U.S. SECURITIES AND EXCHANGE COMMISSION Litigation Release No. 18644 / March 29, 2004 SECURITIES AND EXCHANGE COMMISSION V. WELLNESS UNIVERSE CORPORATION, SYNPAN CORPORATION, AND GEORGE CHARLES PAPPAS, , Civil Action No. 00 Civ. 1147 (S.D.N.Y.) (R.M.B.) The Securities and Exchange Commission ("SEC") announced today that the United States District Court for the Southern District of New York entered final judgments by consent on March 17, 2004, against two corporations, defendants Wellness Universe Corporation ("Wellness") and Synpan Corporation ("Synpan"), and their control person, defendant George Charles Pappas ("Pappas"), in an action brought by the SEC to stop an ongoing pump and dump scheme perpetrated by the defendants in connection with the sale of Wellness stock.
Subject to the judgments are:
Pappas, who is 67 years old, Chairman and Chief Executive Officer of Wellness and Synpan, and a resident of New York, New York.
Wellness, a Minnesota corporation that most recently purported to be in the health and wellness business and whose shares were previously quoted on the OTC Bulletin Board.
Synpan, a Delaware corporation that is controlled by Pappas.
The SEC's complaint alleged that between approximately mid-December 1999 and early February 2000, Pappas caused Wellness and Synpan to issue a series of false or misleading press releases designed to inflate artificially the price of Wellness stock so that the defendants, through certain friends and family members of Pappas, could sell shares of Wellness stock to the public at artificially inflated prices.
Without admitting or denying the allegations of the SEC's complaint, Wellness, Synpan, and Pappas have each consented to the entry of a Final Judgment permanently enjoining each from future violations of Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5, promulgated thereunder. In addition, the Final Judgment to which Pappas has consented requires Pappas to disgorge a total of $1,128,572.24 in ill-gotten gains and prejudgment interest, orders Pappas to pay a $75,000 civil penalty, and imposes on Pappas a penny stock bar and an officer and director bar. That Final Judgment also bars Pappas from ever again offering or selling unregistered securities professionally to investors. Specifically, it will permanently bar Pappas from participating in an unregistered offering "while acting as, on behalf of, or in association with, an issuer, underwriter, broker, or dealer."
Previously, on March 15, 2001, the Court entered a Final Judgment by consent as to relief defendants Paul George Pappas, Kyriak W. Pappas, Karyn L. Pappas, and Makypa. Without admitting or denying the allegations of the Commission's complaint, these relief defendants each consented to entry of a Final Judgment ordering that they collectively disgorge a total $2,220,436.41, representing the defendants' ill-gotten gains, plus prejudgment interest, obtained from the sale of Wellness stock during the course of the fraud.
See also Litigation Release No. 16443 (February 17, 2000)
Wellness Universe, et al. On February 16, 2000, the SEC filed a complaint in connection with a pump and dump scheme perpetrated by George Pappas, the CEO of both Wellness Universe Corp. and Synpan Corp. The SEC alleged that between approximately mid-December 1999 and early February 2000, Pappas caused the companies to issue a series of false or misleading press releases designed to inflate artificially the price of Wellness common stock. The complaint also alleged the defendants, through certain friends and family members of Pappas (“relief defendants”), sold shares of Wellness stock to the public at artificially inflated prices.
Without admitting or denying the allegations of the SEC's complaint, Pappas, Wellness, and Synpan each consented to permanent injunctions, and Pappas agreed to disgorge more than $1.1 million in ill-gotten gains and prejudgment interest, and to pay a $75,000 civil penalty. In addition, the relief defendants agreed to disgorge more than $2.2 million in ill-gotten gains and prejudgment interest.
For more information about the SEC’s action, you can read Litigation Release Nos. 16439, 16443, and 18644.
The Court appointed Alan Vinegrad, Esq., as Distribution Agent. The above funds have been paid and are part of a Disgorgement Fund for distribution to investors who suffered losses on their purchases of Wellness common stock during the scheme. In September 2006, the Court approved the Distribution Agent's proposed plan of distribution. Subsequently, Mr. Vinegrad made distributions to all known claimants.
If you have not received a distribution and believe you are entitled to one, you should immediately contact Ben Razi, attorney for the Distribution Agent, at 202-662-5463.
SECURITIES AND EXCHANGE COMMISSION v. WELLNESS UNIVERSE CORPORATION, SYNPAN CORPORATION, GEORGE CHARLES PAPPAS, Defendants, PAUL GEORGE PAPPAS, KYRIAK W. PAPPAS, MAKYPA, BROOKS WILLIAMS, TOBIAS WEISSMAN, IRIS B. COLEMAN, JOANN CINGARI, AND LOUISE FIORENZA, Relief Defendants. 00 Civ. 1147 (RMB)(S.D.N.Y.)
The Commission today filed a Complaint in the United States District Court for the Southern District of New York charging one individual and two corporations as defendants in connection with a scheme to artificially inflate the value of Wellness Universe Corporation's stock by disseminating a series of fraudulent press releases, primarily over the internet. In addition, the Commission charged eight individuals and one partnership as relief defendants in connection with this "pump and dump" scheme that generated approximately $2.5 million. The Commission simultaneously filed an emergency application seeking, among other things, an order temporarily restraining and preliminarily enjoining the defendants from committing the violations alleged in the Complaint and freezing certain of the defendants' and relief defendants' assets.
Named in the Complaint filed today are:
Wellness Universe Corporation ("Wellness"), a Minnesota corporation;
Synpan Corporation ("Synpan"), a Delaware corporation; and
George Charles Pappas ("George Pappas"), Wellness' and Synpan's 64 year old Chief Executive Officer, who resides in New York, New York.
The Complaint alleges that, since December 1999, George Pappas caused Wellness and Synpan to issue false and misleading press releases, largely over the internet, which boosted the price of Wellness stock from approximately $.10 per share in December 1999 to over $1.00 per share in early February 2000. The Complaint also alleges that, during this time, 3.7 million shares of Wellness stock was sold by members of George Pappas' family and other associates to the public for an aggregate of approximately $2.5 million.
As a result of the foregoing, the Commission alleges that Wellness, Synpan, and George Pappas committed securities fraud in violation of Section 17(a) of the Securities Act of 1933, 15 U.S.C. § 77q(a), and Section 10(b) of the Securities Exchange Act of 1934, 15 U.S.C. § 78j(b) and Rule 10b-5, 17 C.F.R. § 240.10b-5. In addition to the interim relief sought in the application filed today, the Commission seeks a Final Judgment against Wellness, Synpan, and George Pappas: (i) enjoining them from future violations of the above-cited provisions; (ii) requiring disgorgement from Wellness, Synpan, George Pappas, Paul George Pappas, Karyn L. Pappas, Kyriak W. Pappas, Makypa, Brooks Williams, Tobias Weissman, Iris B. Coleman, Joann Cingari, and Louise Fiorenza of all of ill-gotten gains as a result of Wellness', Synpan's, and George Pappas' fraudulent scheme, plus pre-judgment interest; and (iii) assessing civil penalties against Wellness, Synpan, and George Pappas.
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