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Monday, 09/08/2008 4:45:26 PM

Monday, September 08, 2008 4:45:26 PM

Post# of 1649
September 8, 2008 SEC News Digest
Issue 2008-174

ENFORCEMENT PROCEEDINGS
Securities And Exchange Commission Orders Hearing on Registration Revocation Against Three Public Companies for Failure to Make Required Periodic Filings
On September 5, the Commission instituted public administrative proceedings to determine whether to revoke or suspend for a period not exceeding twelve months the registrations of each class of the securities of three companies for failure to make required periodic filings with the Commission:

Karts International, Inc.
Keith Group of Companies, Inc.
KMS Industries, Inc.
In this Order, the Division of Enforcement (Division) alleges that the three issuers are delinquent in their required periodic filings with the Commission.

In this proceeding, instituted pursuant to Exchange Act Section 12(j), a hearing will be scheduled before an Administrative Law Judge. At the hearing, the judge will hear evidence from the Division and the respondents to determine whether the allegations of the Division contained in the Order, which the Division alleges constitute failures to comply with Exchange Act Section 13(a) and Rules 13a-1 and 13a-13 thereunder, are true. The judge in the proceeding will then determine whether the registrations pursuant to Exchange Act Section 12 of each class of the securities of these respondents should be revoked or suspended for a period not exceeding twelve months. The Commission ordered that the Administrative Law Judge in this proceeding issue an initial decision not later than 120 days from the date of service of the order instituting proceedings. (Rel. 34-58468; File No. 3-13160)


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Securities and Exchange Commission Orders Hearing on Registration Revocation Against Three Public Companies for Failure to Make Required Periodic Filings
On September 5, the Commission instituted public administrative proceedings to determine whether to revoke or suspend for a period not exceeding twelve months the registrations of each class of the securities of three companies for failure to make required periodic filings with the Commission:

MAII Holdings, Inc. (MAII)
Tandycrafts, Inc.
Transportation Equities, Inc. (TEQT)
In this Order, the Division of Enforcement (Division) alleges that the three issuers are delinquent in their required periodic filings with the Commission.

In this proceeding, instituted pursuant to Exchange Act Section 12(j), a hearing will be scheduled before an Administrative Law Judge. At the hearing, the judge will hear evidence from the Division and the respondents to determine whether the allegations of the Division contained in the Order, which the Division alleges constitute failures to comply with Exchange Act Section 13(a) and Rules 13a-1 and 13a-13 or 13a-16 thereunder, are true. The judge in the proceeding will then determine whether the registrations pursuant to Exchange Act Section 12 of each class of the securities of these respondents should be revoked or suspended for a period not exceeding twelve months. The Commission ordered that the Administrative Law Judge in this proceeding issue an initial decision not later than 120 days from the date of service of the order instituting proceedings. (Rel. 34-58470; File No. 3-13161)


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Delinquent Filers' Stock Registrations Revoked
The registrations of the securities of Respondents Birman Managed Care, Inc. (n/k/a Alcar Chemical Group, Inc.), Cluster Technology Corp., Global Network, Inc., Micro-Integration Corp., Montt International Corp., and NewCare Health Corp. have been revoked. Each had repeatedly failed to file required annual and quarterly reports with the Securities and Exchange Commission. Thus, each violated a crucial provision of the federal securities laws that requires public corporations to publicly disclose current, accurate financial information so that investors may make informed decisions. The revocations were ordered in an administrative proceeding before an administrative law judge. (Rel. 34-58471; File No. 3-13140)


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Timothy L. Bradshaw Sanctioned
Timothy L. Bradshaw (Bradshaw) has been barred from association with any broker or dealer. The sanction was ordered in an administrative proceeding before an administrative law judge, following a court-ordered injunction against him. In July 2008, Bradshaw was enjoined from violating the antifraud and registration provisions of the federal securities laws based on misconduct in which he acted both individually and through a staff of sales agents to promote the sale of investment contracts for Mobile Billboards of America, Inc. (MBA).

MBA sold more than $60 million of investments that consisted of mobile billboard frames that were purportedly mounted on the sides of trucks to hold advertising posters. However, the investment program was actually a Ponzi scheme that relied on new investor money to make monthly lease payments to investors. Bradshaw was one of the top three sales agents for MBA. He sold more than $5.3 million of the investments, and sales agents under his direction sold an additional $16 million. (Rel. 34-58472; File No. 3-13116)


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Rick Boros a/k/a Vincent Kwiatkowski and North American Mining Ventures, Inc.
On September 3, the Commission filed a complaint in the United States District Court for the Northern District of Illinois against Rick J. Boros, a/k/a Vincent Kwiatkowski (Boros), and North American Mining Ventures, Inc. The complaint alleges that between May 2005 and June 2007 Boros and North American Mining claimed to operate "low-risk, high-return" gold and silver mines in Durango, Mexico. The complaint further alleges that Boros told investors that their funds would be used to develop and expand the alleged gold and silver mines and obtained at least $1.2 million from approximately 17 investors, a number of whom are elderly or retired. The complaint, however, then alleges that Boros then misappropriated virtually all of these funds, spending $358,358 of investor funds to pay his personal credit card debt, to lease and maintain three BMW automobiles, and to pay for his household expenses and his daughter's college tuition. Boros allegedly also transferred at least $132,750 directly into accounts he controlled and sent at least $251,542 to friends and associates. In addition, Boros allegedly spent investor funds to pay for salon services and visits to spas, to buy clothing, handbags and other personal items.

The complaint alleges that, as a result of their conduct, the Defendants violated Sections 5 and 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. [SEC v. Rick J. Boros, a/k/a Vincent Kwiatkowski, and North American Mining Ventures, Inc., Civil Action No. 1:08-CV-5004 (N.D. Ill.)(Lindberg, J.)] (LR-20704)


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Jury Finds Former Master Graphics, Inc. CEO Liable For Securities Fraud Arising From Accounting Scheme
On September 5, a federal jury returned a verdict in the SEC's favor on securities fraud and other charges against John P. Miller, the former Chief Executive Officer, President, and Chairman of the Board of Master Graphics, Inc., a printing company based in Memphis, Tennessee that was publicly traded on the NASDAQ national market system, but is now defunct. Securities and Exchange Commission v. John P. Miller, Civil Action No. 1:04-cv-1655-AJB (N.D.Ga.). The verdict followed a two-week jury trial in Atlanta, Georgia before the honorable Alan J. Baverman, United States Magistrate Judge for the United States District Court for the Northern District of Georgia, Atlanta Division.

The Commission's Complaint, filed June 8, 2004, alleged that Miller, in the spring of 1999, devised and implemented a scheme to fraudulently overstate the company's net income to meet analyst expectations. Pursuant to the plan, the company fraudulently reclassified rent and salary expenses that Master Graphics had already paid to its division presidents in the first quarter as assets on the company's balance sheet. This misstatement caused Master Graphics to materially overstate its earnings for the first quarter of 1999, and materially understate its losses for the second and third quarters of 1999.

The jury found that Miller violated: (1) the antifraud provisions of both the Securities Act of 1933 (Section 17(a)) and the Securities Exchange Act of 1934 (Section 10(b) and Rule 10b-5); and (2) the internal controls and books and records provisions of the Exchange Act (Section 13(b)(5) and Exchange Act Rule 13b2-1). Additionally, the jury found that Miller aided and abetted violations of the issuer reporting, books and records, and internal control provisions of the Exchange Act (Sections 13(a) and 13(b)(2)(A), and Exchange Act Rules 12b-20 and 13a-13).

Judge Baverman will schedule a subsequent hearing to decide what remedies, if any to impose.

For additional information concerning this action see Litigation Release No. 18744 / June 14, 2004, and Litigation Release No. 18733 / June 2, 2004. [SEC v. John P. Miller, Civil Action No. 1:04-cv-1655-AJB (N.D.Ga.)] (LR-20705; AAE Rel. 2873)


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United Rentals, Inc. to Pay $14 Million to Settle Financial Fraud Charges
The Commission announced today that it filed charges against United Rentals, Inc. (URI) alleging that URI engaged in financial fraud and in a broad range of other improper accounting practices. URI is one of the largest equipment rental companies in the world with a network of rental locations in the Unites States, Canada and Mexico.

The Commission's complaint, filed in the United States District Court for the District of Connecticut, alleges that, from late 2000 through 2002, URI engaged in a series of fraudulent transactions undertaken in order to meet URI's earnings forecasts and analyst expectations. The fraud was accomplished primarily through a series of interlocking three-party sale-leaseback transactions orchestrated by URI's then- Chief Financial Officer, Michael Nolan, and its then- Chief Acquisitions Officer, John Milne. Nolan and Milne were previously charged by the SEC for individual wrongdoing.

The complaint alleges that in these transactions URI sold used equipment to a financing company and leased it back for a short period, and then arranged for a third party equipment manufacturer to agree to sell the equipment at the end of the lease period and guarantee the financing company against any losses incurred in the resale of the equipment. URI separately guaranteed the equipment manufacturer against any losses it might incur under the guarantee it had extended to the financing company.

The SEC's complaint also alleges that in another effort to improve its earnings, URI engaged in a series of fraudulent "trade packages" with suppliers. The company sold blocks of used equipment for amounts in excess of fair value, in exchange for certain undisclosed financial inducements offered to those suppliers.

In addition, the SEC alleges that from 1997 to 2000, during a period of enormous growth through acquisitions, URI engaged in other improper accounting practices involving its valuations of acquired assets, use of acquisition reserves, and accounting for customer relationships as well as improperly accounting for other items that overstated net income, including its estimation and recording of self-insurance reserves, its recognition of equipment rental revenues, and its income tax accounting.

Without admitting or denying the charges, URI has agreed to settle the SEC's enforcement action and pay $14 million penalty, which the Commission intends to place in a Fair Fund for distribution to affected investors.

In addition to the financial penalty, URI consented to be permanently enjoined from violating Section 17(a) of the Securities Act of 1933, Sections 10(b), 13(a), 13(b)(2)(A) and 13(b)(2)(B) of the Securities Exchange Act of 1934, and Rules 10b-5, 12b-20, 13a-1, 13a-11 and 13a-13, thereunder. The settlement is subject to court approval.

In determining to accept URI's settlement offer, the Commission considered URI's cooperation with the Commission and its staff in the investigation leading to this action, and the remedial actions it has taken.

The Commission acknowledges the assistance of the U.S. Attorney's Office for the District of Connecticut and the New Haven Field Office of the Federal Bureau of Investigation. The SEC's investigation continues.

For further information, see Litigation Release Nos. 20396 (Dec. 12, 2007), 20418 (Dec. 31, 2007), and 20518 (April 7, 2008). [SEC v. United Rentals, Inc., Civil Action No. 3:08-cv-1354 (CFD) / District of Connecticut] (LR-20706; AAE Rel. 2874)


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INVESTMENT COMPANY ACT RELEASES
Prudential Financial, Inc., et al.
The Commission has issued a temporary order to Prudential Financial, Inc., et al. (Prudential) under Section 9(c) of the Investment Company Act with respect to an injunction issued by the U.S. District Court for the District of New Jersey on Sept. 4, 2008 (Injunction). The temporary order exempts applicants and companies of which Prudential is or becomes an affiliated person from the provisions of Section 9(a) until the Commission takes final action on an application for a permanent order. The Commission also has issued a notice giving interested persons until Sept. 30, 2008, to request a hearing on the application filed by applicants for a permanent order under Section 9(c) of the Act. (Rel. IC-28377 - September 5)


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Fidelity Aberdeen Street Trust, et al.
A notice has been issued giving interested persons until September 29 to request a hearing on an application filed by Fidelity Aberdeen Street Trust, et al., for an order under Section 6(c) of the Investment Company Act for an exemption from Rule 12d1-2(a) under the Act. The order would permit registered open-end management investment companies relying on Rule 12d1-2 under the Act to invest in certain financial instruments. (Rel. IC-28376 - September 5)


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SELF-REGULATORY ORGANIZATIONS
Accelerated Approval of Proposed Rule Change
The Commission issued notice and granted accelerated approval of a proposed rule change submitted by NYSE Arca. (SR-NYSEArca-2008-91), through its wholly owned subsidiary, NYSE Arca Equities, Inc., pursuant to Section 19(b) of the Securities Exchange Act of 1934 regarding the listing of fourteen funds of the Commodities and Currency Trust. Publication is expected in the Federal Register during the week of September 8. (Rel. 34-58457)


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Immediate Effectiveness of Proposed Rule Changes
A proposed rule change (SR-NYSEArca-2008-95) filed by NYSE Arca, through its wholly owned subsidiary, NYSE Arca Equities, Inc., relating to net asset value calculations for CurrencyShares Trusts 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 September 8. (Rel. 34-58458)

A proposed rule change (SR-CBOE-2008-94) filed by the Chicago Board Options Exchange to delete obsolete Rule 15.10 (Reporting Requirements Applicable to Short Sales in Nasdaq National Market) 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 September 8. (Rel. 34-58455)


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Approval of Proposed Rule Change
The Commission approved a proposed rule change (SR-FINRA-2008-033) submitted by the Financial Industry Regulatory Authority that adopts the short interest reporting requirements (NASD Rule 3360 and Incorporated NYSE Rules 421(1) and 421.10) as FINRA Rule 4560 in the consolidated FINRA rulebook. Publication is expected in the Federal Register during the week of September 8. (Rel. 34-58461)


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SECURITIES ACT REGISTRATIONS
Latest Securities Act registrations (TXT)

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


http://www.sec.gov/news/digest/2008/dig090808.htm

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Abraham Lincoln


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