Merle Ferguson-- a good ol' country boy? buyer of edig's partner APS:
SECURITIES AND EXCHANGE COMMISSION
Litigation Release 17032 / June 11, 2001
SEC v. World Homes, Inc., Merle Ferguson and Susan Donohue, Civil
Action No. CV-S-01-658-PMP-LRL (USDC D Nev)
On June 8, 2001, a complaint was filed seeking permanent injunctions
against World Homes, Inc. ("World Homes") and Merle Ferguson alleging
violations of Sections 5(a), 5(c) and 17 (a) of the Securities Act,
and Section 10(b) of the Exchange Act and Rule l0b-5 thereunder, and
against Susan Donohue for violations of Sections 5(a) and 5(c) of the
Securities Act. The Commission's complaint also seeks civil money
penalties against Ferguson.
The Complaint alleges that from approximately January 2000 through
February 2001, World Homes, through its President and Chief Executive
Officer, Merle Ferguson, distributed several false and misleading
press releases misrepresenting, among other things, the following
material facts 1) that World Homes operated and maintained a
production facility for its cement product; 2) that World Homes
possessed financing loans of fifteen million dollars; and 3) that
World Homes had generated over $480 million in contracted business.
These false press releases resulted in an increase in the price of
World Homes' common stock and an increase in the volume of shares
traded on the OTC Bulletin Board.
In addition, it is alleged that from on or about July 16, 1999,
through on or about February 20, 2001, World Homes made nine filings
on Form S-8, registering 4,892,977 shares with a stated maximum value
of $3,777,313. Many of these shares were issued to Ferguson and
Donahue, or entities controlled by them. These shares were allegedly
issued in large part not to compensate those employees, but to raise
capital for World Homes. Ferguson and Donahue sold these shares into
the market and remitted most of the proceeds to World Homes, which
used the funds to finance operations. The complaint alleges Ferguson
and Donahue filed no registration statement with respect to the
resales and no exemption from registration was available with respect
to these offers and sales.
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FINAL JUDGMENT OF PERMANENT INJUNCTION ENTERED AGAINST WORLD HOMES, INC., MERLE FERGUSON AND SUSAN DONOHUE
On January 14, the Honorable Phillip M. Pro issued final judgments of permanent injunction against World Homes, Inc., currently known as Composite Industries of America, Inc., and Merle Ferguson, its President and Chief Executive Officer, enjoining them from future violations of the securities registration and antifraud provisions of the federal securities laws. In addition, Susan Donohue, the company's Secretary- Treasurer, was enjoined from future violations of the securities registration provisions. The defendants consented to the orders without admitting or denying the Commission's allegations. Ferguson was also ordered to pay a civil money penalty in the amount of $120,000.
The complaint alleges that from approximately January 2000 through February 2001, World Homes, through Ferguson, distributed several false and misleading press releases misrepresenting, among other things, the following material facts: 1) that World Homes operated and maintained a production facility for its cement product; 2) that World Homes had obtained financing loans of fifteen million dollars; and 3) that World Homes had generated over $480 million in contracted business. These false press releases resulted in an increase in the price of World Homes= common stock and an increase in the volume of shares traded on the OTC Bulletin Board. In doing so, the complaint alleges World Homes and Ferguson violated Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder.
In addition, it is alleged that from on or about July 16, 1999, through on or about February 20, 2001, World Homes made nine filings with the Commission on Form S-8, registering 4,892,977 of its shares with a stated maximum value of $3,777,313. It is further alleged that many of these shares were issued to Ferguson and Donahue, or entities controlled by them. Ferguson and Donahue sold these shares into the market and remitted most of the proceeds to World Homes, which used the funds to finance the issuer's operations. The complaint alleges this conduct by World Homes, Ferguson and Donahue violated Section 5 of the Securities Act. [SEC v. World Homes, Inc. et al., Civil Action No. CV-S-01-0658-PMP (LRL), USDC D.Nev.] (LR-17328)
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SEC NEWS DIGEST
Issue 2002-186 September 25, 2002
COMPOSITE HOLDINGS, INC. AND MERLE FERGUSON HELD IN CIVIL CONTEMPT
On September 13, the Honorable Philip M. Pro, United States District
Judge, entered an order holding Defendants Composite Holdings, Inc., aka
Composite Industries, Inc. fka World Homes, Inc., and Merle Ferguson in
civil contempt for violations of the January 14, 2002, Judgment which,
among other provisions, enjoined Composite and Ferguson from violations
of the antifraud provisions of the federal securities laws.
The Court further ordered that Composite and Ferguson will remain in
contempt until such time as Composite and Ferguson have conclusively
demonstrated that they are not engaging in conduct enjoined by the
January 14, 2002, Judgment. The Court also ordered that until Composite
and Ferguson purge themselves of the contempt by conclusively
demonstrating that they are not engaging in conduct which violates the
January 14, 2002, Judgment, each defendant will pay a penalty of
$120,000 plus $5,000 per day until they have corrected their false and
misleading public statements. [SEC v. Composite Holdings, Inc., aka
Composite Industries, Inc. fka World Homes, Inc., and Merle Ferguson,
Case No. CV-S-01-0658-PMP-LRL (USDC D.Nev.)] (LR-17741)
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