==========================================START OF PAGE 1====== UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC Litigation Release No. 14873 / April 12, 1996 Securities and Exchange Commission v. Carl E. Lovell, et.al., United States District Court, District of Nevada, Civil Action No. CVS-96-00171-HDM(RLH) The United States Attorney for the District of Las Vegas and the Commission jointly announced that on March 18, 1996 the United States District Court for the District of Nevada entered an order permanently enjoining Carl E. Lovell ("Lovell"), a Las Vegas attorney, and Danna Wale Lovell ("Wale") from future violations of the antifraud provisions of the Securities Exchange Act of 1934 ("Exchange Act"). The injunctive action was part of a global settlement of criminal charges brought by the U.S. Attorney's Office and civil charges brought by the Commission. Without admitting or denying the allegations in the Commission's complaint, both Lovell and Wale consented to the entry of the order which: (1) permanently enjoins them from future violations of Section 10(b) of the Exchange Act and Rule 10b-5 thereunder; (2) bars them from acting as an officer or director of any company which files reports with the Commission for a period of five years; and (3) orders them to disgorge $94,136 plus prejudgment interest in the amount of $96,854.32. The Commission's complaint alleged that from in or about 1987 through in or about 1989, Lovell and Wale engaged in the business of creating shell corporations whose securities were sold pursuant to Regulation D exemptions from registration with the Commission. Among the companies Lovell and Wale created were Triste Corporation ("Triste") and Venga, Inc. ("Venga"), both formed in early 1988. Triste was purportedly formed to fund expansion of the business of Southwest Business Institute, a state accredited business school in Nevada. Venga was purportedly formed to market novelty items bearing the logo and name of "Vegas Chips", a local potato chip manufacturing company. Lovell and Wale conducted controlled initial public offerings and sales of the securities by having all of the shares purchased by a group of investors acting in concert under their instructions. Each company raised approximately $100,000. Part of the proceeds were paid to a corporation controlled by Lovell and Wale and the remainder were given to Southwest Business Schools and Vegas Chips, respectively. Each public corporation was then separated from its operating business entity thereby creating a shell corporation. According to the complaint, Philip Sindler ("Sindler"), a southern California promoter who was looking for public shell corporations to be merged with private companies he was ==========================================START OF PAGE 2====== promoting, was introduced to Lovell as a person who could provide him with public shell corporations whose securities he could control. In late 1988, Sindler met with Lovell and Wale. At that meeting Lovell committed that he could provide one hundred percent of the purportedly publicly owned shares of Triste and Venga at prices of three to six cents per share. Lovell told Sindler that all of his controlled shareholders had accounts at the Las Vegas branch office of Fitzgerald-Talman, Inc. ("Fitzgerald-Talman"), a securities firm based in Denver, Colorado. The accounts were maintained by stockbroker Robert Glau ("Glau"). Lovell told Sindler that Glau would deliver all of the stock of Triste and Venga to accounts Sindler controlled at Adams Securities, located in Las Vegas, Nevada, at the prearranged prices agreed to by Lovell and Sindler. The complaint alleged that, pursuant to this agreement, in November 1988, all of the publicly owned shares of Triste and Venga were "sold" from Lovell's controlled shareholder's accounts at Fitzgerald-Talman to Sindler's controlled accounts at Adams Securities at the pre-agreed prices. Sindler then merged Triste and Venga with other corporations. Adams Securities later sold the stocks to the public at prices in the $1 to $3 range. On October 27, 1993, Lovell, Wale, and other co-conspirators were indicted by a federal grand jury in Las Vegas, Nevada on charges of conspiracy, securities fraud and money laundering.-[1]- A trial in April and May of 1995 ended with a deadlocked jury. On February 2, 1996, Lovell pled guilty to aiding and abetting violations of the federal securities laws, specifically Section 15(c)(2)(A) of the Exchange Act and Rule 15c2-11 thereunder. In connection therewith, the indictment was dismissed as to Lovell and Wale. In addition, the Commission instituted and simultaneously settled administrative proceedings against Lovell and Wale pursuant to which they are barred from participating in the offering of any penny stock and Lovell is suspended from appearing or practicing before the Commission pursuant to Rule 102(e)(3) of the Commission's Rules of Practice, provided that, after a period of five years, he may reapply to the Commission to have such suspension lifted. ---------FOOTNOTES---------- -[1]- Other co-conspirators, both indicted and unindicted, previously pled guilty to various securities laws violations including: Sindler, Adams, Glau and Nicholas Coscia, a southern California attorney.