you think this one is going to trail?
SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 21224 / September 28, 2009
Securities and Exchange Commission v. K&L International Enterprises, Inc., et al., Case No. 6:09-CV-1638-Orl-31KRS (M.D. Fla.)
SEC OBTAINS EMERGENCY RELIEF AGAINST STOCK DISTRIBUTORS STEPHEN CARNES, LAWRENCE POWALISZ AND OTHERSThe Securities andExchange Commission announced today that on September 25, it obtainedemergency relief against Stephen W. Carnes, Lawrence A. Powalisz, theircompanies K&L International Enterprises, Inc., Signature Leisure,Inc., and Signature Worldwide Advisors, LLC (collectively, the StockDistributors), as well as Jared E. Hochstedler and Enzyme EnvironmentalSolutions, Inc. (Enzyme Environmental) The Honorable Gregory A.Presnell of the United States District Court for the Middle District ofFlorida entered a temporary restraining order (TRO) enjoining alldefendants from violating Sections 5(a) and (c) of the Securities Actof 1933. Judge Presnell also ordered an asset freeze against the StockDistributors and temporarily prohibited them from participating in anyoffering of penny stock.
The SEC’s complaint,filed on September 24, alleges that the defendants engaged in anongoing scheme to evade the registration provisions of the federalsecurities laws by selling billions of shares of stock issued bymicrocap companies to the investing public without adhering to theregistration requirements of Section 5 of the Securities Act. Accordingto the complaint, the scheme involved a series of transactions betweenthe Stock Distributors and the microcap companies, including EnzymeEnvironmental (the Issuers), with the same essential characteristics:First, a Stock Distributor either purported to lend money to an Issueror the Issuer identified a “debt” owed to its officer that the Issuerand officer assigned to the Stock Distributor. Second, to reduce oreliminate the loan or the assigned debt, the Issuer issued shares ofits stock to the Stock Distributor. Third, before or after the stockissuances, the Stock Distributor paid the Issuer or an affiliate of theIssuer. Finally, the Stock Distributor immediately sold the shares intothe public market. In two years, the Stock Distributors generatedapproximately $7 million in illegal profits the complaint alleged.
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