UNITED STATES OF AMERICA Before the SECURITIES AND EXCHANGE COMMISSION SECURITIES ACT OF 1933 Release No. 8793 / April 24, 2007 SECURITIES EXCHANGE ACT OF 1934 Release No. 55662 / April 24, 2007 ADMINISTRATIVE PROCEEDING File No. 3-12622 In the Matter of Tier One, Inc. and Bernardo D. Carella, Respondents. ORDER INSTITUTING ADMINISTRATIVE AND CEASE-AND-DESIST PROCEEDINGS, MAKING FINDINGS, AND IMPOSING REMEDIAL SANCTIONS AND A CEASEAND-DESIST ORDER PURSUANT TO SECTION 8A OF THE SECURITIES ACT OF 1933, AND SECTIONS 15(b), 21B AND 21C OF THE SECURITIES EXCHANGE ACT OF 1934. I. The Securities and Exchange Commission (“Commission”) deems it appropriate and in the public interest that cease-and-desist proceedings be, and hereby are, instituted against Tier One, Inc. (“Tier One”) and Bernardo D. Carella (“Carella”), pursuant to Section 8A of the Securities Act of 1933 (“Securities Act”), and Section 21C of the Securities Exchange Act of 1934 (“Exchange Act”), and that public administrative proceedings be, and hereby are, instituted against Carella by the Commission, pursuant to Sections 15(b) and 21B of the Exchange Act. II. In anticipation of the institution of these proceedings, Tier One and Carella have submitted Offers of Settlement (the “Offers”) which the Commission has determined to accept. Solely for the purpose of these proceedings and any other proceedings brought by or on behalf of the Commission, or to which the Commission is a party, and without admitting or denying the findings
herein, except as to the Commission’s jurisdiction over them and the subject matter of these proceedings, which are admitted, Tier One and Carella consent to the entry of the Order Instituting Administrative and Cease-and-Desist Proceedings, Making Findings, and Imposing Remedial Sanctions and a Cease-and-Desist Order Pursuant to Section 8A of the Securities Act, and Sections 15(b), 21B and 21C of the Exchange Act (“Order”), as set forth below. III. On the basis of this Order and the Offers, the Commission finds1 that Summary This matter concerns violations of the securities registration provisions of the Securities Act and the broker-dealer registration provisions of the Exchange Act, by Tier One, Inc. and its president and sole stockholder, Bernardo D. Carella in connection with their sale of limited partnership interests in an oil and gas venture, Abilene Oil & Gas LP (“Abilene LP”). The limited partnership offering raised a total $1.1 million from 52 investors in ten states and Canada, and was the subject of a recent emergency injunctive proceeding by the Commission.2 In the course of the discovery in the injunctive action, the Commission staff determined that Tier One and Carella acted as securities broker-dealers, without registering as such, and raised a total of $342,000 from the unregistered, non-exempt sale of 19 Abilene LP limited partnership interests to ten investors in five states. For their sales efforts, Tier One and Carella received gross commissions of $85,000. Respondents 1. Tier One, Inc. is a New York corporation that Bernard D. Carella formed on June 13, 2003, and its sole place of business is Haverstraw, New York. Carella is Tier One’s president and sole owner. The securities sold by Tier One were interests in Sunray oil and gas partnerships. Tier One is not registered with the Commission or any state as a broker-dealer. 2. Bernard D. Carella, 55, is a resident of Haverstraw, New York, and is the president, and the sole shareholder and director of Tier One. Carella is not registered with the Commission or any state as a broker-dealer or as a broker-dealer’s registered representative. Other Relevant Individuals and Entities 3. Sunray Oil Company, Inc. is an Oklahoma corporation with offices in Addison, Texas. Sunray is the general partner of the Abilene LP limited partnership. 1 The findings herein are made pursuant to Tier One and Carella’s Offer of Settlement and are not binding on any other person or entity in this or any other proceeding. 2 See SEC v. Sunray Oil Company, Inc., et. al., Civ. Act. No.3:06-CV-1097 (U.S. Dist. Ct. Northern District of Texas, Dallas Division/June 21, 2006) (SEC Lit. Rel. No. 19737/June 23, 2006). The Commission's complaint alleges that Abilene LP, Sunray, and Larry Stiles, Sunray's president, violated the registration provisions of the Securities Act and the anti-fraud provisions of the Securities Act and the Exchange Act, and seeks preliminary and permanent injunctive relief, disgorgement plus pre-judgment interest and civil penalties. 2
4. Abilene Oil & Gas LP is a limited partnership registered with the State of Texas on May 31, 2006. Sunray is its general partner. The Abilene LP Offering 5. Sunray was the general partner of Abilene LP. From January 2005 to March 2006, Sunray conducted an offering in which it sold 60 limited partnership units in the Abilene LP offering and raised $1.14 million from 52 investors residing in 10 states and Canada. Sunray’s offer of the Abilene LP interests was not registered with the Commission. 6. From May to August 2005, Tier One offered and sold limited partnership interests in the Abilene LP offering, pursuant to an agreement with Sunray, for a gross commission of 25% of funds raised.3 Although Tier One and Carella received transaction-based compensation for the sale of securities, they were not registered with the Commission or any state as a broker-dealer or its registered representative. 7. Sunray generated the names of prospective investors through its website and an Internet media campaign. Sunray then gave Tier One the names of prospects who responded to these public solicitations. Thereafter, Tier One contacted the prospects by telephone, and mailed them the offering documents, an accreditation questionnaire and a subscription agreement that Sunray provided to Tier One. If a prospect decided to invest, that investor would complete the questionnaire and subscription agreement and mail them directly to Sunray, along with his investment. Sunray would then pay Tier One its commission. 8. Sunray claimed that the Abilene LP offering was exempt from registration under Regulation D, Rule 506 of the Securities Act, and that no unaccredited investor would be allowed to invest. In fact, the Abilene LP offering was sold to at least 16 unaccredited investors, and at least three of the purchasers investing through Tier One were unaccredited. The unaccredited investors did not receive the financial statements and other disclosures required when a Rule 506 offering is sold to unaccredited investors. 9. Tier One sold 19 limited partnership interests in the Abilene LP offering for $324,000 to ten investors in California, Florida, Illinois, Indiana and New Mexico, netting a 15% commission of $53,100 for its efforts. Violations 10. As a result of the conduct described above, Tier One and Carella willfully violated Sections 5(a) and 5(c) of the Securities Act by directly or indirectly offering to sell or selling Abilene LP limited partnership interests when no registration statement was in effect or had been filed as to those securities, and no exemption from registration was available. The Abilene LP private placement memorandum disclosed the 25% commission. 3 3
11. As a result of the conduct described above, Tier One and Carella willfully violated Section 15(a)(1) of the Exchange Act by effecting transactions in, or inducing or attempting to induce the purchase or sale of, Abilene LP limited partnership interests as a broker, without having been registered with the Commission as such. Disgorgement and Civil Money Penalties 12. Tier One and Carella have submitted sworn Statements of Financial Condition, dated October 1, 2006, and other evidence and have asserted their inability to pay disgorgement plus prejudgment interest or a civil money penalty. IV. In view of the foregoing, the Commission deems it appropriate, to impose the sanctions agreed to in Tier One and Carella’s Offers. Accordingly, pursuant to Section 8A of the Securities Act and Section 21C of the Exchange Act, it is hereby ORDERED that: Respondents Tier One and Carella shall cease and desist from committing or causing any violations and any future violations of Sections 5(a) and 5(c) of the Securities Act, and Section 15(a)(1) of the Exchange Act. Pursuant to Sections 15(b) and 21B of the Exchange Act, it is hereby further ORDERED that: Respondent Carella be, and hereby is barred from association with any broker or dealer, with a right to apply for association after one (1) year to the appropriate self-regulatory organization, or if there is none, to the Commission; and Respondents Tier One and Carella shall collectively pay disgorgement of $53,100 plus prejudgment interest, but that payment of such amount is waived, and a penalty against Carella is not imposed, based upon Tier One and Carella’s sworn representations in their Statements of Financial Condition, dated October 1, 2006, and other documents submitted to the Commission. The Division of Enforcement ("Division") may, at any time following the entry of this Order, petition the Commission to: (1) reopen this matter to consider whether Tier One and Carella provided accurate and complete financial information at the time such representations were made; and (2) seek an order directing payment of disgorgement and pre-judgment interest, and the maximum civil penalty allowable under the law. No other issue shall be considered in connection with this petition other than whether the financial information provided by Tier One and Carella was fraudulent, misleading, inaccurate, or incomplete in any material respect. Tier One and Carella may not, by way of defense to any such petition: (1) contest the findings in this Order; (2) assert that payment of disgorgement and interest, and penalty should not be ordered; (3) contest the amount of disgorgement and interest to be ordered, or the imposition of the maximum penalty 4
allowable under the law; or (4) assert any defense to liability or remedy, including, but not limited to, any statute of limitations defense. By the Commission. Nancy M. Morris Secretary 5
34-55660 Apr. 24, 2007 Marex.com, Inc. n/k/a Marex, Inc., Modern Computer Systems, Inc., Panther Telecommunications Corp., Royal Casket Distribution Corp., Schoolwurks, Inc., SkyWay Communications Holding Corp., and South Beach Concepts, Inc. n/k/a Global Franchise Concepts, Inc. Note: See also the Order in this matter http://www.sec.gov/litigation/admin/2007/34-55660.pdf
U.S. SECURITIES AND EXCHANGE COMMISSION Washington, D.C. SECURITIES EXCHANGE ACT OF 1934 Release No. 55660 / April 24, 2007 Administrative Proceeding File No. 3-12621 In the Matter of Marex.com, Inc. n/k/a Marex, Inc., Modern Computer Systems, Inc., Panther Telecommunications Corp., Royal Casket Distribution Corp., Schoolwurks, Inc., SkyWay Communications Holding Corp., and South Beach Concepts, Inc. n/k/a Global Franchise Concepts, Inc. SECURITIES AND EXCHANGE COMMISSION INSTITUTES ADMINISTRATIVE PROCEEDINGS AGAINST SEVEN COMPANIES FOR FAILURE TO MAKE REQUIRED PERIODIC FILINGS The U.S. Securities and Exchange Commission today issued public administrative proceedings against seven companies to determine whether the registration of each class of their securities should be revoked or suspended for a period not exceeding twelve months for failure to file required periodic reports: • Marex.com, Inc. n/k/a Marex, Inc. (MARX) • Modern Computer Systems, Inc. • Panther Telecommunications Corp. • Royal Casket Distribution Corp. • Schoolwurks, Inc. • SkyWay Communications Holding Corp. (SWYCQ) • South Beach Concepts, Inc. n/k/a Global Franchise Concepts, Inc. In this Order, the Division of Enforcement (Division) alleges that the seven issuers are delinquent in their required periodic filings with the Commission. In this proceeding, instituted pursuant to Securities Exchange Act of 1934 (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 a failure to comply with violations of 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 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.
34-55659 Apr. 24, 2007 Airbomb.com, Inc., Internetstudios.com, Inc., Megamedia Networks, Inc., and World Cyberlinks Corp. Note: See also the Order in this matter http://www.sec.gov/litigation/admin/2007/34-55659.pdf
U.S. SECURITIES AND EXCHANGE COMMISSION Washington, D.C. SECURITIES EXCHANGE ACT OF 1934 Release No. 55659 / April 24, 2007 Administrative Proceeding File No. 3-12620 In the Matter of Airbomb.com, Inc., Internetstudios.com, Inc., Megamedia Networks, Inc., and World Cyberlinks Corp. SECURITIES AND EXCHANGE COMMISSION INSTITUTES ADMINISTRATIVE PROCEEDINGS AGAINST FOUR COMPANIES FOR FAILURE TO MAKE REQUIRED PERIODIC FILINGS The U.S. Securities and Exchange Commission today instituted public administrative proceedings against the following four companies to determine whether the registration of each class of their securities should be revoked or suspended for a period not exceeding twelve months for failure to file required periodic reports: • Airbomb.com, Inc. (ABOM) • Internetstudios.com, Inc. (ISTO) • Megamedia Networks, Inc. (MGCH) • World Cyberlinks Corp. (WCYB)
In this Order, the Division of Enforcement (Division) alleges that the four issuers are delinquent in their required periodic filings with the Commission. In these proceedings, instituted pursuant to Securities Exchange Act of 1934 (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 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 these proceedings issue an initial decision not later than 120 days from the date of service of the order instituting proceedings.
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