U.S. SECURITIES AND EXCHANGE COMMISSION

Litigation Release No. 20463 / February 21, 2008

Securities and Exchange Commission v. Clean Care Technologies, Inc., et al., 08 CIV 01719 [HB] (S.D.N.Y.)

SEC Announces Action to Recover Fraudulently Obtained Funds Raised via Sham Securities Offering

On February 21, 2008 the Securities and Exchange Commission filed an action against Clean Care Technologies, Inc. ("CCT"), its former president and principal owner, Edward Klein, and two salespeople, Al Nazon and Anil Varughese, who orchestrated a fraudulent unregistered offering of CCT securities, through which they raised approximately $2.2 million from at least 26 unsuspecting investors.

CCT purported to be the exclusive North American Distributor of a self-cleaning toilet seat. In order to attract investors, Defendants created phony press releases that boasted of sales that never in fact occurred, and published an offering memorandum that misrepresented, among other critical facts, that CCT owned the rights to the product, which in fact it did not. Defendants also failed to disclose to investors that they had established a separate Clean Care entity, Clean Care Systems, LLC ("Systems"), through which the Company raised additional funds by representing that Systems was the exclusive North American distributor of the very same self-cleaning toilet seat. Defendants also did not tell investors in CCT or Systems that their funds were commingled to suit the defendants' needs. Nazon and Varughese were not registered as or associated with a registered broker or dealer but nevertheless engaged in cold-calling to sell Clean Care Securities to the public and were paid exorbitant undisclosed commissions based on their success in selling Clean Care Securities.

The Commission's complaint, filed in the Southern District of New York, charges that the defendants violated 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 by conducting an unregistered offering of securities and making material misrepresentations and omissions to investors. The complaint also charges defendants Nazon and Varughese, who were not registered as brokers or dealers or associated with a registered broker or dealer, with violating Section 15(a) of the Exchange Act by acting as brokers in connection with the sale of Clean Care Securities and receiving transaction based compensation in connection with those sales. The complaint charges Klein with aiding and abetting Nazon and Varughese's violations of Section 15(a) of the Exchange Act. The Commission's complaint seeks a final judgment assessing civil penalties, permanently enjoining defendants from further securities law violations and trading of penny stocks, and ordering the defendants to disgorge their ill-gotten gains. The complaint also names Systems as a relief defendant to potentially permit recovery of any assets that may rightfully belong to investors in Clean Care securities.

http://www.sec.gov/litigation/litreleases/2008/lr20463.htm