==========================================START OF PAGE 1====== UNITED STATES SECURITIES AND EXCHANGE COMMISSION LITIGATION RELEASE NO. 14907 / May 10, 1996 SECURITIES AND EXCHANGE COMMISSION v. THADDEUS E. WATLEY, a/k/a TED WATLEY, ET AL. (United States District Court for the Eastern District of Pennsylvania, Civil Action No. 96-CV-3411) On May 9, 1996, the U.S. District Court for the Eastern District of Pennsylvania entered an Order of Permanent Injunction and Continued Asset Freeze (Reserving the Issues of Disgorgement and Civil Penalties) against defendants Thaddeus E. Watley, a/k/a Ted Watley ("Watley"), Power 2000 and Ted's Neutral Corner, Inc. The Court issued the Order following the institution, last Wednesday, May 1, 1996, of an emergency civil action by the U.S. Securities and Exchange Commission ("Commission"). On that date, the Court granted the Commission's request for certain emergency relief, including the entry of a temporary restraining order and an asset freeze against Watley and the other defendants. The May 9, 1996 Order permanently enjoins Watley, a local radio personality, and Power 2000 and Ted's Neutral Corner, Inc., two entities he controls, from violations of the antifraud provisions of the Securities Act of 1933 and the Securities Exchange Act of 1934. Without admitting or denying the allegations in the Commission's complaint, Watley consented to entry of the Order on behalf of himself and the other two defendants. According to the Commission's complaint, from at least November 1995 through May 1, 1995, Watley, a convicted felon, engaged in a $2.8 million fraudulent offering of securities in Power 2000, an entity that claimed to promote the economic empowerment of the African-American community in Philadelphia, Pennsylvania. Watley solicited many of the investors through a local radio talk show known as "Ted's Neutral Corner." According to the complaint, the defendants claimed that over 80 percent of the funds raised from investors would be held in interest bearing accounts for a period of one year, after which time they would be invested, for a profit to investors, at the discretion of a Power 2000 board of directors. The defendants raised at least $61,141 from 162 investors, most of whom paid in the form of monthly installment payments. The complaint states that nearly all of the money was misappropriated. In addition, the Commission alleges that, in raising the funds, Watley and the other defendants made materially false and misleading statements. Among other things, Watley portrayed himself as a successful businessman and failed to disclose that he had a record of criminal convictions for fraud-related offenses. In addition to permanently enjoining the defendants, the May 9, 1996 Order reserves, for later resolution, the issues of disgorgement, prejudgment interest and the imposition of civil penalties, pending a full accounting of all funds raised by Power ==========================================START OF PAGE 2====== 2000 and a determination of the defendants' ability to pay any sums ordered by the Court. The Order also provides that the asset - 2 - freeze, which was entered on May 1, 1996, remain in place pending further order by the Court. The Court further ordered that $24,200 of the assets frozen be transferred into the Court's registry, where they will be held and applied towards any disgorgement ultimately ordered by the Court. ==========================================START OF PAGE 3====== NEWS DIGEST ORDER OF PERMANENT INJUNCTION AND CONTINUED ASSET FREEZE (RESERVING THE ISSUES OF DISGORGEMENT AND CIVIL PENALTIES) ISSUED AGAINST THADDEUS E. WATLEY, POWER 2000 AND TED'S NEUTRAL CORNER, INC. On May 9, 1996, the U.S. District Court for the Eastern District of Pennsylvania issued an Order of Permanent Injunction and Continued Asset Freeze (Reserving the Issues of Disgorgement and Civil Penalties) against Thaddeus E. Watley, a/k/a Ted Watley ("Watley"), a local radio personality, and two entities he controls: Power 2000 and Ted's Neutral Corner, Inc. ("Ted's Neutral Corner"). Watley, without admitting or denying the allegations of the Complaint filed in this matter, consented to the entry of the Order of Permanent Injunction and Continuing Asset Freeze against him, Power 2000 and Ted's Neutral Corner. The Commission alleges that, from November 1995 through the present, Watley engaged in a $2.8 million fraudulent offering of securities in Power 2000. He solicited the investors, most of whom were African-American, through a radio talk show known as "Ted's Neutral Corner," as well as through other means. According to the complaint, the defendants falsely claimed that over 80 percent of the funds would be held in interest bearing accounts for a period of one year, after which time they would be invested at the discretion of a Power 2000 board of directors. At least $61,141 was raised from 162 investors, and nearly all of the money was misappropriated. To further the scheme, the defendants also made false and misleading statements about the entities and material facts concerning, among other things, Watley's record of criminal convictions for fraud-related offenses. In addition to permanently enjoining the defendants from violations of the antifraud provisions of the Securities Act of 1933 and the Exchange Act of 1934, the May 9, 1996 Order reserves, for later resolution, the issues of disgorgement, prejudgment interest and the imposition of civil penalties, pending a full accounting of all funds raised by Power 2000 and a determination of the defendants' ability to pay any sums ordered by the Court. The Order also provides that the asset freeze, which was entered on May 1, 1996, remain in place pending further order by the Court. The Court further ordered that $24,200 of the assets frozen be transferred into the Court's registry, where they will be held and applied towards any disgorgement ultimately ordered by the Court. [SEC v Thaddeus E. Watley, et al., Civil Action No. 96-CV-3411 (E.D.Pa.)] (LR- ) (P-204) ==========================================START OF PAGE 4====== (C. Annette Kelton, Lawrence Parrish, (215) 597-3100) (P-204)