UNITED STATES SECURITIES AND EXCHANGE COMMISSION

LITIGATION RELEASE NO. 16961 / April 13, 2001

SECURITIES AND EXCHANGE COMMISSION v. J&K GLOBAL MARKETING CORP. et al., Civil Action No. 01-JLK-0645 (USDC D. Colo.)

The Commission announced today that it filed an action and obtained an emergency restraining order against J&K Global Marketing Corp. and its president, Kenneth R. Weare a/k/a Roy Weaver for operating a fraudulent investment scheme on the Internet. The complaint alleges that since at least November 1999, Weare has been promoting on his website the J&K Global investment program in which investors make an initial investment with expectations of at least a 600 percent yearly rate of return to be generated from "high yield ventures." According to the complaint, J&K Global and Weare made no such investments but used the funds from the over 13,000 investors to pay purported returns to other members and to pay his personal expenses. The temporary restraining order, entered on April 11 by Judge John L. Kane, Jr. enjoins J&K Global and Weare, a Lakewood, Colorado resident, from making false statements, freezes their assets, requires them to account for investor proceeds, and requires the repatriation of assets held outside the United States. The order also freezes the funds of AAA-Auction.com, Inc., a company used by Weare for a previous fraudulent offering.

According to the complaint, from at least November 1999 to the present, J&K Global has offered memberships in an investment program through an Internet website and in postings to Internet bulletin boards. The complaint alleges that J&K Global claims that by making an initial investment of $375, after six months investors will receive $375 a month for six months and have the ability to continue receiving returns the following year with another investment. Additionally according to the complaint, Weare falsely claims he has established a bank in Grenada in which all investors are or will become shareholders. Bank records reveal that J&K Global raised at least $6.4 million. Weare claims that money obtained is invested in high-yield ventures. The Commission alleges that the J&K Global program is a Ponzi scheme in which money from new investors is used to make payments to prior investors. The complaint alleges that no investments were made in high-yield ventures but that Weare used investor money for his personal expenses such as clothing, limousine services and medical expenses.

The complaint further alleged that Weare also fraudulently raised money for AAA-Auction, which operated an Internet auction site in 1998 and 1999. According to the complaint, Weare raised at least $415,000 from 35 AAA-Auction investors by misrepresenting that their money would be used to purchase inventory for AAA-Auction to sell on its website, that AAA-Auction would pay quarterly returns and repay their principal after a year, and that investments would be secured by AAA-Auction's inventory. The complaint alleged that Weare used substantial amounts of investor monies for other purposes, including general business expenses, child support payments and undisclosed sales commissions of up to 40 percent.

The Commission alleged that through their false and misleading statements and omissions, Weare, J&K Global and AAA-Auction violated the antifraud provisions, Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities and Exchange Act of 1934 and Rule 10b-5 thereunder and that Weare and J&K Global violated the securities registration provisions, Section 5(a) and (c) of the Securities Act of 1933. The Commission requested emergency action to prevent the defendants from transferring or liquidating any funds and to halt the ongoing fraudulent statements being made in connection with the offer and sale of securities.