S.E.C. Charges 41 With Fraud In Suits Filed Over Sales of Stock
Published: September 25, 1998
The Securities and Exchange Commission today charged 41 defendants, including International Automated Systems Inc. and Global Casinos Inc., with defrauding investors of $25 million in the sale of low-priced stocks.
So-called microcap stocks are among the smallest of companies.
The allegations, in 13 civil suits filed across the nation, involved bogus medical breakthroughs, hotel renovations and stock certificates, the S.E.C. said.
In California, the S.E.C. sued Waldron & Company, which underwrote the initial public offering of Shopping.com last year, contending it issued a false press release and prevented customers from selling Shopping.com stock.
Officials at Waldron could not be reached for comment. Sandra Harris, assistant regional administrator of the S.E.C.'s Los Angeles office, said an investigation of Shopping.com was continuing.
In Utah, International Automated Systems and its president, Neldon Johnson, were accused of securities fraud. In 1996, Bloomberg News reported that the company failed to deliver on its promise to demonstrate its "digital wave modulation" technology.
"I'm not concerned about this lawsuit," Mr. Johnson said in an interview. "It's a weak case." He said that within the last six months, he had been approached by four companies seeking to license the digital wave modulation technology.
"I was offered $100 million and 10 percent of the gross," Mr. Johnson said. He declined to identify the companies.
Other defendants in the S.E.C. actions, which are aimed at sales of small, thinly traded stocks, include newsletter writers who reportedly received undisclosed payments for recommending stocks.