 |
Home | Previous Page | |
|
||
 |
|
|
|
||
 |
|
|
|
|
|||||||||||||||
|
|
|||||||||||||||
|
|
UNITED STATES DISTRICT COURT
CASE NO.
COMPLAINT FOR INJUNCTIVE AND OTHER RELIEF Plaintiff Securities and Exchange Commission ("Commission") alleges: INTRODUCTION 1. The Commission brings this action to restrain and enjoin defendants COI Solutions, Inc. ("COI Solutions"), Robert Wilder ("Wilder") and Melvin Levine ("Levine") (collectively, "Defendants") from making materially false and misleading statements and failing to disclose material information in filings with the Commission in violation of the federal securities laws. In mid-2000, Wilder and Levine agreed to participate in a fraudulent scheme involving the issuance of 1.575 million shares of common stock of COI Solutions to nominees through two S-8 offerings. On October 17 and November 1, 2000, COI Solutions registered the shares in two S-8 registration statements filed with the Commission, which falsely claimed that these shares were paid to individuals for legitimate services rendered to the company. In fact, none of these individuals rendered any bona fide services to COI Solutions, but rather were acting as nominees for Levine and Wilder. Wilder and Levine planned to sell these shares to a European-based investment fund, and deposit a portion of the proceeds in their offshore accounts. Unbeknownst to the individual defendants, the European investment fund never existed and its "representative" was an undercover agent of the Federal Bureau of Investigation. In addition to a permanent injunction, the Commission seeks an order imposing civil monetary penalties against Defendants pursuant to Section 21(d) of the Securities Exchange Act of 1934 ("Exchange Act"). DEFENDANTS 2. Defendant COI Solutions, a Nevada Corporation, is purportedly in the health insurance business and headquartered in Ontario, Canada. COI Solutions' common stock trades on the Over-The-Counter Bulletin Board, and its securities are registered with the Commission pursuant to Section 12 of the Exchange Act. 3. Defendant Wilder, age 67, resides in Toronto, Canada and was, at all relevant times, the chief executive officer of COI Solutions. 4. Defendant Levine, age 70, lives in Pompano Beach, Florida and is a stock promoter. In 1996, the Commission entered a cease-and-desist order against Levine for, among other things, violating the antifraud provisions of the federal securities laws. JURISDICTION AND VENUE 5. This Court has jurisdiction over this action pursuant to Sections 21(d), 21(e), and 27 of the Securities Exchange Act of 1934 ("Exchange Act"), 15 U.S.C. §§ 78u(d), 78u(e) and 78aa. 6. Certain of the acts and transactions constituting violations of the Exchange Act have occurred within the Southern District of Florida. Levine resides in Florida, and Defendants have engaged in many of the acts complained of herein within the Southern District of Florida. 7. Defendants, directly and indirectly, have made use of the means and instrumentalities of interstate commerce, the means and instruments of transportation and communication in interstate commerce, and the mails, in connection with the acts, practices, and courses of business complained of herein. THE FRAUDULENT SCHEME 8. In mid-2000, COI Solutions experienced financial difficulties. Beginning in approximately September 2000, Levine and Wilder held a series of meetings to discuss possible ways to raise money for COI Solutions and, at the same time, enrich themselves. 9. Wilder and Levine agreed to participate in a scheme involving the use of fraudulent stock offerings pursuant to Regulation S-8. The scheme involved COI Solutions signing fictitious consulting agreements with several of Levine's accomplices - for their purported expertise in areas such as alternative medicine, accounting, and marketing - and granting them approximately 1.575 million shares of common stock. 10. According to the agreed-upon scheme, the so-called "consultants" would transfer their shares to Hermitage House Investment Ltd. ("Hermitage"), an offshore corporation owned and controlled by Levine. Hermitage would then sell the shares to a European-based investment fund (the "Fund") for approximately $16 million. Unbeknownst to Defendants, the Fund never existed but was contrived as part of a Federal Bureau of Investigation ("FBI") undercover sting operation. The Fund's "representative", to whom the Defendants had agreed to pay kickbacks, was in fact an undercover agent of the FBI ("UCA"). 11. The UCA posed as a corrupt securities trader employed by the U.S. corporate representative of the Fund. The UCA and his associates told Defendants that he worked with two due diligence officers who reviewed and approved securities to be purchased by the Fund. The UCA and his associates further stated that a purported manager of the Fund was corrupt and had knowledge of the UCA's illicit activities. 12. Wilder, Levine, and others agreed that all of the participants in the fraudulent scheme would receive an undisclosed kickback: Levine would get $2.4 million, Wilder $500,000, and the Fund's representative and his associates approximately $11 million. COI Solutions would also get $2 million, which it would receive through a subsequent purported private placement transacted offshore with one of Levine's other companies. Each consultant was to receive $2,000 to $3,000 for acting as Levine's nominee. THE FALSE FILINGS 13. In furtherance of the scheme, COI Solutions filed a registration statement on October 17, 2000, in connection with a S-8 offering of 775,000 shares of the company's common stock made to five individuals, including Levine's daughter and several friends. 14. On November 1, 2000, COI Solutions filed another registration statement in connection with a S-8 offering of 800,000 shares of the company's common stock made to five other individuals. 15. Wilder signed both registration statements. The consultants identified in the S-8 registration statements never provided any bona fide services to COI Solutions and never took possession of the shares. Rather, the shares were delivered to Levine's attorney who, in turn, delivered the shares to Hermitage. 16. Shortly after the S-8 registration statements were filed, the UCA cancelled the 1.575 million share transaction with Hermitage. COUNT I FRAUD IN VIOLATION OF SECTION 10(b)
17. The Commission repeats and realleges paragraphs 1 through 16 of its Complaint. 18. Through two false S-8 registration statements filed with the Commission - dated October 17 and November 1, 2000 -- Defendants directly and indirectly, by use of the means and instrumentality of interstate commerce, and of the mails, and of any facility of any national securities exchange, in connection with the purchase or sale of the securities, as described herein, have, knowingly, willfully or recklessly: (a) employed devices, schemes or artifices to defraud; (b) made untrue statements of material facts and omitted to state material facts necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading; and/or (c) engaged in acts, practices and courses of business that have operated, are now operating and will operate as a fraud upon the purchasers of such securities, through acts that included, but are not limited to, making the misrepresentations and omissions of material fact described in paragraphs 1 through 16, above. 19. By reason of the foregoing, Defendants directly and indirectly, have each violated and, unless enjoined, will continue to violate Section 10(b) of the Exchange Act, 15 U.S.C. § 78j(b), and Rule 10b-5, 17 C.F.R. § 240.10b-5, thereunder. RELIEF REQUESTED WHEREFORE, the Commission respectfully requests that the Court: I. DECLARATORY RELIEF Declare, determine and find that Defendants have committed the violations of the federal securities laws alleged herein. II. PERMANENT INJUNCTIVE RELIEF Issue a Permanent Injunction, enjoining Defendants, their agents, servants, employees, attorneys, and all persons in active concert or participation with them, and each of them, from violating Section 10(b) of the Exchange Act, 15 U.S.C. § 78j(b), and Rule 10b-5, 17 C.F.R. § 240.10b-5, thereunder. III. CIVIL PENALTIES Issue an Order directing Defendants to pay a civil penalty pursuant to Section 21(d)(3) of the Exchange Act, 15 U.S.C. § 78u(d)(3), for their violations of the federal securities laws as complained herein. IV. FURTHER RELIEF Grant such other and further relief as may be necessary and appropriate. Further, the SEC respectfully requests that this Court retain jurisdiction over this action in order to implement and carry out the terms of all orders and decrees that may hereby be entered, or to entertain any suitable application or motion by the SEC for additional relief within the jurisdiction of this Court. Dated: August 13, 2002
http://www.sec.gov/litigation/complaints/comp17685a.htm
|