SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20509
FORM 8-KA No. 1
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act
March 16, 1998
Date of Report
(Date of Earliest Event Reported)
INTERNATIONAL HERITAGE, INCORPORATED
(Exact Name of Registrant as Specified in its Charter)
Nevada 002-97690-D 87-0421191
(State or other juris- (Commission File No.) (IRS Employer
diction of incorporation) I.D. No.)
Carolina Place
2626 Glenwood Avenue, Suite 200
Raleigh, North Carolina 27608
(Address of Principal Executive Offices)
(919)571-4646
Registrant's Telephone Number
Item 1. Changes in Control of Registrant.
None; not applicable.
Item 2. Acquisition or Disposition of Assets.
None; not applicable.
Item 3. Bankruptcy or Receivership.
None; not applicable.
Item 4. Changes in Registrant's Certifying Accountant.
None; not applicable.
Item 5. Other Events.
On April 20, 1998, the Montana State Auditor's Office issued the First
Amended Cease and Desist Order (the "Order"), in the Matter of: International
Heritage, Inc., Stanley H. Van Etten, Claude W. Savage, Larry G. Smith and
International Heritage, Incorporated, a Nevada corporation, and their agents
and representatives, case no. I-04-02-98-04, which amended the findings of
fact contained in the original order as follows: all references to the
Independent Retail Sales Representative, Johnny Daniel were removed from the
Order; the Commission alleged that: (1) at all times material hereto, IHI's
marketing program was not registered as a security in Montana; (2) that
Respondent Van Etten, on behalf of IHI, falsely informed Montana agents and
representatives of IHI that the Commissioner had agreed to rescind or cancel
the April 3, 1998, Cease and Desist Order and that IHI's Montana
representatives and agents were no longer subject to that Order; and, (3) that
Respondent Van Etten failed to disclose material facts necessary to be
disclose in order to make the statements made not misleading in light of the
circumstances under which they were made. The First Amended Cease and Desist
order contained the following amendments from the conclusions of law contained
in the original Cease and Desist Order: in connection with the offers of
securities [through IHI's marketing program] to Montana residents, Respondents
Van Etten and IHI violated Section 30-10-301(1) and Section 30-10-302, MCA, when
they falsely informed and knowingly made false and misleading statements to
Montana agents and representatives of IHI that on or about April 8, 1998 the
Commissioner had agreed to rescind or cancel the April 3, 1998, Cease and
Desist Order and that they [Montana agents and representatives of IHI] were no
longer subject to that Order. The Staff recommended that the Commissioner
impose total fines of $250,000 and order Respondents, Van Etten, IHI, Savage
and Smith to make restitution for all financial losses sustained by Montana
residents as a result of Respondents' alleged violations of the Montana
Securities Act.
On May 1, 1998, the Commissioner and IHI entered a Consent Order and
Order Vacating Cease and Desist Orders. With the Consent Order, the
Commissioner and IHI seek to: provide an opportunity to educate the citizens
of Montana of the dangers of illegal pyramid schemes and the value of
securities statutes in the State of Montana; to avoid the expense of
litigating the issues contained in the two orders issued by the Commissioner
and to resolve all differences between the Commissioner and IHI. The
Commissioner concluded that IHI is permitted to conduct business in the State
of Montana consistent with the modified marketing and compensation plan
submitted to legal counsel for the Commissioner and as authorized by United
States District Court Judge Richard Story of the Northern District of Georgia,
Atlanta Division in an Order Approving the Modified Compensation and Marketing
Plan entered April 22, 1998 in the action Securities and Exchange Commission
v. International Heritage, Inc. et. al., civil action no. 1 98-CV-0803-RWS.
Without admitting any liability under any Montana statute, IHI
stipulated and consented to: comply with the Securities Act of Montana and the
rules and orders promulgated thereunder; to offer the right to rescind the
sale of any notes purchased by Montana citizens between July 17, 1997 and
October 31, 1997; to offer refunds to all Montana citizens of any costs
associated with a retail business agreement used by IHI as a manner of
purchasing product in the past, less any commissions or refunds previously
paid; provided the person requesting the refund put such request in writing
and certifying their Montana citizenship at the time of executing the retail
business agreement and his or her intent to terminate their association with
IHI; pay all properly requested refunds within six months following receipt of
said request; pay $21,000 to the Commissioner for reimbursement of
investigative costs; contribute in 1998 to youth activities and consumer
protection efforts in Montana, including public education about the
protections afforded by Montana's securities laws; provide, for the purpose of
monitoring the activities of IHI and its independent retail sales
representatives, documents to the Commissioner upon the reasonable request of
the Commissioner and his staff; and waive the right to a hearing on the
allegations contained within the earlier issued Cease and Desist Orders.
The Cease and Desist Order dated April 3, 1998 and the First Amended
Cease and Desist Order dated April 20, 1998 were vacated. The Commissioner
has agreed that if the terms of the Consent Order are satisfied, he will not
initiate any civil or administrative action against IHI or any of the
individual Respondents as set out in the earlier issued Cease and Desist
Orders. Further it was stipulated and consented by the Commissioner that the
Consent Order shall not and does not constitute a securities or investment
related permanent or temporary injunction for the purposes of any collateral
effects or reporting requirements under state securities laws or self-
regulatory organization rules, nor does the Order restrict, limit, prohibit or
disqualify the Respondents, or any affiliate of the Respondents, in any manner
from engaging in any lawful activity or practice pursuant to the Securities
Act of 1933, the Securities and Exchange Act of 1934, the Investment Advisors
Act of 1940, or the Commodity Exchange Act, and/or any rules or regulations
promulgated thereunder, and/or any state securities and commodities laws or
acting as an affiliated person or any underwriter, broker, dealer, investment
advisor, investment company, bank, insurance company or other entity or person
under applicable federal or state insurance, securities, banking or commodity
laws.
Respondent Van Etten, on behalf of all of the Respondents, paid, upon
execution of the Consent Order, the $21,000 reimbursement of investigative
costs and the Company and the individual Respondents shall endeavor to carry
out the provisions of the Consent Order as expeditiously as possible.
On April 17, 1998, in the class action filed in the District court of
Dallas County, Texas, F-116th Judicial District, by Craig T. Liebenforfer,
individually and on behalf of others similarly situated v. International
Heritage, Inc., case no DV98-2241, Defendant filed an Answer generally denying
each and every allegation set forth in Plaintiffs' Original Class Action
Petition and demanding strict proof thereof. Additionally, Defendant
requested that Defendant recover all costs of the action.
On April 27, 1998, Plaintiffs filed a First Amended Class Action
Petition alleging various facts as originally set forth and contained in the
Complaint filed by the Securities and Exchange Commission in their action
against International Heritage, Inc. et. al., United States District Court for
the Northern District of Georgia, Atlanta Division, civil action no. 1 98-CV-
0803-RWS.
On April 22, 1998, in the United States District Court for the Northern
District of Georgia, Atlanta Division, civil action no. 1 98-CV-0803-RWS,
Securities and Exchange Commission v. International Heritage, Inc. et. al.,
the Court ordered, on Defendant International Heritage's Application for an
Order Approving the Modified Compensation and Marketing Plan, that IHI is
authorized to conduct business consistent with the modified plan submitted to
the Court and under the continued observation of the Monitor. The Monitor is
directed to monitor the Defendants' level of compliance with this and the
Court's previous orders.
On April 28, 1998, in the United States District Court for the Eastern
District of North Carolina, civil action no 5:98-CV-237-BR-2, Sharon A.
Meckenstock, Dan H. Meckenstock, Custodian FBO Jean Carlo Meckenstock and
Wilbur E. Meckenstock, on their own behalf and on behalf of a class of all
persons similarly situated v. International Heritage, Inc., Stanley H. Van
Etten, Claude W. Savage, Larry G. Smith, and International Heritage,
Incorporated, Defendants filed an Answer specifically setting forth the
matters which are admitted and those which are denied, and setting forth the
following additional defenses: the Court lacks subject matter jurisdiction
over some or all of the claims asserted in the Complaint; the Complaint fails
to state a claim for which relief can be granted; Defendants rely on and
assert any other matter constituting an avoidance or affirmative defends and
the Court lacks personal jurisdiction over Defendant Smith. Defendant's pray
the Court: deny class certification' the relief requested by Plaintiffs; award
Defendants their reasonable attorneys fees and costs and grant a jury trial on
all issues.
Item 6. Resignations of Registrant's Directors.
None; not applicable.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
None; not applicable.
Item 8. Change in Fiscal Year.
None; not applicable.
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act
of 1934, the Registrant has duly caused this Report to be signed on its
behalf by the undersigned hereunto duly authorized.
INTERNATIONAL HERITAGE, INCORPORATED
Date: 05/08/1998. By /s/ Stanley H. Van Etten
_______________________________________
President, CEO and Chairman of the Board
