U.S. SECURITIES AND EXCHANGE COMMISSION

Litigation Release No. 16529 \ April 28, 2000

SECURITIES AND EXCHANGE COMMISSION v. SAM D. SCHWARTZ, et al., Civil Action No. 98-6142 VAP (C.D. Cal.)

INJUNCTION AND FINES ORDERED AGAINST FORMER INCOMNET CHAIRMAN AND CEO SAM D. SCHWARTZ

United States District Judge Virginia A. Phillips issued a judgment on April 24, 2000, against Sam D. Schwartz, former chairman of the board and chief executive officer of Incomnet, Inc. The judgment enjoins Schwartz from future violations of the antifraud and reporting provisions of the federal securities laws and orders him to pay a civil penalty of $85,000. The judgment was entered as part of a settlement between Schwartz and the Commission. Schwartz consented to the judgment, but neither admitted nor denied the allegations made by the Commission.

The Commission alleged in its amended complaint that Schwartz, a resident of Los Angeles, bought over a million shares of Incomnet common stock in at least 48 transactions and sold over 900,000 shares in at least 28 transactions during a period from June 1994 through July 1995. On only one occasion did Schwartz timely file reports to disclose his trading. In addition, Schwartz signed an Incomnet 8-K report that contained false or misleading statements concerning Schwartz' disclosure of trading to Incomnet's board of directors and the board's authorization of that trading. Schwartz also approved press releases that contained misleading information concerning his trading.

In its complaint, the Commission alleged that Schwartz violated Sections 10(b), 13(a), 13(d) and 20(d) of the Securities Exchange Act of 1934 and Commission rules 10b-5, 12b-20, 13a-11, 13a-13, and 13d-1.