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Dthomas: The 700M consists of two suits that RA won by default against 3 local yokel Floridians who are bankrupt, and their two companies, which are defunct.
It was not against naked shorters worldwide, or US wide, or State wide, and certainly not against the SEC. It was against 3 guys who have nothing to collect.
There's no chance of collecting anything. Nothing has been found to collect in 6 years.
Thanks for the info. I find it interesting the Ruth had to get a Federal Public Defender (BTW - they do have a means test for getting such lawyers, so insinuations that she made a lot of money off of her activity seem to be off the mark).
virginian: Thank you for your response to my harshness - and thanks for your kind word, as I do try to avoid attacking shareholders, or making derogatory remarks about anyone (but I'm as successful of that on the RB board as I am here).
Now to the issue of 'NSS.' Yes, it exists, but personally I don't think it is anywhere near the huge problem people are claiming, particularly as concerns USXP.
I know you don't trust the SEC, but I do a whole lot more than you do. The SEC, in their original filing of charges against RA and company pointed out that the ftd at the time they prepared there filing was 'de minimus' and a total of 357,000 shares (something like that). In fact, there is no evidence outside of RA/Gunderson's claims of any significant NSS affecting USXP. His claims have no substance, and despite having stated at least once that I can remember that he has the proof, he has never provided any such proof.
RA began claiming 200B in NSS at a time when his company hadn't gotten to where it had traded as much as 50B in its history. How do you have 4 times the actual shares traded in NSS? You can't.
Again, there is absolutely no evidence of an NSS problem with USXP other than the claims of RA/Gunderson. You do know that Gunderson, in his sworn statement to the court in opposition to the summary judgement (before the SEC won that judgement) that he thought their could be as many as a trillion share NSS postion in USXP, and that several times the daily trading had come in at 72 (74?) times the outstanding shares?
I hope I'm wrong (well, not until RA/Gunderson are gone) for your sake, but nobody can point to any evidence of any significant NSS position, not even RA and Gunderson. And there has been no evidence of any wholesale covering of NSS positions in any of the companies that claim this problem is ruining them.
If anyone wants a copy of the PDF that includes the 5-day notice sent to RA, I'll be happy to email it. Just need to know an email address.
janice shell: The Florida version of the notice isn't worded quite the same, but you are right, it is an Eviction Notice. The following statement is included in the Notice:
"Demand is hereby made for payment of those monies currently due in the amount of Thirty Three Thousand One Hundred Fifty Five Dollars and 95/100 (33,155.95) or for possession of the above referenced Premises within within 5 days from the date of delivery of this Notice, not including Saturdays, or Sundays or Holidays, to wit: on or before the 2nd day of August 2007."
Pay us the cash, or give us back the premises...
janice shell: Or Simon Wiesenthal...
virginian: I went and looked at exhibit 2, which is a copy of the notice the lessor's attorney sent to RA about rent overdue. Such a notice is the first step in seeking eviction, IF RA hasn't paid the rent due by the end of today.
The attachment is a pdf of a scanned copy of that letter, so I can't convert it to text. If you have an e-mail address I can send it to, I can do that.
According to this letter, RA needs to pay them 33,155.95 by today.
beeboymama: There is evidence that the landlord did put a lienhold on all of USXP's office furniture and equipment. That was provided a couple of weeks ago.
What privacy laws do you think apply to lessors?
Proof of the lessor contacting the SEC has been posted. Evidence of a possible lien against USXP's property has been posted.
virginian: Lessors don't usually make a move on a lessee unless there is a significant arrears and the lessee is essentially doing nothing to rectify the situation.
Read the quote I provided again: The lessor contacted the SEC. Why did they do that? I have no idea.
Payment was due by today by USXP. Any eviction would take weeks if not months.
I tend to believe the SEC filing - Obviously it is something that RA could easily disprove, if the SEC was being less than truthful. Proving that the SEC was lying, and doing what RA has been claiming, which you seem to believe the SEC would do, would severely undermine the SEC's receivership and contempt motions.
RA has lost to the SEC already, and will lose on this one as well. As the SEC points out, correctly, the response filed by Gunderson to the receivership and contempt motions is filled with mostly arguments that the Judge already found were invalid in the Summary Judgement. Those arguments won't wash.
Sorry if I seem to be a bit harsher than normal, but I'm having a much harder time understanding how someone as intelligent as you obviously are still believe anything that RA and Gunderson say.
Good luck, you really are going to need it on this one.
dutchboy: NO!!! It's the SEC, not the SCE.
Other than that, you've got it.
Remember the conversation about what the status of the lease for office space was awhile back, where one poster reported talking to the lease agent and being told that the USXP was behind in its lease payments, and nobody believed him (including me)?
Well, he was right. This is from the latest SEC filing:
"However, the SEC was recently contacted by the lessor for Universal Express in Boca Raton, Florida, who informed the SEC that Universal Express is in arrears on its rent. On July 26, 2007, the lessor issued a five-day notice to Universal Express, demanding payment no later than August 2, 2007."
The following is the text of the SEC's response to last Friday's response to their motions for receivership and contempt.
Case 1:04-cv-02322-GEL Document 200 Filed 08/01/2007 Page 1 of 12
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The consolidated response from defendants Universal Express, Inc.("Universal
Express"), Richard A. Altomare ("Altomare") and Chris G. Gunderson ("Gunderson")
(collectively herein "the Defendants") to motions filed by Plaintiff Securities and Exchange
Commission ("SEC") for the appointment of a receiver and for an order finding them in contempt can only be described as an utterly disingenuous attempt to deny the fact that the Court
has entered findings and a judgment against them. [Defendants'
Response, Docket 197.] That denial is the common thread running through all of the various motions and responses now
pending before this Court.1 The arguments raised in the Defendants' briefs do little more than rehash factual or legal arguments already vetted before, and rejected by, the Court.2 Moreover, the Defendants' briefs concede that the bases for the SEC's receivership and contempt motions exist. First, the Defendants' briefs concede that Universal Express lacks the financial resources to comply with the Court's judgment and is technically insolvent. Second, the briefs concede
that the defendants have not complied, and in fact do not intend to comply, with any of the provisions of the Court's judgment. In light of these conceded facts, the SEC's motions for the appointment of a receiver and for an order finding the Defendants in contempt should be granted.
1 Pending before the Court are: (1) the Defendants Motion to Stay and the Plaintiff's Opposition to that Motion; (2)
Defendants' Motion for jury trial on the remaining counts of the complaint and the SEC's Response to that motion; (3) the SEC's Motion to Dismiss Unadjudicated Claims as to the
Defendants and their Opposition to that motion;(4) the SEC's Motion for Appointment of a Receiver and the Defendant's
Opposition to that motion; and (5) the SEC's Motion for Entry of Civil Contempt Against Defendants and their Response to that motion.
2 The 35 paragraphs of the Gunderson affidavit contain no competent evidence and no new arguments which are relevant to any of the pending motions. Gunderson reiterates at length the Defendants' short-selling allegations, which have no evidentiary basis and are irrelevant to this case (¶¶ 1-
3, 21, 35). Gunderson also reiterates all of the "bankruptcy exemption" arguments previously rejected by the Court (¶¶
33-35). Indeed, despite the Court's entry of judgment, Gunderson suggests (without citation to evidence) that the
press releases issued by the company were not really false (¶¶ 27-29). Gunderson also devotes numerous paragraphs to Altomare's leadership of Universal Express, but fails to mention that under Altomare, the company has perpetually failed to generate any substantial revenue or net income (¶¶ 7-16). Altomare's six-paragraph affidavit details his ostensible success in leading the company since its emergence from bankruptcy (though with all of the company's operations admittedly still only in the developmental stage, (¶ 3), and his unspecified unsuccessful efforts to date to find his successor.
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I. The Defendants' Briefs Underscore the Need for a Receiver
A. Universal Express is Insolvent The Defendants' concede that Universal Express is technically insolvent given the Court's judgment. In their reply in support of their Motion to Stay all of the relief ordered by the Court against them [Docket 195], the Defendants represent that the company has total assets
"slightly in excess of approximately $11 million" with which to
satisfy the Court's judgment as to Universal Express of $21 million in total disgorgement, prejudgment interest and penalties (Reply brief at p. 6, n. 3). Thus, even assuming arguendo that this statement as to the company's current assets is true,3 the company currently has insufficient assets to satisfy the Court's judgment.
Compounding this insolvency is Universal Express' lack of legitimate income producing business operations. Defendants' Response to the Motion for Appointment of a Receiver, in
effect asks the Court to accept the incredible proposition that, some fourteen years after exiting bankruptcy, the company has prospects of making what it concedes are still no more than
"development-stage" business operations a success. Nothing in the company's public filings or its various briefs supports that argument. The company has operated at a net loss since its
inception and its independent auditors issued a "going concern"
qualification to their opinion letter for the audit of the company's year-end 2006 financial statements. (Receiver Motion, Att. A, p. 11). Although the Defendants' Response suggests that the company's revenues are increasing, it conspicuously fails to disclose that the company's net losses are escalating much more rapidly. Between fiscal 2005 and fiscal 2006, the company's net operating losses rose from approximately $10 million to nearly $19 million (Receiver
Motion, Att. A, p. 12). For the nine months ended March 31, 2007 alone, the company's reported net loss had escalated to $21 million on revenues of $2,687,262. (Receiver Motion, Att. B, p. 5).
3 Plaintiff is not aware of any independently audited figures which would support this representation by Defendants. As stated in the SEC's Receiver motion, the company's most recent
audited financial statements at year end 2006 reported assets including cash and cash equivalents of $2,102,459 and net property and equipment valued at $206,832 (Receiver Motion, Att. A, Form 10-KSB, pp. 11-14.). The company's most recent filing is an unaudited March 31, 2007 Form 10-Q filed on May 21, 2007, lists total assets of approximately $11 million, which includes current assets of $874,376 in cash and cash equivalents, $350,159 in property and equipment and approximately $4,707,383 in unspecified "other current assets" (Receiver Motion, Att. B, 3/31/07 Form 10-Q, p. 3).
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The company's financial statements demonstrate that, absent its
historical life blood of unregistered stock sales, Universal Express cannot generate enough revenue to survive. The
company's reported operating expenses rose from $13,053,854 for the nine months ended March 31, 2006 to $21,634,168 for the nine months ended March 31, 2007. (Receiver Motion, Att. B, p.
5). The company's audited financials for the 2006 fiscal year
reported revenues of $1,073,486 and cost of goods sold of 830,486, resulting in a gross profit of $242,603. However, this slight gross profit was dwarfed by the company's operating expenses of $19,164,811. (Receiver Motion, Att. A, p. 12). These reported figures demonstrate that the company does not have sufficient legitimate business operations to survive economically, even absent the Court's ordered financial relief. The Defendants have addressed this fundamental and recurrent
operating deficiency by continuing to issue unregistered stock into the public market in violation of the Court's judgment, as addressed herein.
B. A Receiver is Necessary to Stop Altomare's Illegal Conduct
The Defendants' Response appears to posit the startling argument that Altomare is entitled to ignore the Court's judgment because he has unique qualifications that render him
indispensable to Universal Express. That argument is refuted by the financial performance figures cited above. In addition, the Court has found that Altomare engaged in repeated illegal
and fraudulent conduct which renders him "substantially unfit" to lead a public company. The Defendants' brief simply ignores this finding. Instead, Altomare's attached affidavit recounts his ongoing search for a replacement as though the Court's imposition of an officer and director bar
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against him were merely suggestive. In addition, both the Altomare and Gunderson affidavits appear to claim that Altomare's appointment as interim CEO during the bankruptcy
reorganization created lifetime tenure for Altomare which insulates him from the reach of this Court's judgment. See, e.g., Gunderson affidavit, ¶31. These assertions, as well as Altomare's actions to date, suggest that a receivership is necessary not only to stop Altomare's illegal conduct, but to protect the interest of investors, who are the real beneficial owners of the company and its assets. 4
C. Costs of the Receivership
To the extent they are accurate, the company's most recent financial statements facially suggest that the company has enough assets to pay for a receivership to: (1) assume control of the company; and (2) conduct an initial evaluation of its assets and operations and report to the Court on its ability to satisfy the Court's April 2007 judgment. According to its most recent Form 10-Q for the quarter ended March 2007, the company has cash and cash equivalents in the amount of $874,376 and total current assets of $6,050,429 (SEC Motion, Att. B. p. 3). However, the SEC was recently contacted by the lessor for Universal Express in Boca Raton, Florida, who
informed the SEC that Universal Express is in arrears on its rent. On July 26, 2007, the lessor issued a five-day notice to Universal Express, demanding payment no later than August 2, 2007. (attached as Exhibit 2). Appointment of a receiver is necessary to ascertain the true state of Universal Express's assets and affairs, to marshal and conserve assets, and report on them to the Court. See SEC v. Koenig, 469 F.2d 198 (2d Cir. 1972); SEC v. S&P Nat'l Corp., 360 F.2d 741, 750-51 (2d Cir. 1966).
4 Altomare's public statements make clear that he does not intend to obey the Court's judgment. In fact, Altomare has publicly issued threats against the SEC and the Court. Exhibit 2.
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Although the general rule is that costs and fees associated with a receivership be paid from the property under the receiver's possession and control, the Court, sitting in equity, has discretion to assess such costs against defendants Altomare and Gunderson, whose fraudulent conduct created the necessity for the receivership. SEC v. Milan Capital Group, Inc., 2001 U.S. Dist. LEXIS 11804, * 7 (S.D.N.Y. August 14, 2001); SEC v. Presto Telcom, 2007 U.S. App. LEXIS 14177, * 6 (9th Cir. June 5, 2007).
The SEC has requested that Universal Express provide current
financial information concerning all bank accounts. To date, Universal Express has not produced the requested information. As an interim measure in support of its Motion for Appointment of a Receiver, and to fully inform the Court, the SEC requests that the Court issue an order directing Universal Express to produce to the SEC forthwith, and/or at a hearing before
the Court: (1) all of its bank records for the last six months; (2) documents sufficient to identify the nature and location of all of its current assets, as well as any encumbrances on such assets; (3) documents reflecting any current debts owed to the company by any person, including defendant Altomare or his wife; and (4) documents reflecting any current debts owed by the company.
II. Contempt
The Defendants' response to the SEC's motion for entry of civil
contempt sanctions fails to present evidence challenging the Commission's clear and convincing proof that the defendants
have not complied with the Court's preliminary injunction entered April 20, 2004 or the final judgment entered April 2, 2007. The Defendants have not met their burden of proof that they have diligently attempted to comply with the Court's orders in a reasonable manner. In fact, they admit not complying with the Court's order barring Altomare from
serving as an officer and director of a public company, and requiring them to pay disgorgement and prejudgment interest.
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As discussed below, the defendants are in contempt and appropriate sanctions should be imposed.
A. Defendants Violated the Court's Prohibition on Unregistered Sales. Between January 1, and June 20, 2007, Altomare and Gunderson, acting for Universal Express, instructed the company's transfer agent in various letters sent by fax through interstate commerce to issue over 20.9 billion shares to ten entities or individuals. No registration statement was in effect for these transactions. The defendants claim
they did not violate the Court's orders prohibiting unregistered offers or sales because these transactions did not involve "sales" within the meaning of Section 5 of the Securities Act. [Defendants' Response, Docket
197 at p. 5] Contrary to their claim, these transactions come
directly within the definition of a sale. Section 2(3) of the Securities Act defines the term "sale" or "sell" to include every contract of sale or disposition of a security or interest in a security for value. 15 U.S.C. §§ 77b(a)(3). In each of these transactions the defendants directly and indirectly
disposed of the shares by transferring ownership of the stock from the company to ten entities or individuals for value.
Defendants admit that the shares were issued for public relations services, an exchange for value.
Defendants' Response at p. 6.
Defendants incorrectly suggest that the staff of the commission's Division of Corporation Finance agreed in a series of letters commenting on the company's June 30, 2006
annual report, that securities exchanged for "stock rights" contained in subscriptions agreements did not constitute an offer to sell a security. Defendants fail to identify or quote any language in the letters that constitutes the agreement. Review of all the letters reveals no such agreement.5
5 The initial comment letter from the Division of Corporation Finance dated October 25, 2006, states in the first and second paragraph of page 1: "Where indicated, we think you should
revise your documents in response to these comments. If you disagree, we will consider your explanation as to why our comment is inapplicable or a revision is unnecessary. . . . Please understand that the purpose of our review process is to assist you in your compliance with the applicable disclosure requirements and to enhance the overall disclosure in your filing." Further at page 2 in comment 21, the letter states: "Note 16 – Stock Rights, page F-15 21. Disclose in more detail how many stock
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Moreover, the staff's comments could not create such a binding
agreement upon the Commission. "The obligation to file accurate reports is entirely the registrant's, and this obligation cannot be shifted to the Commission or its staff under any
circumstances." SEC v. Falstaff Brewing Corp., 1978 U.S. Dist. LEXIS 14669, *73-74 (D.D.C. 1978); see also 15 U.S.C. § 78z (prohibiting representation that examination of a statement or report filed with the SEC is a finding that the statement or report is true or accurate).
Defendants suggest without citation to evidence that the securities that they offered and sold during 2007 are restricted and exempt from the registration process. The burden is on the defendants to show that the securities transactions at issue fall within one of the exemptions from registration, a burden they have failed to meet. SEC v. Cavanagh, 2004 U.S. Dist. LEXIS 13372 at *51, Fed. Sec. L. Rep. (CCH) P92,866 (S.D.N.Y. 2004). In all but one transaction, the instruction letters from Altomare and Gunderson, direct the transfer agent that the stock "is to be free trading under the S-8 registration of the Company's 1994 Stock Option Plan." 6 Defendants' reliance on an exemption under the 1994 Stock Option Plan created during the bankruptcy proceeding has already been rejected by the Court. Defendants have
failed to meet their burden of demonstrating that the 20.9 billion shares issued during 2007 are exempt from the registration rights have been issued, the specific terms of these rights, and how you account for these rights." The letter closes at page 5 with a request that the company acknowledge that: (1) the company is responsible for the adequacy and
accuracy of the disclosure in the filings; (2) the staff comments or changes to disclosure in response to staff comments do not foreclose the Commission from taking any action with
respect to the flings; and (3) the company may not assert staff comments as a defense in any proceeding initiated by the Commission or any person under the federal securities laws of the United States." In its response dated November 14, 2006, Universal Express acknowledges and agrees to the three provisions listed above. See USXP Exhibit 9b at pp. 2-3, carry-over paragraph [Docket 199-12]. The staff's request for information on stock rights continues in the January 24, 2007 letter, "Note 17 – Stock Rights, page F-30 16. We reissue prior comment 21. Please revise your filing to disclose the details of EACH of your stock rights issuances. Also tell us how you account for the stock rights and refer to your basis in the
accounting literature." See USXP Exhibit 9g at p. 4 [Docket 199-17].
In response counsel for Universal Express states in a letter dated March 26, 2007, that "As noted in the revised disclosure, the terms of the stock rights are only determined at the time the Subscription Agreement is entered into between the investor and the Company." See USXP Exhibit 9c at p. 6 in response to comment numbered 16 [Docket 199-13]. 6 Only one of the 84 transactions involving new stock issued in 2007 contains language that may indicate the shares were restricted. On February 14, 2007, Altomare and Gunderson directed the transfer agent to issue 670,000,000 shares to Khalid Sunaid Alsunaid and requested the
stock "bear the standard safe harbor provisions of
Rule 144."
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requirements of Section 5. They are in contempt of the Court's orders prohibiting unregistered sales.
B. Defendants Violated the Court's Prohibition on Against Fraudulent Statements.
Defendants continue to make false and misleading statements about revenues earned from the company's purported 9,000 postal store network, and the status of the company's litigation with the Commission. In a company that reported revenues of $1,212,929, cost of goods sold of $969,251, and net loss of $8,418,950 as of March 31, 2007,7 the source of the company's revenues and the extent of its business operations is a material fact that a reasonable investor would consider in buying this stock. If there is no postal store network, as the Court found in its Opinion and Order,8 but rather independent postal stores in the United States that may or may not decide to buy products offered by Universal Express, then the risk that future sales will not occur and revenues will be adversely effected is substantially higher than if a contractual obligation creates the network of postal stores and obligates them to buy products from the company. The financial status of the company is a material fact that a reasonable investor would consider in the mix of information. See SEC v. Murphy, 626 F.2d 633, 643 (9th Cir. 1980). Similarly, the statements about status of the company's litigation with the Commission are false, and entry of a judgment in excess of $21 million is a material fact. It is not nit-picking or hair-splitting to require the company to truthfully disclose its business operations and entry of judgment that exceeds the company's assets by at least $10 million. The Defendants are in contempt of the Court's orders prohibiting fraudulent statements.
C. Altomare Violated the Officer and Director Bar.
Altomare's conduct in signing the March 2007 and amended December 2006 quarterly reports filed after April 2, 2007 violated the Court's final judgment prohibiting him from serving 7 See SEC Contempt Exhibit 1 at p. 6 of 23.
8 Opinion and Order at p. 12-13 [Docket 172], citing Altomare Dep. 1 at 249-50.
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as an officer or director of a public company. Altomare admits this conduct. [Response at pp. 8-9]. Moreover, he made misleading statements in these filings, by omitting to disclose the material fact that the Court had found on February 21, 2007 that he was substantially unfit to hold office and subsequently barred him from serving as an officer and director of a public
company.
D. Defendants Failure to Pay Disgorgement and Prejudgment Interest.
Defendants bear the burden of producing evidence of their inability to comply with the Court's order requiring them to pay disgorgement and prejudgment interest. Huber v. Marine
Midland Bank, 51 F.3d 5, 10 (2d Cir. 1995). This burden, which is one of production, see U.S. v. Rylander, 460 U.S. 752, 757 (1983), is not easily met as the alleged contemnor must prove
"plainly and unmistakably that compliance is impossible." Id. The defendants have not met this burden. Their response is devoid of any evidence on their financial inability to make any
payment in satisfaction of the judgment.9 If the alleged contemnor fails to offer evidence of his inability to comply with the order, he has not satisfied his burden. Huber, 51 F.3d at 10.
Conclusory statements are inadequate to carry the burden. See Donovan v. Sovereign Security,
Ltd., 726 F.2d 55, 59 (2d Cir. 1984). The time for the defendants to submit evidence of their financial inability to pay passed with their filing of the responsive brief, which contained no financial information. No hearing is required if there are no material facts in dispute. New York State NOW v. Terry, 697 F. Supp. 1324, 1330 n.6 (S.D.N.Y. 1988). They
are in contempt of the Court's final judgment by failing to pay disgorgement or prejudgment interest as ordered.
9 Mr. Altomare's salary of $650,000 for the year ending June 30, 2006 is relevant. It creates the presumption that he was similarly compensated in the year ending June 30, 2007. His
ownership of shares of Universal Express also indicates that he has assets, which he may be able to liquidate to satisfy the judgment. Defendants complain about citation to their own statements in the annual report that "[a]s of June 30, 2006, we have advanced $906,000 to the spouse of the chief executive officer, who is also one of our employees." SEC Exhibit 3 at 44. It is not clear from this statement in the annual report whether the advance occurred in one lump-sum or several payments over time. Regardless, Mrs. Altomare's receipt of these funds, which is listed in the company's balance sheet under "Related Party Receivables," is an asset from which either Altomare or Universal Express could pay at least some part of the judgment.
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E. Reporting the Court's Judgment Defendants contend that they were not required to report entry of the Court's Opinion and
Order on February 21, 2007 or the final judgment on April 2, 2007, because the judgment was entered during the current reporting period and the company is not required to file its annual report until after June 30, 2007. This argument ignores that the defendants are required to accurately describe legal proceedings in which the company or its officers are involved. Item 103 of Regulation S-K, 17 C.F.R. § 229.103. Further, it ignores the requirement that all periodic reports filed with the Commission must "in addition to the information expressly required to be included in a statement or report, . . . also … add[ ] such further material information, if any, as may be necessary to make the required statements, in light of the
circumstances under which they are made not misleading." Exchange Act Rule 12b-20, 17 C.F.R. § 240.12b-20. Moreover,
under Generally Accepted Accounting Principles, Universal Express must account for entry of the judgment, which it has not done. The defendants' omission of information about entry of the Court's order and judgment was material information in light of Altomare's continued employment as the company's sole officer and director, and the company's inaccurate disclosures on the status of legal proceedings.
IV. Conclusion
For the reasons set forth above, Plaintiff's motion for appointment of a receiver and for entry of an order of contempt should be granted.
Dated: August 1, 2007 Respectfully submitted,
s/ Julie K. Lutz JL9404
Julie K. Lutz
Leslie J. Hughes
Attorneys for the Plaintiff
Securities and Exchange Commission
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CERTIFICATE OF SERVICE
I hereby certify that on August 1, 2007, I electronically filed the PLAINTIFF'S REPLY IN SUPPORT OF MOTIONS FOR APPOINTMENT OF RECEIVER AND FOR ENTRY OF CIVIL CONTEMPT AGAINST DEFENDANTS UNIVERSAL EXPRESS, INC., ALTOMARE, AND GUNDERSON with the Clerk of the Court for filing and uploading to the CM/ECF system which will send notification to the following as indicated to the parties listed below.
lifegear: They can't sell in Canada for the same basic reason they can't sell in the USA: They haven't gotten approval for any of their products in Canada (or the US).
What????? Talbot didn't file yet??????????? But he told us he would.
I don't believe it. Something must have happened.
Maybe they got wet again?
No posts since just after 4 yesterday? Was there a problem with investorshub?
janice shell: I wonder how a survivor of the Holocost would feel about his comparing USXP's situation with the SEC with the Jews situation with the Nazis.
Today's story in the Palm Beach Post about USXP and SEC. Interesting to note that RA stated that Luggage Express moves 40 bags per day. Amazing. At 100.00 per bag, drumroll please, that comes up to 1.5M per year in revenue. Yikes.
Also, he compares the USXP situation with the Nazis forbidding Jews from owning businesses in 1939. And threatens a "business Waco" situation should anyone try and take over the company.
The man is not stable...
Days may be numbered for Boca businessman wrestling with the SEC
By RANDY DIAMOND
Palm Beach Post Staff Writer
Monday, July 30, 2007
BOCA RATON — Never mind that a federal judge said in Februarythat Richard Altomare, chief executive of Universal Express, had "repeatedly and brazenly" committed fraud. Forget the $21.9 million fine handed out to Altomare and the company's chief counsel along with it, and the fact it barred either man from working again as director or officer of a public company.
Finally, disregard the July 3 request of the Securities and Exchange Commission that the judge incarcerate Altomare for ignoring the order.
Altomare said he is fighting the ruling of federal Judge Gerald Lynch of the Southern District of New York and has filed a notice of appeal. In the meantime, he is still running the company.
''If they wanted to come and seize control of this company they're going to watch another Waco," he said in an interview at the penny-stock company he has run for 13 years. "They're going to have a corporate Waco. Let them come in.''
It's unclear if Altomare, 58, is serious about Waco, a reference to the standoff in Texas in 1993 against federal law enforcement in which dozens of people died. He speaks colorfully about his companies and the civil case against him, comparing his situation to 1939 Berlin when the Germans barred Jews from owning businesses. He admonishes the skeptical to ''Remember the Duke lacrosse players."
But one way or another, the four-year legal battle between Altomare and the SEC is winding down. On June 21 the SEC requested that the court appoint a receiver to take control of the Boca Raton-based company and then on July 3 asked to have Altomare and Universal's New York-based chief counsel Chris Gunderson jailed, unless they resigned.
Altomare, a natural-born showman, has a flair for the dramatic. He also has a broad entrepreneurial spirit that has resulted in interests in more businesses than there are acts in a circus. Divisions of his company do everything from moving freight to selling Michael Jackson memorabilia at auction.
But make no mistake about the securities fraud charges against him: The SEC is wrong. "This is an agency that has gone bad," he said.
The SEC declined to comment on Altomare's case.
Many small companies
Universal Express is an umbrella for a number of companies, most of them involved with the transportation of luggage or baggage. It's best known enterprise is Luggage Express, which picks up traveler baggage at their homes and transports it ahead of their airline flight. A new division, Luggage Express Lost, specializes in returning luggage lost by airlines to hotel rooms or homes.
But Universal Express' interests aren't exclusively luggage. Another division provides services to postal stores. Yet another, run by Altomare's son, moves the belongings of college students to dormitories. Altomare said he is negotiating to buy a New Jersey gas and oil wholesaler who owns and operates in excess of 38 retail gasoline and diesel oil stations. Altomare's plan: nothing less than a national network of gas stations.
Another recent acquisition: A stake in a Boca Raton charter aviation company.
The Universal Express office occupies two small floors of a Boca office building. It has 37 full-time employees, many of whom work in the crowded call center there.
Many of the employees are focused on the work of Luggage Express, sending luggage - 40 bags a day, Altomare says - across the United States and the rest of the world.
Altomare, a former Marine, sees a major company with thousands of employees in the future. He thinks big and believes in cross selling. He started a coalition that seeks to have all luggage sent separate from airline passengers in the name of security - something that, if it were to happen - would boost his businesses enormously.
So far, however, none of his businesses is flying high. Altomare said the company has turned a profit some years but acknowledges that in almost two decades of business, the company has primarily lost money. Universal, according to its SEC filings, lost $18.9 million in 2006 with revenue of $1.1 million. ''We are building something and are proud of our losses,'' he said.
He has been building a long time. Altomare's involvement with the company dates to 1994. That's when he was appointed by a federal bankruptcy judge in New York to serve as trustee of Packaging Plus Services. At the time he was an investment banker. He ultimately brought the company out of bankruptcy and renamed it Universal.
Selling unregistered stock
How can Universal keep losing money and continue to stay in business? By selling more stock.
To run the money-losing enterprise, the penny stock company continues to issue unregistered stock without the SEC's permission - almost 21 billion shares in 2007. The stock was selling for as low as one-fifth of a penny last week on the over-the-counter bulletin board, according to a review of trading boards.
It is the sale of $500 million of unregistered shares between 2001 and 2003, followed by "false or misleading" news releases that the company had received $885 million in new funding, that is at the core of the SEC case against him. The statements had the effect of boosting the share price.
Universal received between $8.5 million and $9 million from the sale of the unregistered stock from April 2001 through December 2003, the SEC said. Altomare profited from selling the stock to the general public. According to the SEC, Altomare also made a direct profit, diverting $1 million of it to his personal accounts or using the money to cover personal expenses.
Altomare said the issuance of new stock without SEC permission was approved by the federal bankruptcy court as part of Universal's reorganization - in 1994. Judge Lynch in his February decision called the assertion that the bankruptcy allowed shares to be sold into perpetuity "baseless."
Further, Universal counsel Gunderson said, Altomare's using the $1 million was proper because he had not been paid a salary for six years because of Universal's financial problems.
Altomare claims the real issue is a grudge against him on the part of the SEC. He said Universal asked the SEC for help when a stock scam victimized the company in the late 1990s but the agency refused to help.
Altomare said he started issuing news releases attacking the SEC in late 2003 for doing nothing about naked short selling. That process, which involves the sale of unowned shares for less than their current value in a wager that share prices will fall, was how Universal's stock price had been manipulated, he said.
Indeed, documents show juries awarded Universal $338 million in July 2001 and $137 million in April 2003 for harm done it by specific investor groups in the late 1990s. Altomare said the company received little of the award.
Court records also show Universal filed suit against the SEC in federal court in Miami in March 2004 seeking damages for the commission's failure to help Universal. The suit also accused the SEC of harassment. Universal's lawsuit against the SEC was dismissed in 2005 and the decision affirmed in appellate court in 2006.
While the SEC case got filed after Altomare's criticism, the SEC maintains it had begun its investigation four months prior, according to court documents.
Universal's legal and financial problems haven't harmed Altomare's finances. Last year Universal's board gave him a $50,000 raise, pushing his salary to $650,000. As Universal's only board member, Altomare approved it himself.
Also in 2006, his wife, Barbara Halpern, who serves as Universal's vice president of administration, received a $906,000 advance, according to the company's 2006 annual report.
"Without Barbara there would have been no Universal Express," Gunderson, the company's chief counsel, wrote in an e-mail. "Barbara's initial loan of over $250,000 from her IRA saved the Company years ago."
Altomare said he intends to beat the SEC. "I should be CEO of the year," he said.
Not everyone is so sure. If Judge Lynch grants the SEC's ruling for a receiver for the company, Universal Express' life will probably be short-lived, said Jim Sallah, a former SEC attorney in Miami, who now is a defense lawyer.
Sallah said that given the company's huge losses, chances are the marshal will pay off debtors and shut the place down. "It will likely be good night for Universal Express,'' he said.
Staff researcher Niels Heimeriks contributed to this story.
http://www.palmbeachpost.com/business/content/business/epaper/2007/07/30/a1bz_universal_0730.html
Thanks for the heads up.
virginian: I have no idea whether or not RA has pulled off some kind of partnership or ownership of UJet. Clearly there are no SEC filings of any kind that back up his claims.
As for the 'sold back' part, I believe that is an error in the filings. RA actually sold back an acquisition (SGA?) that I can't remember the name of off the top of my head shortly after the SEC charges were filed (as well as 'Bags to Go'). That isn't noted in the filings. I believe strongly that is the actual company that he is talking about in those filings, and not UJet, and that UJet was erroneously identified initially and never corrected.
All in MNSVHO, of course.
P.S. Keep in mind that RA specifically stated that there UJet debt in the webcast, so you have to wonder how much of the claimed assets will be outweighed by debt. It is very unusual for RA to mention negatives about anything, so that has me scratching my head as to why he did.
only1gail: The court's future rulings in this case are incredibly important. First, there is the regular court's rulings on the SEC's motions for putting USXP into receivership due to the company's (RA's) failure to meet the fine the court levied against the company and the contempt charges.
Then there is the appeal of the lower court's ruling which who knows how long that will take. The available evidence shows that so far all that has happened is that a notice of intent to appeal has been filed. They haven't filed the actual appeal yet as far as anyone can tell. They have until about August 6th to file the actual appeal, or their right to appeal expires.
RA has been good at putting out PRs in the past that at least initially peak buying interest, so I can't say he won't be able to do that again, but he really, really, really needs to start winning in court or else...
only1gail: Regarging good news/bad news question - Right now it's basically neutral - No true believer is going to sell on the filings, nor is anyone going to buy on them either.
What the court (judge) does about the filings and the contempt and receivership motions, that will be a different story.
virginian: I have to tell you that I believe you are looking at these filings with some very, very, very rose colored glasses.
The main response tries to invalidate the contempt motion by claiming that USXP has not sold a single unregistered share. That the 15.2B shares issued since the summary judgement was won by the SEC were given to the 10 entities for additional PR services. How many of those 10 entities were found to have anything to do with providing PR services? If those companies provided any money to USXP, how does that wash? USXP overpaid them in shares, so they're paying back the difference?
Gunderson also tries to defend against the charge that RA still claims that there is a UniversalPost network with x amount of members, a claim the judge already ruled was bogus, by basically saying to the judge, you were wrong, so we haven't changed that claim.
Gunderson also tries to defend against the continued claim that USXP's suit against the SEC is still ongoing. He admits it isn't but essentially says it's an issue of symantics that the claim was never removed from the SEC filings, and, besides, its common knowledge that USXP lost the case and the appeal. Yeah, common knowledge, which is why RA continues to rant about the SEC being the defendant in the existing actions. When did RA announce that the appeal was lost?
And as for the fact that the SEC verdict was not reported in the SEC docs, he does make a case (weak) for the info not being included in the quarterly report for the quarter ending March 31st, stating that the judgement wasn't entered into the court record until the first week in April. Well, the judgement was rendered back in March, and the SEC cited the lack of an 8-K about the judgement in their contempt motion. Gunderson didn't defend against that at all.
I personally don't see how USXP is going to succeed in its defense against contempt charges. The judge may be more lenient about what those charges result in than the SEC wants, but I've been wrong before, and I'll be wrong again.
We'll see, soon enough (or not soon - I don't think any date has been set for hearing the contempt charges officially, and it could still be months away).
Nice research (as always). I checked the filings page and the change was made on July 26th.
No surprise that Ms. Flinders wants a low a profile with this company as possible...
The responses to the SEC receivership and contempt motions by USXP, RA, and Gunderson are now a part of the court's record.
Someone has made the pdfs available online at 4shared.com, a free file sharing site. I really like the claim that RA hasn't been selling any shares, that the 15.2B shares issued to the 10 entities after the judgement was entered into the record were given to them for additional PR services:
The main response: http://www.4shared.com/file/20755664/a45ed5df/show_case_doc-197.html
RA's affidavit: http://www.4shared.com/file/20755662/4d3d70ea/show_case_doc-198.html
Gunderson'e affidavit:
http://www.4shared.com/file/20755661/d4342150/show_case_doc-199-1.html
3-martini lunch?
Dr Worm: Your math is off - if what you think happened did, they got .0006 x 380000 = 228.00.
Put it in place back when we dropped to .009 range because at that time I thought we'd get a bounce.
We did, but I forgot to take it off. Dumb.
Would have worked great when I put it in place. Don't think it will work well at all this time down...
Really getting ugly - Unfortunately I forgot I had a GTC for 500000 at .0076. Did manage to cancel 120000 of that order.
Looks like there is really bad news known that we are of course not privy to, like the company declaring BK or something to that affect.
Oh well, what's another 2900.00 down the tube...
CoolD: Not exactly. He did lie about being a Marine Corp officer in the past, but he did serve in the Marine Corp reserves as a sargeant.
joelu: RE: a pr about a closing - I didn't hear anything about anything coming soon. He did talk a little about the one he had promised was going to be PRed a couple of weeks ago, but that info got lost (at least to me) in his continued ranting and raving about the SEC.
There is no USXP case against the SEC. The one he did file got dismissed, with his charges against the SEC dismissed with prejudice (cannot be refiled), and against the others who he only identified essentially as 'John Does' without predudice, but he had until April 2005 to refile his 'John Doe' charges if he could actually name the people he was trying to sue.
The 11 Circuit Court of Appeals ruled in favor of the lower court, upholding the decision against RA. He never filed an appeal with the Supreme Court, which he had told everyone he definately would do.
The only case still ongoing is the SEC vs RA, Guderson, USXP, et al.
klmill: I've already given a summary, but if you want to verify it all for yourself, go to the following link:
http://viavid.net/login/login.aspx
You have to register, but it is free.
lifegear: Not really. He said that there are 4 companies, and they are remaining loyal throughout the SEC mess, but no claims of anything closing anytime soon that I heard.
He also talked about his supposed Arab investors and how the SEC mess has them nervous so that's why he hasn't been able to close any of that money.
He also claimed that the NJ court chancellor (which I have no idea who he could possibly be referring to) has ruled that everything in the jackson collection belongs to USXP.
And he ranted and raved about the SEC for about 50 minutes of the 55 minute conference.
lifegear: All over. You should be able to go to the website soon and listen to the archived copy.
P.S. If you want to listen to RA ranting and raving about the SEC for about an hour, you should go listen.
P.P.S. Also go and listen if you want to hear samples of two of the unreleased songs. You'd figure out really quick as to why they were never released.
beeboymama: Maybe. I expect that RA's discount share partners will be dumping, and I really hope that RA gets the justice he really deserves, very soon, but RA did hold out the 'buyback' carrot for you guys.
Of course, it was just a possibility according to him, which IMNSVHO, will never happen, but it might keep the price alive for another couple of days.
Good luck to you on your investment, just don't stay at the party too long.
P.S. That was a hell of a dump by the discount partners while I was posting. Started the post while there were still 9 MMs on bid at .0004.
RA continues to falsly claim that the lawsuits he won were against naked shorters and RICO cases. Here is the story told by USXP originally after the first award:
http://findarticles.com/p/articles/mi_m0EIN/is_2001_July_26/ai_76772112
$389 Million Dollar Jury Award to Universal Express — USXP —
Business Wire, July 26, 2001
Business Editors
NEW YORK--(BUSINESS WIRE)--July 26, 2001
Univeral Express, Inc. (OTC:USXP), announced that a jury in the Circuit Court, Dade County, Florida, yesterday awarded USXP a damage verdict after trial of $389 million dollars ($389,000,000) against Select Capital, Ronald G. Williams and Walter S. Kolker for fraud and conversion for failure to honor previous funding commitments and stock manipulation.
"We are very grateful to the Dade County jury for vindicating our rights and recognizing the substantial scope and value of our company," stated Richard A. Altomare, President and CEO of USXP.
"This judgment is final and non-appealable. The company's trial counsel, Arthur W. Tifford, a prominent Miami attorney, will now take the necessary steps toward collection. Tifford has collected judgment monies against these defendants in a number of other cases," said Chris Gunderson, General Counsel of the company.
"On one level, it is gratifying to have a judicial system validate what we have been saying since 1998. On another level, collectibility is huge and now we are able to introduce professionals to trace the paper trail for collusion, damage culpability and offshore accounts. This might bring some compliance officers and insurance companies into this issue of collectibility. We will now allow the professionals to collect. We have done what we said we would do in 1998 and more," concluded Altomare.
It could be argued that the "stock manipulation" was referring to NSS, but it cannot be argued that the case had anything to do with RICO charges of any kind.
USXP may have a chance to survive on its own without RA, and it will have its chance to try to do that soon enough. Until then, RA will continue to lie about everything under the sun.
barryinla: Congrats. Hopefully you made some of the TCLL money back.
lifegear: It's not all of the items (though NJ may be a different story). Most likely just the items that were agreed on in the settlement that was signed by RA (or USXP lawyers).
There may be some other MJ items at the center of this ruling, since the judge has previously issued an order to allow MJ to inspect the rest of the collection. The only reason MJ would want to inspect that collection is to see if there are any other items he believes belong to him.
Apparently the Janet Jackson items may still be up in the air. That seems to be a separate issue still to be adjudicated.
The general belief is that Janet and MJ lost a previous case as to ownership of their part of the collection. That appears to be false. I ran across an article yesterday from 2004. In that article was reference to a ruling in Los Angelos Federal court case that forbade Vaccaro from selling the collection. Apparently that court agreed that MJ and Janet's items should not have been sold as part of the collection by the bankruptcy trustee.
http://www.signonsandiego.com/news/state/20040419-1916-jacksonmemorabilia.html
That's all about as clear as mud, but for the most part nothing is looking good for RA's ownership of any MJ (an probably eventually Janet) items.
virginian: My repost from our conversation on the CyberKey board.
The best thing that can happen for both of us is that RA manages to pull off one of his supposed gas & oil deals (really pull it off, and not just say he has).
That way you probably win as a stockholder, but in the end, as someone who really wants RA to be brought to justice for all his BS, I'll win as well. Anything RA does from here on is totally immaterial. It won't change the summary judgement, and it cannot be considered in any appeal of that judgement. Even if he has gone completely legit (which I know he hasn't), he is still guilty of the crimes he did before.
So, here's hoping that Friday RA puts out great news backed up with 8-Ks, names, and numbers, for guys like you.
Cassandra: I try to be detailed in my posts when bringing up new points, but you have made all of efforts look pitiful in comparison to yours.
Wow... It looks like Plant attempted to use Sullivan to provide backup for his claims in his initial interview with the SEC, but maybe Sullivan backed out, or he never agreed to do it in the first place.
I do know that Leading Points could not have had any contract with any government agency for any size or product (no Cage code).
Thanks for this very interesting information. It adds greatly to the picture that is getting clearer every day.
Melvin Chizek: No chance this is another Richard A. Altomare? Pamela Altomare doesn't compute for our RA.