosecution against Stratcomm, CRG, Stratcomm chief executive Roberto Veitia and a number of associates of the Florida-based investor relations group.
The SEC claims the Stratcomm defendants generated $20-million in illicit profits by secretly selling shares of client companies while they were touting the stocks.
In a consent settlement released Friday, Jerry Berman, who sold unregistered shares and acted as a broker without a licence, in violation of sections of the Securities Act of 1933 and the Securities Exchange Act of 1934, agreed to cease and desist from future securities violations. The commission waived payment of disgorgement of $50,000 and elected not to impose a civil fine, based on Mr. Berman's demonstrated inability to pay.
Stratcomm was delisted in October of 1998 from the Vancouver Stock Exchange, the exchange formerly known as the Scam Capital of the World, and now trades on the OTC Bulletin Board.
Stratcomm's VSE clients included Giovanni Camporese's A&A Foods, the Kalpakian's AG Armeno Mines, Dimples Group and Seven Mile High Group.
Mr. Berman also served as a finder for VSE-listed Luxor Industrial in 1993, in a $100,000 private placement. His Luxor dealings were not the subject of regulatory proceedings.
After an administrative hearing, the SEC found that Mr. Berman sold more than 300,000 shares of Stratcomm to the public, in violation of registration provisions of federal securities laws, earning commissions from Stratcomm and CRG of more than $50,000.
The SEC notes that Stratcomm had not filed a registration statement concerning the stock sales, and there was no other registration statement or exemption in effect.
The Berman settlement is the third in recent months in the Stratcomm case.
The SEC recently settled with Jack Rodriguez Jr., a former employee of Corporate Relations Group, Ammonia Hold, and Michael Parnell, an insider of the CRG client.
On Feb. 23, the SEC disclosed a consent settlement with Mr. Rodriguez, in which the securities violator was required to pay disgorgement of $19,432 and refrain from future securities violations. Based on Mr. Rodriguez's demonstrated claim of his inability to pay, the disgorgement was waived and a civil fine was not sought.
The SEC alleges that in late 1994 and early 1995, Mr. Rodriguez, as part of the promotion of one of Corporate Relations' clients, paid registered representatives to solicit their clients to purchase the stock. "Rodriguez knew, or was reckless in not knowing, that he was part of CRG's overall fraudulent scheme concerning this stock," states the SEC.
The regulator notes that Mr. Rodriguez violated the antifraud provisions of federal securities laws. The commission also alleges that Mr. Rodriguez violated registration provisions and the broker-dealer registration requirement of securities laws by selling unregistered shares of Stratcomm and collecting commissions based on these sales.
The SEC disclosed on Jan. 21 that former Stratcomm group client Ammonia Hold and its major shareholder and one-time president Mr. Parnell agreed to refrain from future securities violations. Mr. Parnell was fined $25,000 by
the regulator.
In a final judgment entered Dec. 28 in the U.S. District Court for the Middle District of Florida, the SEC alleged that Ammonia Hold, a Little Rock, Ark., company that manufactures odour-eliminating products for consumer and industrial markets, and Mr. Parnell violated registration requirements in the issuance and sale of Ammonia Hold shares to Corporate Relations Group.
The SEC also charged Ammonia Hold and Mr. Parnell with fraudulently reporting the proceeds of the shares sold to CRG through co-defendant Fondo de Adquisiciones E Inversiones Internacionales XL SA, as licensing revenues. The regulator notes that proceeds of the stock sales should have been posted as capital infusions in regulatory filings, a press release and on Ammonia Hold's Web site.
The SEC's prosecution of other Stratcomm defendants, including Mr. Veitia, continues.
Mr. Veitia was quite upbeat in September when the SEC launched its prosecution. "We applaud the SEC's efforts to clean up the seamier side of the investor relations industry; however, in this case, we believe they are aimed at the wrong target," stated Mr. Veitia.
"Stratcomm Media discloses the nature and amount of compensation we receive from clients, and we work hard to make it easily accessible for readers of our publications," stated Mr. Veitia. The Stratcomm CEO noted that his company adopted "new policies" for disclosing compensation from public companies in 1997.
Stratcomm's subsidiaries include co-defendant Gulf/Atlantic Publishing, investor relations firm Rainbow Communications, Arrow Marketing, Applied List Management and Altamonte Printing.
Gulf/Atlantic's publications include MoneyWorld, a monthly magazine, Financial Sentinel, a tabloid, and investor newsletters such as Rumor Mill, Confidential Fax Alert and MoneyWorld Insider.
(Readers wishing further details on Stratcomm may refer to bulletins under previous Canadian symbols SML and SMMM.)
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