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SECURITIES AND EXCHANGE COMMISSION LITIGATION RELEASE NO. 16750 / October 4, 2000 SECURITIES AND EXCHANGE COMMISSION v. DEBISYS, INC., MARK T. FLANAGAN, AND JAMES S. EBERHART, Civil Action No. SACV 99-1237 DOC (EEx) (C.D. Cal.) On September 21, 2000, the Honorable David O. Carter of the United District Court for the Central District of California entered a Final Judgment of Permanent Injunction and Other Relief against Defendant James S. Eberhart. This judgment concludes the lawsuit filed by the Securities and Exchange Commission on October 7, 1999 against James S. Eberhart of Costa Mesa for fraudulently selling $2.3 million in unregistered securities to 150 investors nationwide from January through July 1997. The Commission alleged that Eberhart sold unregistered securities in the form of investment contracts for a sale-leaseback program for point-of-sale terminals. Point-of-sale terminals process retail forms of payment, including ATM cards, debit cards, credit cards, check guarantee cards, and "smart" cards. The Commission further alleged that Eberhart misrepresented the use of investor funds, falsely representing that investor funds would be used to purchase the terminals, when, in fact, approximately 66 percent of investor funds were spent on sales commissions, administrative costs, and "returns" to investors. Eberhart failed to answer the Complaint and the Court entered judgment against him by default. The judgment enjoins Eberhart against violations of the antifraud, securities registration, and broker-dealer registration provisions of Sections 5(a), 5(c), and 17(a) of the Securities Act of 1933 and Sections 10(b) and 15(a) of the Securities Exchange Act of 1934 and Rule 10b-5. The judgment orders Eberhart to pay $76,102 in disgorgement, $3,625 in pre-judgment interest, and $76,102 in civil penalties. [SEC v. Debisys, Inc. Mark T. Flanagan, and James S. Eberhart, Civil Action No. SACV 99-1237 DOC (EEx) C.D. Cal.] (See also LR-16331 dated October 7, 1999).
http://www.sec.gov/litigation/litreleases/lr16750.htm
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