The Securities and Exchange Commission

[jimmenknee]

August 29, 2008 SEC News Digest
Issue 2008-169

ENFORCEMENT PROCEEDINGS
In the Matter of Shane Traveller
On August 28, the Securities and Exchange Commission issued an Order Instituting Administrative Proceedings Pursuant to Rule 102(e) of the Commission's Rules of Practice, Making Findings, and Imposing Remedial Sanctions against Shane H. Traveller. The Order finds that, on Aug. 6, 2008, the United States District Court for the District of Nevada entered a final judgment against Traveller permanently enjoining him from future violations of Section 17(a) of the Securities Act of 1933 and Sections 10(b) and 13(b)(5) of the Securities Exchange Act of 1934 and Rules 10b-5 and 13b2-1 thereunder, and from aiding and abetting violations of Sections 13(a) and 13(b)(2)(A) of the Exchange Act and Rules 12b-20, 13a-1, and 13a-13 thereunder. Traveller was also ordered to pay a civil penalty of $50,000 and was barred for a period of five years from acting as an officer or director of a public company and from participating in an offering of penny stock. Based on the final judgment of permanent injunction, the Order suspends Respondent Traveller for a period of five years from appearing or practicing before the Commission as an accountant. Traveller consented to the issuance of the Order without admitting or denying the findings in the Order.

According to the Order, the Commission’s complaint alleged that Traveller, a former Director of 21st Century, violated the antifraud provisions of the securities laws when he supervised the drafting of 21st Century Technologies, Inc.’s 2004 Form 1-E and offering circular and failed to ensure that proper disclosures were made concerning the precarious financial state of the company and the terms of its financing arrangement. The complaint further alleged that Traveller aided and abetted 21st Century’s reporting and record-keeping violations when he did nothing to ensure that the company disclosed certain loans, approved certain investments after they had been made, and prepared false Board minutes. (Rels. 34-58438 — In the Matter of Shane H. Traveller, CPA; AAER-2868; File No. 3-13149) [SEC v. Compass Capital Group, Inc., Mark A. Lefkowitz, Alvin L. Dahl, John R. Dumble, John C. Hopf, Kevin D. Romney, and Shane H. Traveller, Case No. 2:08-CV-00457, D. Nev., filed April 10, 2008] (LR-20695)


--------------------------------------------------------------------------------

In the Matter of Alvin Dahl
On August 28, the Commission issued an Order Instituting Administrative Proceedings Pursuant to Rule 102(e) of the Commission's Rules of Practice, Making Findings, and Imposing Remedial Sanctions against Alvin L. Dahl. The Order finds that, on Aug. 6, 2008, the United States District Court for the District of Nevada entered a final judgment against Dahl permanently enjoining him from future violations of Rule 13a-14 of the Securities Exchange Act of 1934, and from aiding and abetting violations of Section 13(a) of the Exchange Act and Rules 12b-20, 13a-1, and 13a-13 thereunder. Dahl was also ordered to pay a civil penalty of $5,000 and was barred for a period of five years from participating in an offering of penny stock. Based on the final judgment of permanent injunction, the Order suspends Respondent Dahl for a period of one year from appearing or practicing before the Commission as an accountant. Dahl consented to the issuance of the Order without admitting or denying the findings in the Order.

According to the Order, the Commission’s complaint alleged that Dahl, a consultant who worked part-time as 21st Century Technologies, Inc.’s CFO from 2000 through 2004, prepared 21st Century’s false and misleading Form 10-K for 2003 and Forms 10-Q for the first and second quarters of 2004, and certified that those filings were complete and accurate, even though they contained material omissions concerning certain of 21st Century’s reported investments and loans. (Rels. 34-58439 — In the Matter of Alvin L. Dahl, CPA; AAER-2869; File No. 3-13150) [SEC v. Compass Capital Group, Inc., Mark A. Lefkowitz, Alvin L. Dahl, John R. Dumble, John C. Hopf, Kevin D. Romney, and Shane H. Traveller, Case No. 2:08-CV-00457, D. Nev., filed April 10, 2008] (LR-20695)


--------------------------------------------------------------------------------

In the Matter of Jerry Burdick, CPA
On August 29, the Commission issued an Order Instituting Administrative Proceedings Pursuant to Rule 102(e) of the Commission’s Rules of Practice, Making Findings, and Imposing Remedial Sanctions against Jerry L. Burdick, CPA.

The Order finds that Jerry L. Burdick was enjoined by the United States District Court for the Southern District of California. The Order further finds that the complaint filed by the Commission made the following allegations. Burdick, as the interim chief financial officer for SeraCare Life Sciences, Inc., caused SeraCare to misstate its financial statements by inflating income before taxes for the second and third quarters of fiscal year 2005 by 20% and 17%, respectively. Specifically, Burdick improperly released general inventory reserves that he created following a major acquisition by SeraCare, which caused SeraCare’s net income before taxes to be inflated in the second and third quarters of 2005. In addition, Burdick caused misrepresentations to be made to SeraCare’s auditors by creating a backdated letter that was given to the auditors as support for recognizing revenue on an almost $1 million sale before the close of the fiscal year. Burdick also caused misrepresentations to be made to SeraCare’s auditors by providing an increased inventory valuation without any documented or verifiable support.

Based on the above, the Order suspended Burdick from appearing or practicing before the Commission as an accountant. Burdick consented to the issuance of the Order without admitting or denying any of the findings in the Order, except he admitted the entry of the injunction. (Rels. 34-58441; AAER-2870; File No. 3-13151)


--------------------------------------------------------------------------------

In the Matter of William K. Boston, Jr.
On August 29, the Commission issued an Order Instituting Administrative Proceedings Pursuant to Section 15(b) of the Securities Exchange Act of 1934, Making Findings, and Imposing Remedial Sanctions against William K. Boston, Jr. The Order finds that on August 18 an order of permanent injunction was entered by consent against Boston, permanently enjoining him from future violations of Sections 5(a), 5(c) and 17(a) of the Securities Act of 1933, Section 10(b) of the Exchange Act of 1934 and Rules 10b-5 and 10b-10 thereunder and from aiding and abetting violations of Exchange Act Rule 10b-10, in the civil action entitled SEC. The Commission’s complaint alleged that Boston and his business, Century Estate Planning, Inc., participated in a massive fraud orchestrated by Michael E. Kelly that victimized thousands of investors across the United States by raising at least $428 million through the offer and sale of fraudulent and unregistered securities called Universal Leases. Universal Leases were securities in the form of investment contracts that were structured as timeshares in several hotels in Cancun, Mexico, coupled with pre-arranged servicing agreements with a purportedly independent leasing agent that promised investors a safe investment and guaranteed returns. The complaint alleged that Boston offered and sold Universal Leases to investors and recruited others to do so. The complaint further alleged, among other things, that Boston made false and misleading statements about the safety of the Universal Leases and about the purportedly independent leasing agent, and also failed to make required disclosures about the commissions he was being paid for his Universal Lease sales.

Based on the above, the Order bars Boston from association with any broker or dealer. Boston consented to the issuance of the Order without admitting or denying any of the findings in the Order except as to the entry of the order of permanent injunction against him. (Rel. 34-58442; File No. 3-13152)


--------------------------------------------------------------------------------

SEC v. American Energy Resources Corp., H&M Petroleum Corp., and Donald Allen
On August 28, the Commission filed a civil action in the United States District Court for the District of Colorado against Donald H. Allen, a resident of Colorado Springs, Colo., and his two wholly-owned companies, H&M Petroleum Corporation (H&M) and American Energy Resources Corporation (AER), for violations of the antifraud and registration provisions of the federal securities laws.

In its complaint, the Commission alleges that, between March 2002 and December 2006, Allen, H&M, and AER raised approximately $9.9 million from at least 355 investors nationwide through a series of unregistered offerings of fractional interests in oil and gas projects. These projects were marketed to the public through cold call telephone solicitations and “seminars” advertised in local newspapers. According to the complaint, Allen, H&M, and AER defrauded investors by using investor funds for undisclosed purposes, including diverting over $2.3 million to Allen’s personal use. The defendants also misrepresented or omitted material information about their track record, projected return on the investments, and their own investment in the offerings. The complaint further alleges that Allen, AER, and H&M violated the securities registration provisions of the federal securities laws and that Allen acted as an unregistered broker-dealer.

Allen, AER, and H&M agreed to settle the SEC’s charges without admitting or denying the allegations in the complaint. These settlements are subject to approval by the court. Allen, AER, and H&M agreed to be permanently enjoined from violations of Sections 5(a), 5(c) and 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. Allen further agreed to be permanently enjoined from violating Section 15(a) of the Exchange Act. Allen, AER, and H&M agreed to jointly and severally pay $510,000 of disgorgement and additionally pay the costs of distributing these funds to harmed investors. [SEC v. American Energy Resources, Corp., H&M Petroleum Corp., and Donald H. Allen, Civil Action No., 08-CV-01847 REB BNB, D. Colo.] (LR-20694)


--------------------------------------------------------------------------------

SEC Files Enforcement Action Against Mark E. Salyer, a Registered Representative, Relating to His Misappropriation of Millions of Dollars from Customers of Metlife Securities, Inc.
On June 23, 2008, the Commission filed a civil injunctive action against Mark E. Salyer alleging violations of the antifraud provisions of the federal securities laws in connection with his misappropriation of millions of dollars from customers of MetLife Securities, Inc. while he was employed there as a registered representative. Salmar Investors Group, Inc and Horizon Holdings, Inc., two companies purportedly controlled by Salyer, were also named as relief defendants because they received funds fraudulently diverted by Salyer from several MetLife customer accounts.

The Commission’s complaint alleges that, from at least June 2005 through October 2007, Salyer diverted approximately $6 million from MetLife customer accounts to multiple entities, two of which he directly controls. According to the complaint, Salyer diverted the money by forging customer signatures on wire transfer forms and by convincing customers to invest in a company he controlled under the guise that it was a MetLife investment. The complaint further alleges that to facilitate and otherwise conceal his fraud, Salyer falsified customer brokerage account statements or provided customers with fraudulent explanations for discrepancies in the account balances reflected in their account statements. The complaint alleges that Salyer defrauded at least 33 customers, most of whom are senior citizens who had long-standing business relationships with Salyer.

The Commission’s complaint charges Salyer with violating Section 17 (a) of the Securities Act of 1993, and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10(b) thereunder. The complaint seeks disgorgement of all ill-gotten gains, a permanent injunction prohibiting future violations of the securities laws and civil money penalties against Salyer. [SEC v. Mark E. Salyer, et al., Case No.:2:08-CV-179, E.D. TN] (LR-20696)


--------------------------------------------------------------------------------

SEC Amends Complaint to Add Defendant Joseph Shereshevsky’s Wife as Relief Defendant and Obtains Asset Freeze Over More Than $900 Thousand in Assets Transferred to Her
On August 28, the Commission amended its complaint against Wextrust Capital, LLC, its principals, and four affiliated Wextrust entities, to add defendant Joseph Shereshevsky’s wife, Elka Shereshevsky, as a relief defendant, alleging that Joseph Shereshevsky attempted to hide more than $900 thousand in investor funds by placing them in accounts putatively in her name. The amended complaint also adds broker-dealer fraud charges against defendant Steven Byers.

The Commission’s original complaint alleged that defendants conducted a massive Ponzi-type scheme from 2005 or earlier that raised approximately $255 million from approximately 1,200 investors. The targets of the fraudulent offerings are primarily members of the Orthodox Jewish community. Simultaneously with the filing of the original action, the Commission sought and obtained emergency relief from the Court to freeze the defendants’ assets, place the Wextrust entities under the control of a receiver to safeguard assets and issue a temporary restraining order to stop the ongoing offerings and orders granting other immediate relief. With the filing of the amended complaint, the Commission sought and obtained a temporary order freezing the assets of the relief defendant, Elka Shereshevsky.

The Commission's original complaint, filed in federal court in Manhattan on August 11, charged that Wextrust, its principals Steven Byers and Joseph Shereshevsky, and its affiliated entities Wextrust Equity Partners, LLC (WEP), Wextrust Development Group, LLC (WDG), Wextrust Securities, LLC (Wextrust Securities) and Axela Hospitality, LLC (Axela) conducted at least 60 securities offerings through private placements and created approximately 150 entities in the form of limited liability companies or similar vehicles to act as issuers or facilitators of the offerings, purportedly to fund the acquisition of specified assets, the majority of which were commercial real estate ventures. Contrary to representations in the offering memoranda that proceeds would be used for specific projects, the defendants allegedly diverted funds to pay returns to investors in prior offerings, or to fund expenses of the defendants. Overall, the original complaint alleged that defendants diverted at least $100 million dollars to unauthorized purposes and that defendants are conducting at least four ongoing offering frauds intended to raise money to pay back investors from prior offerings. In addition to the emergency relief sought when filed, the Commission’s original complaint seeks disgorgement of the defendants’ ill-gotten gains, civil penalties, and permanent injunctions barring future violations of the antifraud and other provisions of the federal securities laws.

The amended complaint alleges that defendant Joseph Shereshevsky routinely placed his own assets – residential real estate, bank accounts, and a share in the ownership of Wextrust – in his wife’s name. The amended complaint further alleges that Elka Shereshevsky had a “no show” job at Wextrust and received improper transaction-based compensation and bonuses for sales of securities her husband made through Wextrust Securities while he was not registered as an associated person with it. Although Elka Shereshevsky purportedly holds twenty percent ownership of Wextrust Securities as General Partner of the Shereshevsky Family Partnership, the amended complaint alleges that defendant Joseph Shereshevsky controls that interest.

The amended complaint further alleges that in early August 2008, when numerous Wextrust accounts had been frozen, defendant Joseph Shereshevsky directed his wife to open an account with a bank in Norfolk, Va., into which he diverted at least $75,000 of his own or Wextrust investment vehicle assets. In addition, the court-appointed receiver in this matter has identified other accounts putatively controlled by Elka Shereshevsky that contain more than $825,000 of her husband’s or the Wextrust defendants’ assets. One wire transfer report showing a $100,000 transfer into such an account states, “per Joe’s phone call,” indicating Shereshevsky directed the transfer.

The amended complaint further alleges that defendant Byers violated Section 15(a) by effecting securities transactions while he was not registered as, or associated with, a broker-dealer. The amended complaint alleges that defendants violated and are violating Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. Wextrust Securities violated Sections 15(b)(1), 15(b)(7) and 15(c)(1) of the Exchange Act and Rules 10b-3, 15b1-1, 15b3-1 and 15b7-1 promulgated thereunder. Shereshevsky and Byers violated Section 15(a) or alternatively, aided and abetted, Wextrust Securities' violations of Sections 15(b)(1), 15(b)(7) and 15(c)(1) of the Exchange Act and Rules 10b-3, 15b1-1, 15b3-1 and 15b7-1 promulgated thereunder. [SEC v. Steven Byers, Joseph Shereshevsky, Wextrust Capital, LLC, Wextrust Equity Partners, LLC, Wextrust Development Group, LLC, Wextrust Securities, LLC and Axela Hospitality, LLC, and Elka Shereshevsky (Relief Defendant) 08 Civ. 07104, DC, S.D.N.Y.] (LR-20697)


--------------------------------------------------------------------------------

INVESTMENT COMPANY ACT RELEASE
Allianz Life Insurance Company of North America, et al.
A notice has been issued giving interested persons until Sept. 18, 2008, to request a hearing on an application filed by Allianz Life Insurance Company of North America, Allianz Life Variable Account A, Allianz Life Variable Account B, Allianz Life Insurance Company of New York, and Allianz Life of NY Variable Account C (collectively Applicants), and Allianz Variable Insurance Products Trust (collectively with Applicants, Section 17 Applicants). Applicants request an order under Section 26(c) of the Investment Company Act to permit the substitution of securities issued by certain registered investment companies for shares of certain other registered investment companies. Section 17 Applicants also request an order pursuant to Section 17(b) of the Act exempting them from the provisions of Section 17(a) of the Act to permit certain in-kind transactions in connection with the substitution. (Rel. IC-28369 - August 28)


--------------------------------------------------------------------------------

SELF-REGULATORY ORGANIZATIONS
Immediate Effectiveness of Proposed Rule Changes
A proposed rule change filed by National Stock Exchange (SR-NSX-2008-14) to amend the NSX BLADESM Fee Schedule to reduce routing fees has become effective pursuant to Section 19(b)(3)(A) of the Securities Exchange Act of 1934. Publication is expected in the Federal Register during the week of Sept. 1, 2008. (Rel. 34-58342)

The New York Stock Exchange filed a proposed rule change (File No. SR-NYSE-2008-069), which became effective upon filing pursuant to Section 19(b)(3)(A) of the Exchange Act, that amends Section 501.00 of its Listed Company Manual to waive application of this section to any listed company that is a foreign private issuer and that submits a letter from an independent home country counsel certifying that a home country law or regulation prohibits compliance from the rule. Publication of the proposal is expected in the Federal Register during the week of Sept. 1, 2008. (Rel. 34-58398)

A proposed rule change filed by the New York Stock Exchange amending NYSE Rule 123B, Exchange Automated Order Routing System, to allow a Member Organization to provide other market participants with access to the Exchange on an agency basis (SR-NYSE-2008-71) has become effective under Section 19(b)(3)(A) of the Securities Exchange Act of 1934. Publication is expected in the Federal Register during the week of Sept. 1, 2008. (Rel. 34-58429)

A proposed rule change filed by the NASDAQ Stock Market (SR-NASDAQ-2008-070) relating to fees and credits for members using the Nasdaq Crossing Network has become effective under Section 19(b)(3)(A) of the Securities Exchange Act of 1934. Publication is expected in the Federal Register during the week of Sept. 1, 2008. (Rel. 34-58435)


--------------------------------------------------------------------------------

Accelerated Approval of Proposed Rule Change
The Commission granted accelerated approval to a proposed rule change (SR-NASDAQ-2008-071) submitted by the NASDAQ Stock Market relating to the generic listing standards for Index Multiple Exchange Traded Fund Shares and Index Inverse Exchange Traded Fund Shares. Publication is expected in the Federal Register during the week of Sept. 1, 2008. (Rel. 34-58440)


--------------------------------------------------------------------------------

Proposed Rule Changes
A proposed rule change (SR-CBOE-2008-88) has been filed by the Chicago Board Options Exchange under Section 19(b)(2) of the Securities Exchange Act of 1934 relating to the demutualization of Chicago Board Options Exchange, Incorporated. Publication is expected in the Federal Register during the week of Sept. 1, 2008. (Rel. 34-58425)

The New York Stock Exchange has filed a proposed rule change (SR-NYSE-2008-76) pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 and Rule 19b-4 thereunder, amending NYSE Rule 2B to establish procedures designed to manage potential informational advantages resulting from the affiliation between the Exchange and Archipelago Securities L.L.C. Publication is expected in the Federal Register during the week of Sept. 1, 2008. (Rel. 34-58430)

NYSE Arca has filed a proposed rule change (SR-NYSEArca-2008-90) pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 and Rule 19b-4 thereunder, amending NYSE Arca Equities Rule 7.31(x) to clarify the permissible order entry time and eligibility of its primary only order and amending NYSE Arca Equities Rule 14.3 to establish procedures designed to manage potential informational advantages resulting from the affiliation between the Exchange and Archipelago Securities L.L.C. Publication is expected in the Federal Register during the week of Sept. 1, 2008. (Rel. 34-58431)


--------------------------------------------------------------------------------

Approval of Proposed Rule Changes
The Commission granted approval of a proposed rule change (SR-NASDAQ-2008-053) submitted by the NASDAQ Stock Market under Rule 19b-4 of the Securities Exchange Act of 1934 to modify its definition of “Independent Director.” Publication is expected in the Federal Register during the week of Sept. 1, 2008. (Rel. 34-58335)

The Commission approved a proposed rule change (SR-NASDAQ-2008-062) submitted under Rule 19b-4 of the Securities Exchange Act of 1934 by the NASDAQ Stock Market to clarify the application of Nasdaq rules when a listed company combines with a non-Nasdaq entity. Publication in the Federal Register is expected during the week of Sept. 1, 2008. (Rel. 34-58432)

The Commission has issued an order approving a proposed rule change filed by NYSE Arca (SR-NYSEArca-2008-77) to list and trade the Barclays Middle East Equities (MSCI GCC) Non Exchange Traded Notes due 2038. Publication is expected in the Federal Register during the week of Sept. 1, 2008. (Rel. 34-58437)


--------------------------------------------------------------------------------

JOINT INDUSTRY PLAN RELEASES
Order Approving Proposed Amendment to the Plan for Reporting of Consolidated Options Last Sale Reports and Quotation Information
The Commission granted approval to an amendment to the Plan for Reporting of Consolidated Options Last Sale Reports and Quotation Information submitted pursuant to Section 11A of the Securities Exchange Act of 1934 and Rule 608 thereunder by the Options Price Reporting Authority (SR-OPRA-2008-02), as modified by Amendment No. 1 thereto, to amend OPRA’s Vendor Agreement and related documents and to adopt a new policy. Publication is expected in the Federal Register during the week of Sept. 1, 2008. (Rel. 34-58434)


--------------------------------------------------------------------------------

SECURITIES ACT REGISTRATIONS
Latest Securities Act registrations (TXT)

--------------------------------------------------------------------------------

RECENT 8K FILINGS
Latest 8-K filings (TXT)


http://www.sec.gov/news/digest/2008/dig082908.htm