<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
FORM 8-K
CURRENT REPORT
Pursuant to Sections 13 of 15(d) of the Securities
Exchange Act of 1934
Date of Report (Date of earliest event reported):
September 25, 1996
SYSTEMS OF EXCELLENCE, INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Florida 0-20788 65-0126945
- --------------------------------------------------------------------------------
(State or other (Commission File (IRS Employer
jurisdiction of Number) Identification
incorporation) Number)
Tysons Dulles Plaza
1420 Spring Hill Road, Suite 155, McLean, Virginia 22102
--------------------------------------------------------
(Address of Principal Executive offices)
Registrant's telephone number, including area code: (703) 734-9200
Registrant's Former Name or Address: N/A
<PAGE> 2
ITEM 4. Changes in Registrant's Certifying Accountant
The information in this Item 4 and elsewhere in this Form 8-K is
provided by Registrant's present management (see Items 5 and 6 below), and is
based upon information obtained by present management as a result of diligent
inquiry during the short time present management has been in place, from
Registrant's records, and from accountants, counsel and others who were
associated with Registrant from time to time during the periods referred to
herein. Neither Registrant's President and Chief Executive Officer nor members
of Registrant's current Board of Directors other than Mr. Ken Walther, who
resigned as Registrant's President effective November 1, 1996, were affiliated
with Registrant in such capacities prior to approximately October 24, 1996 and
as a result, do not have personal knowledge of the events reported herein which
occurred prior to that date.
On or about September 18, 1996, confirmed by letter dated September
20, 1996, Weinberg, Pershes & Company, P.A. ("WPC") advised Registrant of the
need to expand "significantly" the scope of its audit. WPC had been engaged as
Registrant's Independent Certifying Accountant on or about July 2, 1996, to
among other things, audit Registrant's balance sheet as of February 29, 1996
and Registrant's related statements of operations, retained earnings, and cash
flows for the year then ended. The basis of WPC's September 18, 1996 advice to
Registrant is more fully set forth in WPC's letter to Registrant dated
September 20, 1996 and delivered to Mr. Huttoe, on behalf of Registrant on or
about that date, a copy of which is included herewith, and hereby incorporated
by reference.
On or about September 25, 1996, David M. Goldstein, Esq., believed by
Registrant's present management to have been counsel for Registrant at the
time, formally notified WPC that its services as Registrant's Independent
Certifying Accountant was no longer required. Upon information and belief,
Registrant's present management believes that Mr. Goldstein was instructed to
advise WPC by Registrant's then Chief Executive Officer and one of Registrant's
two (2) directors, Charles O. Huttoe.
On September 21, 1996, Registrant under the direction and control of
Mr. Huttoe, was caused to appoint M. S. Finkel & Co., CPA, purportedly as
Independent Certifying Accountant to replace WPC. In connection with such
appointment, on or about September 30, 1996, Registrant filed a Report on Form
8-K with the Securities and Exchange Commission ("SEC"), disclosing the change
of Registrant's accountants and stating that there had been no disagreements
with WPC "on any matters of accounting principals or practices, financial
statement disclosure or auditing scope or procedure or any reportable events".
The September 30, 1996 Form 8-K disclosure was incorrect and as mentioned above
there were disagreements between WPC and Registrant. As a result of, and in
connection with the replacement of WPC by M.S. Finkel & Co., WPC was dismissed
as Registrants certifying accountants effective September 21, 1996.
<PAGE> 3
M. S. Finkel & Co. prepared Registrant's balance sheet as of February
29, 1996 and Registrant's related statements of operations, shareholders
equity, and cash flows for the year then ended, which were included in
Registrant's Form 10-KSB filed with the SEC on or about September 24, 1996.
On or about October 4, 1996, the SEC issued a Formal Order of
Investigation (See Item 5 hereof). On or about October 10, 1996, Registrant,
by action of Mr. Huttoe and Maria Iacovelli, purportedly engaged the services
of Feldman, Radin & Co., P.C. Registrant has been unsuccessful in its attempts
to contact M.S. Finkel & Co., and as a result, does not know whether there were
any disagreements between Mr. Huttoe and M. S. Finkel & Co., and/or Registrant
and M.S. Finkel & Co., regarding any accounting issues. On October 18, 1996,
Mr. Kenneth Walther, then President of Registrant (see Items 5 and 6 below), in
a press release issued by Registrant, stated that Feldman, Radin & Co., P.C.
had been engaged to re-audit the financial statements included in Registrant's
Form 10-KSB for the period ended February 29, 1996 because Registrant lacked
confidence in such financial statements, which were prepared and purportedly
subjected to an audit by M.S. Finkel & Co. Registrant is unaware of any action
undertaken in connection with Registrant by Feldman, Radin & Co., P.C. as a
result of the aforementioned appointment.
On November 6, 1996, Registrant reached agreement with WPC to
re-engage WPC as Registrant's Independent Certifying Accountants to: 1)
complete its audit of the balance sheet of Registrant as of February 29, 1996
and the related statements of operations, stockholders' equity, and cash flows
for the year then ended, including the expanded scope of such audit as
indicated in WPC's letter to Registrant dated September 20, 1996; 2) render
consulting services and advice to Registrant, and in particular, advice
regarding Registrants periodic filings in 1996; and 3) audit Registrant's
balance sheet as of February 28, 1997, and the related statements of
operations, stockholders' equity, and cash flows for the year then ended.
As a result of the foregoing, on November 7, 1996, Registrant informed
Feldman Radin & Co., P.C. that Registrant had decided to re-engage its former
auditors to complete its accounting requirements. There was no disagreement
between Registrant and Feldman, Radin & Co., with respect to any accounting
issues. A copy of this Form 8- K will be provided to Feldman Radin & Co.
Nothing in connection with Registrant's re-engagement of WPC and termination of
a relationship, if any, with Feldman, Radin & Co., P.C., should be viewed as
casting any aspersions on Feldman, Radin & Co. P.C.
ITEM 5. Other Events
a. Forms S-8
On or about September 24, 1996, Registrant, as a result of
instructions from Mr. Huttoe, filed approximately 16 registration statements on
Forms S-8 with the SEC with respect to a total of approximately 39,577,538
shares of Registrant's common stock. Each
<PAGE> 4
of the Forms S-8 caused to be filed with the SEC by Mr. Huttoe, reflected that
the shares of Registrant's common stock referred to in the respective Forms S-8
were issued to the recipient as compensation for services rendered to
Registrant. Registrant, as of the date of this report, does not have
sufficient information available to it to determine, among other things, the
exact nature or extent of the services, if any, rendered to Registrant by the
persons named in the aforementioned Forms S-8, whether those services, if any,
were actually rendered, or the value, fair market or otherwise, of the
services, if any, rendered to Registrant by the recipient of the shares named
in the Forms S-8 as the recipient. However, in certain cases, Registrant has
determined that certain shares of Registrant's common stock referred to in the
Forms S-8 were not issued for services rendered to Registrant, certain shares
were issued for cash payments to Registrant, and certain shares may have been
issued to nominees of Mr. Huttoe. Registrant's new management is conducting an
inquiry regarding, among other things, the facts surrounding the Forms S-8 and
Mr. Huttoe's actions with respect thereto. Registrant has also commenced
efforts to determine the property of the issuance of such shares and whether
any of the aforementioned shares or the value thereof, can be recovered by
Registrant.
b. Prior Periodic Reports.
On or about September 24, 1996, Registrant filed with the SEC,
Registrant's Form 10-KSB for the year ended February 29, 1996, and Registrant's
Form 10-QSB for the quarterly period ended May 31, 1996. Registrant lacks
confidence in the financial information and other disclosures in both of those
period reports and has retained the services of accountants (see Item 4
hereof), new counsel and others to investigate and determine the facts and
recommend remedial steps, if any, and if appropriate.
c. SEC Investigation
On or about October 4, 1996, the SEC issued a private formal order of
investigation concerning Registrant, the various filings made by it with the
SEC, trading in Registrant's securities, and the actions of Mr. Huttoe with
respect thereto. Registrant has and continues to voluntarily and actively
cooperated with the SEC in connection with its investigation.
d. SEC Ordered Suspension of Trading
On October 7, 1996, the SEC temporarily suspended trading in
Registrant's securities for a period of fourteen (14) days. In its press
release regarding the suspensions, the SEC stated:
"The Commission [SEC] ordered this trading suspension because
of questions raised as to the adequacy and accuracy of
publicly-disseminated information concerning, among other things: (1)
SOE's [Registrant] reported financial condition; (2) the existence and
value of services rendered to SOE in exchange for stock issued by SOE;
(3) whether stock was issued by SOE to consultants without
registration; (4) the reasons for changes in SOE's independent
accountants; and (5) SOE's
<PAGE> 5
sales of its video teleconferencing products. The Commission
determined that the public interest and the protection of investors
requires a suspension of trading in SOE securities."
As noted in this Form 8-K, Registrant's current management has taken
various steps to investigate and resolve these issues.
e. New Management
Registrant's present management has been advised that on October 10,
1996, Mr. Huttoe and Ms. Iacovelli as Registrant's Board of Directors, among
other things, appointed Walther and David Bruggeman as directors of Registrant,
elected Mr. Walther as Chief Executive Officer of Registrant to replace Mr.
Huttoe who was either going to resign from such capacity with Registrant or
taking an administrative leave of absence from association with Registrant and
appointed new accountants (see Item 4, hereof). Registrant's present
management also has been advised that on that same day, October 10, 1996, Mr.
Huttoe advised Registrant that he would resign as a director of Registrant and
Ms. Iacovelli advised Registrant that she resigned as Registrant's corporate
secretary and director.
Apparently, Mr. Huttoe did not formally resign as director of
Registrant on October 10, 1996. On October 24, 1996, Mr. Huttoe approved and
accepted the appointment of new directors of Registrant, including David
Bruggeman, Thomas G. Clines, Kathleen S. Connell, Michael P. Hegarty, William
H. Sullivan and Kenneth W. Walther. On October 30, 1996, Mr. Huttoe confirmed
in writing to Registrant that he resigned as a director of Registrant.
By letter dated October 31, 1996, Mr. Bruggeman, Registrant's Vice
President of Product Management, declined appointment to Registrant's Board of
Directors. By letter dated November 4, 1996, Mr. Khan confirmed that he
declined appointment to Registrant's Board of Directors.
On November 1, 1996, Registrant's Board of Directors, consisting of
five (5) directors - Thomas G. Clines, Kathleen S. Connell, Michael P. Hegarty,
William A. Sullivan and Kenneth Walther, among other things, elected Ms.
Connell as Chairperson of the Board of Directors, accepted the resignation of
Mr. Walther as President and Chief Executive Officer of Registrant, elected Mr.
Thomas G. Clines as President and Chief Executive Officer of Registrant,
determined to re-engage WPC as Registrant's Certifying Accountant (see Item 4
hereof) and confirmed Mr. Huttoe's resignation as an officer and director of
Registrant.
f. SEC Complaint
On November 7, 1996, the SEC filed a Complaint and, among other
things, a Motion for Temporary Restraining Order naming, among others, Mr.
Huttoe, his wife, mother, other entities and Registrant as defendants. A Copy
of the SEC's Complaint (without exhibits) is included herewith. The SEC's
Complaint, among other things, seeks to enjoin the various defendants from a
variety of activities and further seeks monetary disgorgement and monetary
<PAGE> 6
penalties from Mr. Huttoe and others but not Registrant. The SEC's action was
filed in the United States District Court for the District of Columbia (Civil
Action No. CV 96 02543 GK).
On November 7, 1996, after a hearing on the SEC's motion for temporary
restraining order, the Court granted the SEC's motion. A copy of the Court's
Order is included herewith. As can be seen by the SEC's complaint and the
Court's Order, the SEC does not seek monetary penalties or sanctions from
Registrant.
ITEM 6. Resignations of Registrant's Directors.
Registrant believes that on October 10, 1996, Mr. Huttoe announced
that he would resign as a director of Registrant (see Item 5) and that Ms.
Iacovelli did resign as a director of Registrant. Mr. Huttoe provided
Registrant with a written resignation dated October 30, 1996.
ITEM 7. Financial Statements and Exhibits.
(c) Exhibits
Exhibit No. Document Description
----------- --------------------
99.1 Letter from Weinberg, Pershes & Company, P.A., dated
September 20, 1996.
99.2 Complaint filed in Civil Action no. CV 96 02543 GK,
pending in the United States District Court for the
District of Columbia and styled SECURITIES AND
EXCHANGE COMMISSION V. CHARLES O. HUTTOE, HUTTOE &
ASSOCIATES, INC., WORD CORPORATION, NATIONAL TRADING
SERVICES, INC., KAREN PURVIS, TAMMY JO PERKINS,
JOSEPHINE BROOKS, SGA GOLDSTAR RESEARCH INC., THEODORE
R. MELCHER, JR., SHANNON B. TERRY, SYSTEMS OF
EXCELLENCE, INC., APLHA SECURITIES, LTD. AND DUNBAR
HOLDINGS, LTD.
99.3 Order Granting Plaintiff's Request for Temporary
Restraining Order, Asset Freeze, and other Relief,
entered in Civil Action No. 96-02543 GK, pending in
the United States District Court for the District of
Columbia.
<PAGE> 7
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the Registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
SYSTEMS OF EXCELLENCE, INC.
By: /s/ TOM CLINES
-----------------------------------
Tom Clines, President
Date: November 15, 1996.
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Document Description
- ----------- --------------------
<S> <C>
99.1 Letter from Weinberg, Pershes & Company, P.A., dated
September 20, 1996.
99.2 Complaint filed in Civil Action no. CV 96 02543 GK, pending
in the United States District Court for the District of
Columbia and styled SECURITIES AND EXCHANGE COMMISSION V.
CHARLES O. HUTTOE, HUTTOE & ASSOCIATES, INC., WORD
CORPORATION, NATIONAL TRADING SERVICES, INC., KAREN PURVIS,
TAMMY JO PERKINS, JOSEPHINE BROOKS, SGA GOLDSTAR RESEARCH
INC., THEODORE R. MELCHER, JR., SHANNON B. TERRY, SYSTEMS
OF EXCELLENCE, INC., APLHA SECURITIES, LTD. AND DUNBAR
HOLDINGS, LTD.
99.3 Order Granting Plaintiff's Request for Temporary
Restraining Order, Asset Freeze, and other Relief, entered
in Civil Action No. 96-02543 GK, pending in the United
States District Court for the District of Columbia.
</TABLE>
<PAGE> 1
EXHIBIT 99.1
WEINBERG, PERSHES & COMPANY, P.A.
CERTIFIED PUBLIC ACCOUNTANTS
September 20, 1996
Systems of Excellence, Inc.
2600 Douglas Road
Suite 607
Coral Gables, Florida 33134
Gentlemen:
As you know, on or about July 2, 1996, Weinberg, Pershes & Company, P.A.
("WPC") was retained by Systems of Excellence, Inc. (the "Company") to audit
the Company's balance sheet as of February 29, 1996 and the Company's related
statements of operations, retained earnings, and cash flows for the year then
ended. WPC was also retained to provide consulting services to the Company
with respect to all accounting and tax matters related to proposed
acquisitions, tax matters and other general matters.
In the course of our audit of the Company we have become aware of information
indicating that certain acts of the Company may not have been in conformity
with state and federal law. The purpose of this letter is to advise you of our
statutory obligations under Section 10A of the Securities Exchange Act of 1934
(the "1934 Act"), in connection with our audit of the Company's balance sheet
and to advise you that, based on our preliminary findings, we have concluded
that the Company may have committed illegal acts, as defined in Section 10A of
the 1934 Act, which may have a material effect on the Company's financial
statements and which require that timely and appropriate remedial action be
taken by the Company. A copy of Section 10A of the 1934 Act is enclosed for
your review.
Based on information developed to date by WPC in the course of our audit, we
have determined the following:
1. The Company has not filed the following reports required to be filed
under the federal securities laws:
a. Form 10-Q for the quarter ended May 31, 1996;
b. Form 10-Q for the quarter ended August 31, 1996; and
c. Form 10K for the fiscal year ended February 29, 1996.
2. The Company may have (i) increased the number of authorized shares of
its common stock, (ii) issued shares of its common stock to members of
the public, and (iii) made substantial acquisitions without a vote of
the Company's shareholders and without following proper corporate
formalities, as required by Florida law.
<PAGE> 2
Systems of Excellence, Inc.
September 20, 1996
Page 2
3. The Company may have failed to comply with requirements of the
Florida's Business Corporation Act by failing to hold shareholders'
meetings and elections and that certain acts of the Company which
required votes of the Company's shareholders were approved only by the
Company's Board of Directors.
4. The Company may have failed to notify its transfer agent of all of its
authorized and issued shares of common stock. Although the Company's
records indicate that in August, 1996 approximately 80,000,000 shares
of the Company's common stock were authorized and approximately
58,000,000 shares of its common stock were issued and outstanding, the
Company's transfer agent, American Securities Transfer & Trust, Inc.,
was only aware of 30,000,000 authorized common shares of the Company
and 23,702,270 issued and outstanding shares.
5. The Company may have issued shares of the Company's common stock to
members of the public pursuant to S-8 registration statements under
the Securities Act of 1933 which may not have been filed with the SEC
as required by federal regulations and statutes. In certain of those
instances, registration of shares on an S-8 Registration Statement may
not have been permissible because the Company may not have been
current in its filings with the SEC at the time such statements were
allegedly filed.
6. Through June 1996, the Company apparently issued a significant number
of shares of its common stock to various individuals and companies for
services provided by such persons and entities. Serious questions
exist concerning the compensation paid, and the consideration
received, by the Company for these services.
7. The Company also issued shares of its common stock to members of the
public pursuant to a private placement memorandum. The investors who
received such shares also received promissory notes signed by the
Company. Serious questions exist concerning this private placement.
8. The Company may also have issued shares of its common stock to certain
of its officers and directors without shareholder approval. Serious
questions exist concerning the issuance of such shares.
<PAGE> 3
Systems of Excellence, Inc.
September 20, 1996
Page 3
PLEASE ADVISE US, AS SOON AS PRACTICABLE, WHAT REMEDIAL ACTIONS THE COMPANY
WILL TAKE WITH RESPECT TO EACH OF THE ABOVE NUMBERED PARAGRAPHS.
You should be aware that, pursuant to Section 10A of the 1934 Act, if we
conclude that (i) any or all of the above possible illegal acts has a material
effect on the financial statements of the Company, (ii) the senior management
has not taken, and the board of directors has not caused senior management to
take, timely and appropriate remedial actions with respect to the detected
possibly illegal acts, and (iii) the failure to take remedial action is
reasonably expected to warrant a departure from a standard report of ours, when
made, or warrants resignation from this engagement, under Section 10A of the
1934 Act, we must, as soon as practicable, directly report our conclusions to
the Company's board of directors. Pursuant to Section 10A of the 1934 Act, the
Company must then inform the Securities & Exchange Commission ("SEC") within
one business day after receipt of our report and provide us with a copy of the
Company's notice to the SEC. If we do not receive a copy of such notice before
the expiration of the one day period, we are required to furnish the SEC with a
copy of our report no later than one business day following the business day we
fail to receive a copy of the Company's notice to the SEC.
Your prompt reply to this letter is requested.
Sincerely,
WEINBERG, PERSHES & COMPANY, P.A.
<PAGE> 1
EXHIBIT 99.2
UNITED STATES DISTRICT COURT
DISTRICT OF COLUMBIA
___________________________________________________
:
SECURITIES AND EXCHANGE COMMISSION, :
450 FIFTH STREET, N.W. :
WASHINGTON, D.C. 20549, :
:
PLAINTIFF, : CIVIL ACTION NO. 96-
:
:
V. :
:
CHARLES O. HUTTOE, HUTTOE & :
ASSOCIATES, INC., WORD CORPORATION, :
NATIONAL TRADING SERVICES, INC., :
KAREN PURVIS, TAMMY JO PERKINS, :
JOSEPHINE BROOKS, SGA GOLDSTAR :
RESEARCH INC., THEODORE R. :
MELCHER, JR., SHANNON B. TERRY, :
SYSTEMS OF EXCELLENCE, INC., :
ALPHA SECURITIES LTD., AND :
DUNBAR HOLDINGS LTD., :
:
DEFENDANTS. :
:
___________________________________________________:
COMPLAINT
Plaintiff Securities and Exchange Commission alleges:
SUMMARY
1. This case involves an on-going fraudulent scheme in which
defendant Charles Huttoe, Chairman of the Board and Chief Executive Officer of
Systems of Excellence, Inc. ("SOE" or the company), caused SOE to engage in a
massive unregistered distribution of the company's stock. The stock price was
manipulated to artificial heights with materially false and misleading press
releases issued by SOE, under Huttoe's direction, and through fraudulent stock
promotion by SGA Goldstar Research,
<PAGE> 2
Inc. SOE issued the unregistered stock to recipients controlled by Huttoe, and
to accounts controlled by Theodore R. Melcher, Jr., and Shannon Terry, SGA
Goldstar's principals.
2. Huttoe and Terry and, on information and belief, Melcher, then
quickly sold their SOE stock to an unsuspecting public, not disclosing that the
prices were grossly inflated due to their own unlawful activities. Huttoe
alone amassed at least $9.7 million in aggregate unlawful profits thereby.
3. Huttoe later engaged in a massive cover-up, once his scheme
began to unravel, to create the false impression that the shares had been
properly registered on Form S-8, a Commission form which allows the
registration of company stock issued to company employees and consultants. As
part of the cover-up scheme, Huttoe fabricated bogus Forms S-8 and forged
consultant agreements, and later had them filed with the Commission.
4. By knowingly or recklessly engaging in this conduct,
defendants directly or indirectly violated, are violating, and unless
restrained will violate the antifraud, registration, and filing provisions of
the federal securities laws, specifically, Sections 5(a), 5(c), 17(a), and
17(b) of the Securities Act of 1933 ("Securities Act") [15 U.S.C. Sections
77e(a), 77e(c), 77q(a), and 77q(b)], Sections 10(b), 13(a), 13(b)(2)(A),
13(b)(2)(B), 13(b)(5), and 16(a) of the Securities Exchange Act of 1934
("Exchange Act") [15 U.S.C. Sections 78j(b), 78m(a), 78m(b)(2)(A),
78m(b)(2)(B), 78m(b)(5), and 78p(a)], and Rules 10b-5, 12b-20, 13a-1, 13a-11,
13a-13, 13b2-1, 13b2-2, 16a-2, and 16a-3, thereunder [17 C.F.R. Sections
240.10b-5, 240.12b-20, 240.13a-1, 240.13a-11, 240.13a-13, 240.13b2-1,
240.13b2-2, 240.16a-2, and 240.16a-3].
- 2 -
<PAGE> 3
JURISDICTION
5. This Court has jurisdiction of this action pursuant to Section
22(a) of the Securities Act [15 U.S.C. Section 77v(a)], and Section 27 of the
Exchange Act [15 U.S.C. Section 78aa], and 28 U.S.C. Section 1331.
6. The Commission brings this action pursuant to authority
conferred upon it by Section 20(b) of the Securities Act [15 U.S.C. Section
77t(b)], and Section 21(d)(1) of the Exchange Act [15 U.S.C. Section
78u(d)(1)].
7. Defendants, directly or indirectly, have made use of the means
and instrumentalities of interstate commerce, or of the mails, or of the
facilities of a national securities exchange in connection with the acts,
practices, and courses of business alleged herein.
DEFENDANTS
8. CHARLES O. HUTTOE, age 49, resides in Miami, Florida. Since
1994, he has served as Chairman of the Board and Chief Executive Officer of
Systems of Excellence, Inc. Huttoe directed the hyping and distribution of
unregistered SOE stock, including shares purportedly registered on Form S-8,
using nominee accounts he controlled that were maintained in the names of the
following defendants:
a. NATIONAL TRADING SERVICES, INC. is or was a Florida
corporation, of which Huttoe is the President, Secretary, registered agent, and
controlling person;
b. WORD CORPORATION is or was a Mississippi corporation,
of which Huttoe is the controlling person;
- 3 -
<PAGE> 4
c. TAMMY JO PERKINS, age 27, is Huttoe's niece;
d. KAREN PURVIS, age 41, also known as Karen Purvis
Huttoe, is Huttoe's wife; and
e. JOSEPHINE BROOKS, age 72, is Huttoe's mother.
9. HUTTOE & ASSOCIATES was a Florida broker-dealer operated and
controlled by defendant Huttoe, and now operates as an alter-ego of Huttoe.
10. SGA GOLDSTAR RESEARCH INC., is a corporation wholly owned by
defendant Theodore R. Melcher, Jr. SGA publishes "SGA Goldstar Whisper
Stocks," an electronic tout sheet that aggressively promoted public investment
in SOE stock without disclosing that it was compensated by SOE for doing so.
11. THEODORE R. MELCHER, JR., age 51, owns SGA, and is one of its
two employees. Melcher, personally and through his nominee Alpha Securities
Ltd., received unregistered SOE stock as undisclosed compensation for promoting
SOE's stock in the Whisper Stock report.
12. ALPHA SECURITIES LTD. is a corporation owned and controlled by
Melcher.
13. SHANNON B. TERRY is SGA's only other employee. Terry,
personally and through his nominee Dunbar Holdings Ltd., received unregistered
SOE stock as undisclosed compensation for promoting SOE's stock in the Whisper
stock report.
14. DUNBAR HOLDINGS LTD. is a corporation owned and controlled by
Terry.
15. SYSTEMS OF EXCELLENCE, INC. is a Florida corporation,
incorporated in 1989, with offices in McLean, Virginia and Coral Gables,
Florida. SOE is engaged in the manufacture and distribution of video
tele-conferencing equipment. SOE's stock is
- 4 -
<PAGE> 5
registered with the Commission pursuant to Section 12(g) of the Exchange Act.
Until the Commission suspended trading in SOE's stock on October 7, 1996 (which
suspension has since expired), SOE's stock was quoted on the NASDAQ Bulletin
Board.
OTHER ENTITIES
16. WEINBERG, PERSHES & CO., P.A. ("WPC"), accountants and
auditors, a Florida accounting firm, were SOE's independent auditors.
17. MERLE S. FINKEL, C.P.A., represents himself as being
affiliated with M.S. Finkel & Co., accountants and auditors. Within hours of
being hired as SOE's independent auditor, Finkel, on or about September 21,
1996, provided an unqualified audit opinion on SOE's financial statements for
fiscal years ending February 28, 1995 and February 29, 1996.
18. MARIA IACOVELLI, age 31, is the Corporate Secretary of SOE and
is its other director.
THE FRAUDULENT SCHEME
HUTTOE DIRECTS A MASSIVE
UNREGISTERED DISTRIBUTION OF SOE STOCK
19. SOE entered the video tele-conferencing business on February
12, 1996, when it acquired ICMX Federal Systems, Inc., whose sole business was
manufacturing and distributing video tele-conferencing equipment.
20. Beginning by at least March 9, 1995, and continuing at least
through July 26, 1996, SOE, under the direction of Huttoe, began a massive
distribution of tens of millions of shares of unrestricted, freely-trading
company stock to Huttoe's nominees and confederates, even though the
distribution had not been registered with the Commission.
- 5 -
<PAGE> 6
21. Huttoe knowingly or recklessly deceived the Transfer Agent,
who issued the shares without restrictive legends, into believing that the
shares had been properly registered with the Commission, by falsifying the
Forms S-8 presented to the Transfer Agent to indicate prior filing with the
Commission.
SOE AND HUTTOE FILE THE FIRST SET OF MATERIALLY
FALSE AND MISLEADING FORMS S-8
22. On or about December 6, 1995, SOE, under Huttoe's direction,
filed with the Commission eleven materially false and misleading registration
statements on Forms S-8.
23. The millions of shares purportedly registered on the Forms S-8
had already been distributed prior to the filing.
24. Contrary to representations in the Forms S-8, the SOE stock
was distributed to persons who had performed no services for the company that
would qualify the stock for S-8 registration.
25. SOE and Huttoe knew or recklessly disregarded the fact that
these filings were materially false and misleading.
SOE ISSUES MORE UNREGISTERED SHARES
26. SOE, under Huttoe's direction, continued to issue additional
unrestricted, free-trading SOE shares without registering the shares with the
Commission. Commencing on or about December 20, 1995, and continuing at least
through July 26, 1996, SOE issued approximately 35.5 million additional such
unregistered shares.
27. In or around February 1996, as part of this additional
distribution, SOE issued unrestricted, free- trading shares of SOE stock, and a
"note payable," to investors
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<PAGE> 7
in a $2.5 million purported "private placement." These shares were distributed
to investors in proportion to the amount of money invested.
28. At the time these shares were issued and distributed, they
were not registered with the Commission.
HUTTOE MANIPULATES THE MARKET FOR SOE SECURITIES
HUTTOE ISSUES MATERIALLY
FALSE AND MISLEADING PRESS RELEASES
29. In connection with the unregistered distribution of its stock,
SOE, under the direction of Huttoe, issued a series of materially false and
misleading press releases touting its success in the video tele-conferencing
business and announcing other corporate developments. These releases, together
with other false information contributed by SGA Goldstar, caused SOE's stock
price to skyrocket from $0.28 on December 26, 1995, to over $4.50 on June 10,
1996, before retreating to $3.00 on July 12, 1996.
a. In a December 26, 1995 press release, SOE announced
that ICMX, which SOE was in the process of acquiring, had already booked $10
million in sales for Fiscal 1996. In fact, ICMX (now SOE) never had revenues
or orders of that magnitude, or even approaching it.
b. On May 28, 1996, SOE falsely announced that World
Communications Group had ordered approximately 1,000 video tele-conferencing
units, and estimated the value of the order to be $3.4 million. There was no
such order.
c. On June 12, 1996, SOE falsely announced that it had
acquired Lazer Tek Designs and "projected revenues over the next 12 months of
$10 million," failing to
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<PAGE> 8
disclose that Lazer Tek was owned by SOE's new president, Kenneth Walther, and
his wife. In fact, there was no acquisition, and there was no basis for the
revenue projection.
d. On June 20, 1996, SOE falsely announced that it had
sold 12 video tele-conferencing units to VueCom, Inc. (also known as ICSN). In
fact, no more than four units were ordered as of October 16, 1996.
e. On July 12, 1996, SOE falsely announced that it had
received through ICE Communications, Inc., multiple orders of several hundred
thousand dollars each in video tele-conferencing equipment. In fact, SOE never
received ICE orders even approaching this magnitude.
30. Huttoe and SOE knew or recklessly disregarded the fact that
each of these releases was materially false and misleading.
SGA GOLDSTAR RESEARCH, INC. TOUTS
SOE FOR UNDISCLOSED COMPENSATION
31. In connection with the unregistered distribution of SOE
shares, SGA initiated aggressively promotional coverage of SOE in its
newsletter, the Whisper Stock Report, on or about January 23, 1996. As
compensation for this coverage, SOE issued shares to Melcher and his nominee
Alpha Securities, and to Terry and his nominee Dunbar Holdings, Ltd.
32. SGA's reports were highly promotional, strongly urging
accumulation of the stock, discouraging sales, and even discouraging investors
from independently verifying SGA's information.
33. SGA's highly promotional reports were materially false and
misleading, and failed to disclose material facts.
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<PAGE> 9
a. SGA Goldstar did not disclose the material facts that
its principals, Melcher and Terry, were compensated by SOE for promoting SOE
stock, the amount of such compensation, or that the form of the compensation
was SOE stock.
b. SGA did not disclose the material fact that Terry,
and, on information and belief, Melcher, the authors of the Whisper Stock
Report, while issuing a strong buy recommendation to their readers, were
selling their SOE stock into the market;
c. SGA published materially false and misleading reports
about the SEC's investigation into the company, and the company's response
thereto.
34. These promotional materials, together with the materially
false and misleading company press releases, caused SOE's stock price to
skyrocket.
35. SGA, Melcher, Terry, and Huttoe knew or recklessly disregarded
the fact that these reports were materially false and misleading.
HUTTOE, TERRY, AND MELCHER SELL THEIR
UNREGISTERED SOE STOCK INTO THE INFLATED MARKET
36. During the period from January 16, 1996 through August 28,
1996, while knowingly or recklessly flooding the market with materially false
and misleading information, Huttoe and Terry, and on information and belief,
Melcher, sold millions of shares of SOE stock to the public.
37. Huttoe directed the unregistered SOE shares, including shares
purported registered on Form S-8, into nominee accounts he controlled. Huttoe
then caused those accounts, including accounts under the names of National
Trading Services, Inc., Word Corporation, Tammy Jo Perkins, Karen Purvis, and
Josephine Brooks, to sell the
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<PAGE> 10
unregistered shares, amassing for himself unlawful profits of at least $9.7
million. Within eight (8) days following the May 28, 1996 announcement, Huttoe
alone realized profits of over $5 million.
38. During this same time period of heavy selling, Melcher and
Terry were publishing strong buy recommendations through their newsletter SGA
Goldstar.
39. In selling his SOE stock, Huttoe, knowingly or recklessly,
failed to disclose material facts:
a. Melcher and Terry's promotional materials hyping the
stock were materially false and misleading,
b. The company's press releases were materially false
and misleading;
c. The company's periodic public disclosure reports were
materially false and misleading;
d. Huttoe was selling his SOE stock;
e. The SOE shares were not registered for sale.
40. In selling their SOE stock, Melcher and Terry, knowingly or
recklessly, failed to disclose material facts:
a. Terry, and, on information and belief, Melcher, were
selling their SOE stock while they were making their strong buy recommendations
to the investing public;
b. Melcher and Terry's promotional materials hyping the
stock were materially false and misleading.
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<PAGE> 11
HUTTOE TRIES TO PREVENT DISCOVERY OF HIS ILLEGAL SCHEME
HUTTOE LIES TO SOE'S INDEPENDENT AUDITORS,
PRESENTING THEM WITH FALSE AND MISLEADING DOCUMENTS
41. On July 2, 1996, SOE engaged the accounting firm of Weinberg,
Pershes & Co. (WPC) to conduct an audit of SOE's financial statements for its
fiscal year ended February 28, 1996.
42. During the audit, Huttoe, knowingly or recklessly, provided
the auditors with materially false and misleading documents and information,
including false S-8 registration statements, and withheld requested material
information.
a. The S-8 registration statements falsely represented
that the stock recipients were consultants of SOE, and had performed services
for the company, when in fact, they were not consultants, and had provided no
services sufficient to qualify the registration as an S-8.
b. The S-8 registration statements falsely represent
that they had been filed with the Commission, when in fact they had not.
c. SOE and Huttoe failed to respond to the auditors'
letters requesting further information regarding SOE's apparent violations of
laws in connection with the distribution of SOE stock.
HUTTOE PREPARES FORGED AND FRAUDULENT DOCUMENTS
AND FILES THEM WITH THE COMMISSION
43. On or about September 20, 1996, SOE's independent auditors,
WPC, began questioning SOE and Huttoe, pursuant to Section 10A of the Exchange
Act [15 U.S.C. Section 78j-1], about SOE's possibly illegal activities in
connection with the massive
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<PAGE> 12
distribution of the shares purportedly registered on Forms S-8.
44. In response, Huttoe expanded his cover-up scheme to create the
impression that the previously issued stock was properly registered on Forms
S-8.
45. Over the weekend of September 21 and 22, 1996, Huttoe, along
with the Corporate Secretary working under his direction, fabricated a series
of "consulting agreements" for filing as exhibits to a new series of Forms S-8
to be filed with the Commission.
46. The "consulting agreements" described fictitious services
purportedly provided to SOE by Huttoe's nominees and SOE investors and bore
fictitious agreement dates. In fact, no such services were provided.
47. Some of these "consulting agreements" contained fictitious
"lock up" terms, pursuant to which the recipients agreed not to sell the
securities purportedly granted pursuant to the agreement until a fixed period
of time had elapsed. In certain cases, the securities purportedly subject to
the "lock up" had already been disposed of by the time the agreement was
created.
48. Huttoe procured forged signatures for the purported
consultants on the "consulting agreements."
49. Huttoe directed that the bogus agreements, bearing the forged
signatures, be made exhibits to 16 Registration Statements on Form S-8, knowing
that they were to be filed with the United States Securities and Exchange
Commission, as they were, on or about September 24, 1996.
50. Those Registration Statements purported to register a total of
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<PAGE> 13
approximately 39.6 million shares, which purported to be issued to 93 different
consultants in exchange for services that SOE valued at $54.5 million.
HUTTOE PROCURES A MATERIALLY FALSE
AND MISLEADING ACCOUNTANT'S REPORT
51. On or about September 21, 1996, Huttoe hired Merle S. Finkel,
who held himself out as affiliated with M.S. Finkel, to provide an unqualified
audit opinion for SOE's fiscal year 1996, which ended February 29, 1996.
52. That same day, September 21, 1996, Finkel signed an
unqualified Auditor's Opinion for inclusion in the Company's Form 10KSB filed
with the Commission.
53. As was known or recklessly disregarded by Huttoe and SOE, the
Auditor's Opinion was materially false and misleading in its entirety.
54. In fact, Finkel had made no attempt to contact anyone from
SOE's real auditors, WPC, or to obtain that firm's workpapers.
55. Finkel never discussed the company or its books, records and
accounts with the SOE personnel responsible for managing the SOE's bank
accounts and keeping SOE's records.
HUTTOE ALTERS SOE'S BOOKS
56. Prior to September 21, 1996, an entry in the company's books,
records and accounts contained an entry for a liability described as "note
payable shareholders." This entry related to the shares issued to SOE
investors pursuant to the so-called "private placement," but which were now
purportedly registered under Forms S-8.
57. Under Huttoe's direction, SOE knowingly or recklessly
falsified the books to convert that liability into a note payable to Huttoe.
In fact, no such note existed.
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<PAGE> 14
58. This alteration deliberately concealed the fact that the "note
payable" was connected to the "private placement," which also involved the
distribution of unregistered SOE shares to investors.
59. Huttoe knowingly or recklessly caused the falsification of the
contract in which SOE purported to hire Merle S. Finkel, so as to give the
false impression that Finkel had been hired on September 13, 1996, rather than
the same day his unqualified audit opinion was rendered.
HUTTOE CONCEALS HIS TRADES BY
FAILING TO FILE REQUIRED DISCLOSURE REPORTS
60. Huttoe failed to file Forms 3, 4, and/or 5, although required
to do so, to publicly disclose his trading in SOE stock, and the massive
changes in his beneficial ownership of SOE stock.
SOE FILES MATERIALLY FALSE AND MISLEADING
PUBLIC DISCLOSURE AND REGISTRATION REPORTS
SOE FILES A MATERIALLY FALSE AND MISLEADING FORM 10-KSB
61. On or about September 23, 1996, SOE, under the direction of
Huttoe, filed its annual report on Form 10-KSB with the Commission. The
statement was materially false and misleading.
a. The statement's financials incorporate the fictitious
"note payable" to Huttoe;
b. The statement incorporates the materially false and
misleading Auditor's Opinion;
c. The discussion of liquidity and capital resources in
the
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<PAGE> 15
Managements' Discussion and Analysis section stated that SOE's "primary sources
of cash are from royalty income, development fees and services and support
revenues and the sales of video teleconferencing product," when in fact they
were not SOE's primary source of cash for 1996. Those sources in the aggregate
generated less than $200,000 of revenue in 1996, an amount dwarfed by SOE's
selling, general and administrative expenses, which exceeded $900,000.
d. The statement includes a false projection
specifically ordered included by Huttoe, that "sales are projected to
substantially increase over the next twelve months," and that "[p]rojections of
$41 million in gross revenues appear to be within the Company's grasp," when
there was no reasonable basis for these projections; and
e. The statement fails to disclose that shares
purportedly registered on Forms S-8 were issued to Huttoe's nominees, that
those nominees had not provided services to SOE, that Huttoe was selling
company stock through those nominees, and that Huttoe was selling stock for his
own profit.
62. Huttoe and SOE knew or recklessly disregarded the fact that
the report was materially false and misleading.
SOE FILES A MATERIALLY FALSE AND MISLEADING FORM 10-QSB
63. On or about September 23, 1996, SOE, under Huttoe's direction,
filed its quarterly report on Form 10-QSB with the Commission.
64. This report was materially false and misleading in failing to
disclose that shares purportedly registered on Forms S-8 were issued to
Huttoe's nominees, that those
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<PAGE> 16
nominees had not provided services to SOE, that Huttoe was selling company
stock through those nominees, and that Huttoe was selling stock for his own
profit.
65. Huttoe and SOE knew or recklessly disregarded the fact that
the report was materially false and misleading.
SOE FILES THE SECOND SET OF MATERIALLY FALSE
AND MISLEADING FORM S-8 REGISTRATION STATEMENTS
66. On or about September 24, 1996, SOE, under Huttoe's direction,
filed materially false and misleading Registration Statements on Form S-8, with
the Commission.
a. The forged "consulting agreements" were annexed to
the Registration Statements;
b. The Registration Statements falsely described
services provided to the company by the stock recipients even though in fact no
such services were provided.
c. The Registration Statements were the instruments of a
fraud, as their belated filing created the deception that the shares described
therein were properly registered with the Commission.
67. Huttoe and SOE knew or recklessly disregarded the fact that
the Registration Statements were materially false and misleading and
fraudulent.
SOE FILES A MATERIALLY FALSE AND
MISLEADING CURRENT REPORT ON FORM 8K
68. On or about October 1, 1996, SOE filed with the Commission a
materially false and misleading current report on Form 8-K, to explain the
resignation of its auditors, WPC.
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<PAGE> 17
69. The report falsely states that "there have been no
disagreements with Weinberg, Pershes on any matter of accounting principals or
practices, financial statement disclosure or auditing scope or procedure or any
reportable events".
70. In fact, there were material disagreements in these areas.
71. Huttoe and SOE knew or recklessly disregarded the fact that
the report was materially false and misleading.
CLAIM ONE
(SALE OF UNREGISTERED SECURITIES)
VIOLATIONS OF SECTIONS 5(A), 5(C)
OF THE SECURITIES ACT [15 U.S.C. Section 77E(A), AND 77E(C)]
72. Paragraphs 1 through 71 are hereby realleged and incorporated
by reference.
73. By reason of the foregoing, all defendants, and each of them,
have violated, are violating, and unless restrained will violate Sections 5(a)
and 5(c) of the Securities Act [15 U.S.C. Sections 77e(a) and 77e(c)].
CLAIM TWO
(FRAUDULENT OFFER AND SALE,
INSIDER TRADING)
VIOLATIONS OF SECTION 17(A) OF THE
SECURITIES ACT [15 U.S.C. Section 77Q(A)], SECTION 10(B)
OF THE EXCHANGE ACT, AND RULE 10B-5
THEREUNDER [17 C.F.R. Section 240.10B-5]
74. Paragraphs 1 through 71 are hereby realleged and incorporated
by reference.
75. By reason of the foregoing, defendants Huttoe, Huttoe &
Assoc., National Trading Services, Word Corp., SGA Goldstar, Melcher, Terry,
Alpha Securities, Dunbar
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<PAGE> 18
Holdings, and SOE, and each of them, directly or indirectly, have violated, are
violating, and unless restrained will violate Section 17(a) of the Securities
Act [15 U.S.C. Section 77q(a)], Section 10(b) of the Exchange Act [15 U.S.C.
Section 78j(b)], and Rule 10b-5 thereunder [17 C.F.R. Section 240.10b-5].
CLAIM THREE
(UNDISCLOSED COMPENSATION FOR STOCK PROMOTION)
VIOLATIONS OF SECTION 17(B) OF
THE SECURITIES ACT [15 U.S.C. Section 77Q(B)]
76. Paragraphs 1 through 71 are hereby realleged and incorporated
by reference.
77. By reason of the foregoing, defendants SGA Goldstar, Melcher,
Terry, Alpha Securities, and Dunbar Holdings, and each of them, directly or
indirectly, have violated, are violating, and unless restrained will violate,
Section 17(b) of the Securities Act [15 U.S.C. Section 77q(b)].
CLAIM FOUR
(FALSE AND MISLEADING FILINGS)
VIOLATIONS OF SECTIONS 10(B) AND 13(A)
OF THE EXCHANGE ACT [15 U.S.C. Section 78J(B) AND 78M(A)], AND
RULES 10B-5, 12B-20, 13A-1, 13A-11, AND 13A-13, THEREUNDER
[17 C.F.R. Sections 240.10B-5, 240.12B-20, 240.13A-1, 240.13A-11,
AND 240.13A-13]
78. Paragraphs 1 through 71 are hereby realleged and incorporated
by reference.
79. By reason of the foregoing, defendants SOE and Huttoe have
violated, are violating, and unless restrained will violate Section 10(b) of
the Exchange Act [15 U.S.C.
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<PAGE> 19
Section 78j(b)], and Rule 10b-5 thereunder [17 C.F.R. Section 240.10b-5]; and
SOE has violated, is violating, and unless restrained will violate Section
13(a) of the Exchange Act [15 U.S.C. Section 78m(a)], and Rules 12b-20, 13a-1,
13a-11, and 13a-13, thereunder [17 C.F.R. Sections 240.12b-20, 240.13a-1,
240.13a-11, and 240.13a-13].
CLAIM FIVE
(BOOKS, RECORDS, AND ACCOUNTS; MISREPRESENTATIONS TO AUDITORS)
VIOLATIONS OF SECTIONS 13(B)(2)(A), 13(B)(2)(B)
AND 13(B)(5) OF THE EXCHANGE ACT [15 U.S.C.
Sections 78M(B)(2)(A), 78M(B)(2)(B), AND 78M(B)(5)]
AND RULE 13B2-1 AND 13B2-2 THEREUNDER
[17 C.F.R. Section 240.13B2-1, 240.13B2-2]
80. Paragraphs 1 through 71 are hereby realleged and incorporated
by reference.
81. By reason of the foregoing, defendant SOE has violated, is
violating, and unless restrained will violate Section 13(b)(2)(A) and
13(b)(2)(B) of the Exchange Act [15 U.S.C. Sections 78m(b)(2)(A) and
78m(b)(2)(B)]; and Huttoe has violated, is violating, and unless restrained
will violate Section 13(b)(5) [15 U.S.C. Section 78m(b)(5)], and Rules 13b2-1
and 13b2-2, thereunder [17 C.F.R. Sections 240.13b2-1 and 240.13b2-2].
CLAIM SIX
(REPORTING CHANGES IN HOLDINGS)
VIOLATIONS OF SECTION 16(A)
OF THE EXCHANGE ACT [15 U.S.C. Sections 78P(A),
AND RULES 16A-2 AND 16A-3, THEREUNDER
[17 C.F.R. Sections 240.16A-2 AND 240.16A-3].
82. Paragraphs 1 through 71 are hereby realleged and incorporated
by reference.
83. By reason of the foregoing, Huttoe has violated, is violating,
and unless
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<PAGE> 20
restrained will violate Section 16(a) of the Exchange Act [15 U.S.C. Sections
78p(a)], and Rules 16a-2 and 16a-3, thereunder [17 C.F.R. Sections 240.16a-2
and 240.16a-3].
PRAYER FOR RELIEF
WHEREFORE, the Commission respectfully requests that this Court issue
Orders:
I.
Permanently enjoining all defendants, and each of them, and their
officers, agents, servants, employees, attorneys, and those persons in active
concert or participation with them who receive actual notice by personal
service or otherwise, from violating, directly or indirectly, Sections 5(a) and
5(c) of the Securities Act of 1933 [15 U.S.C. Sections 77e(a) and 77e(c)].
II.
Permanently enjoining defendants Huttoe, Huttoe & Assoc., National
Trading Services, Word Corp., SGA Goldstar, Melcher, Terry, Alpha Securities,
Dunbar Holdings, and SOE, and each of them, and their officers, agents,
servants, employees, attorneys, and those persons in active concert or
participation with them who receive actual notice by personal service or
otherwise, from violating, directly or indirectly, Section 17(a) of the
Securities Act [15 U.S.C. Section 77q(a)], Section 10(b) of the Exchange Act
[15 U.S.C. Section 78j(b)], and Rule 10b-5 thereunder [17 C.F.R. Section
240.10b-5].
III.
Permanently enjoining defendants SGA Goldstar, Melcher, Terry, Alpha
Securities, and Dunbar Holdings, and each of them, and their officers, agents,
servants,
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<PAGE> 21
employees, attorneys, and those persons in active concert or participation with
them who receive actual notice by personal service or otherwise, from
violating, directly or indirectly, Section 17(b) of the Securities Act [15
U.S.C. Section 77q(b)].
IV.
Permanently enjoining defendant SOE and its officers, agents,
servants, employees, attorneys, and those persons in active concert or
participation with it who receive actual notice by personal service or
otherwise, from violating, directly or indirectly, Sections 13(a), 13(b)(2)(A),
and 13(b)(2)(B) of the Exchange Act [15 U.S.C. Sections 78m(a), 78m(b)(2)(A),
78m(b)(2)(B)], and Rules 12b-20, 13a-1, 13a-11, and 13a-13, thereunder [17
C.F.R. Sections 240.12b-20, 240.13a-1, 240.13a-11, and 240.13a-13].
V.
Permanently enjoining defendant Huttoe and his agents, servants,
employees, attorneys, and those persons in active concert or participation with
it who receive actual notice by personal service or otherwise, from violating,
directly or indirectly, Sections 13(b)(5) and 16(a) of the Exchange Act [15
U.S.C. Sections 78m(b)(5) and 78p(a)], and Rules 13b2-1, 13b2-2, 16a-2 and
16a-3, thereunder [17 C.F.R. Sections 240.13b2-1, 240.13b2-2, 240.16a-2 and
240.16a-3].
VI.
Directing all defendants, other than SOE, and each of them, and their
officers, agents, servants, employees, and attorneys, to disgorge all illegal
gains, together with prejudgment interest.
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<PAGE> 1
VII.
Granting such temporary and preliminary relief as is necessary to
assure defendants' compliance with the Court's orders, including: a temporary
restraining order; a preliminary injunction; a temporary freeze of defendants'
assets and accounts, other than SOE's; the temporary surrender of Huttoe's
passport; an order prohibiting the destruction and alteration of documents; an
order expediting discovery; an order directing defendants to answer the
complaint; and an order directing defendants, other than SOE, to file an
Accounting.
VIII.
Granting such other relief as this Court may deem just and proper.
Respectfully submitted,
----------------------------------------
OF COUNSEL NANCY GRUNBERG, Trial Counsel
D.C. Bar No. 380169
NORAN J. CAMP, Trial Counsel
THOMAS C. NEWKIRK Attorneys for Plaintiff
ERICH T. SCHWARTZ Securities and Exchange Commission
KENNETH R. LENCH P.O. Box 50239, Mail Stop 4-2
PAULA L. KASHTAN Washington, D.C. 20091-0239
ERIC R. WERNER [Courier: 450 5th Street, N.W.,
MS-4-2, Washington, D.C. 20549]
Dated: November 7, 1996 Tel: 202-942-4734 (Grunberg)
Washington, D.C. FAX: 202-942-9581
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<PAGE> 2
EXHIBIT 99.3
UNITED STATES DISTRICT COURT
DISTRICT OF COLUMBIA
________________________________________________
:
SECURITIES AND EXCHANGE COMMISSION, :
450 FIFTH STREET, N.W. :
WASHINGTON, D.C. 20549, :
:
PLAINTIFF, : CIVIL ACTION NO. 96-02543 GK
:
:
V. :
:
CHARLES O. HUTTOE, HUTTOE & :
ASSOCIATES, INC., WORD CORPORATION, :
NATIONAL TRADING SERVICES, :
KAREN PURVIS, TAMMY JO PERKINS, :
JOSEPHINE BROOKS, SGA GOLDSTAR :
RESEARCH INC., THEODORE R. :
MELCHER, JR., SHANNON B. TERRY, :
SYSTEMS OF EXCELLENCE, INC., :
ALPHA SECURITIES LTD., AND :
DUNBAR HOLDINGS LTD., :
:
DEFENDANTS. :
________________________________________________:
ORDER GRANTING PLAINTIFF'S REQUEST FOR TEMPORARY
RESTRAINING ORDER, ASSET FREEZE, AND OTHER RELIEF
This cause comes before the Court upon motion by the Plaintiff
Securities and Exchange Commission ("Commission") for the following Orders with
respect to Defendants:
1. Temporarily Restraining defendants from violating the
federal securities laws;
2. Temporarily freezing assets and accounts of
defendants, other than Systems of Excellence, Inc.;
3. Requiring Charles O. Huttoe to temporarily surrender
his passport and refrain from foreign travel pending
identification of accounts;
<PAGE> 3
4. Prohibiting destruction and alteration of documents;
5. Expediting discovery;
6. Expediting the production of bank records subject to
12 U.S.C. Sections 3401, et seq., by delaying notice
to the customer, as provided by 12 U.S.C. Section
3409;
7. Directing defendants to answer the Complaint;
8. Directing defendants, other than Systems of
Excellence, Inc., to file an Accounting; and
9. Directing defendants to Show Cause why the Court
should not issue a Preliminary Injunction and impose
other relief against them.
The Court has considered the Commission's Complaint, Memorandum of
Points and Authorities in support of the TRO, and the Declaration of Paula L.
Kashtan and exhibits filed therewith, and all other documents and arguments in
support of its application for emergency relief ("Application").
The Commission has made a sufficient and proper showing in support of
the relief granted herein by: i) presenting a prima facie case of securities
laws violations by defendants, and ii) showing a reasonable likelihood that the
defendants enjoined herein will continue to violate the federal securities laws
in connection with their offer, purchase and sale of SOE stock.
The Court finds good cause to believe that, unless restrained and
enjoined by Order of this Court, defendants, other than SOE, will dissipate,
conceal or transfer from the jurisdiction of this Court assets which could be
subject to an Order of Disgorgement. Accordingly the Court hereby orders as
follows:
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<PAGE> 4
I.
TEMPORARY RESTRAINING ORDER
IT IS HEREBY ORDERED that, pending determination of the Show Cause
Preliminary Injunction hearing,
1. Defendants Charles O. Huttoe, Huttoe & Assoc.,
National Trading Services, Word Corporation, SGA Goldstar Research, Inc.,
Theodore R. Melcher, Jr., Shannon B. Terry, Alpha Securities Ltd., Dunbar
Holdings Ltd., and Systems of Excellence, Inc., and their officers, agents,
servants, employees, attorneys, and those persons in active concert or
participation with them, and each of them, ARE HEREBY RESTRAINED AND ENJOINED
from directly or indirectly, in the absence of an applicable exemption,
a. making use of any means or instruments of
transportation or communication in interstate commerce or of the
mails to sell a security through the use or medium of any prospectus
or otherwise, or
b. carrying or causing to be carried through the
mails or in interstate commerce, by any means or instruments of
transportation, any such security for the purpose of sale or delivery,
unless a registration statement is in effect as to such security, or
c. making use of any means or instruments of
transportation or communication in interstate commerce or of the mails
to offer to sell or offer to buy through the use or medium of any
prospectus or otherwise any security, unless a registration statement
is in effect as to such security, or while the registration
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<PAGE> 5
statement is the subject of a refusal or stop order or (prior to the
effective date of the registration statement) any public proceeding
under Section 8 of the Securities Act [15 U.S.C. Section 77h],
in violation of Sections 5(a) and 5(c) of the Securities Act [15 U.S.C.
Sections 77e(a) and 77e(c)];
2. Defendants Charles O. Huttoe, Huttoe & Assoc.,
National Trading Services, Inc., Word Corporation, SGA Goldstar Research, Inc.,
Theodore R. Melcher, Jr., Shannon B. Terry, Alpha Securities Ltd., Dunbar
Holdings Ltd., and Systems of Excellence, Inc., and each of them, and their
officers, agents, servants, employees, attorneys, and those persons in active
concert or participation with them, and each of them, ARE HEREBY RESTRAINED AND
ENJOINED from directly or indirectly, in connection with the offer, purchase,
or sale of any securities, by the use of any means, instruments or
instrumentalities of transportation or communication in interstate commerce, or
of the mails, or of any facility of any national securities exchange,
a. employing any device, scheme, or artifice to
defraud, or
b. obtaining money or property by means of any
untrue statement of a material fact, or omitting to state a material
fact necessary in order to make the statements made, in light of the
circumstances under which they were made, not misleading, or
c. engaging in any transaction, act, practice or
course of business which operates or would operate as a fraud or
deceit upon any person,
in violation of Section 17(a) of the Securities Act [15 U.S.C. Section
77q(a)], Section 10(b) of
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<PAGE> 6
the Exchange Act [15 U.S.C. Section 78j(b)], and Rule 10b-5 thereunder [17
C.F.R. Section 240.10b-5].
3. Defendants SGA Goldstar Research, Inc., Theodore R.
Melcher, Jr., Shannon B. Terry, Alpha Securities Ltd., and Dunbar Holdings
Ltd., and each of them, and their officers, agents, servants, employees,
attorneys, and those persons in active concert or participation with them, and
each of them, ARE HEREBY RESTRAINED AND ENJOINED from directly or indirectly,
using any means or instruments of transportation or communication in interstate
commerce or by the use of the mails,
to publish, give publicity to, or circulate any
notice, circular, advertisement, newspaper, article,
letter, investment service, or communication which,
though not purporting to offer a security for sale,
describes such security for a consideration received
or to be received, directly or indirectly, from an
issuer, underwriter, or dealer, without fully
disclosing the receipt, whether past or prospective,
of such consideration and the amount thereof,
in violation of Section 17(b) of the Securities Act [15 U.S.C. Section
77q(b)];
4. Defendant Systems of Excellence, Inc., and its
officers, agents, servants, employees, attorneys, and those persons in active
concert or participation with it, ARE HEREBY RESTRAINED AND ENJOINED from,
a. Failing to file with the Commission, in
accordance with such rules and regulations as the Commission may
prescribe as necessary or appropriate for the proper protection of
investors and to insure fair dealing in the
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<PAGE> 7
security,
(1) such information and documents (and
such copies thereof) as the Commission shall require to keep
reasonably current the information and documents required to
be included in or filed with an application or registration
statement filed pursuant to Section 12 of the Exchange Act [15
U.S.C. Section 78l], and
(2) such annual reports (and copies
thereof), certified if required by the rules and regulations
of the Commission by independent public accountants, and such
quarterly reports (and such copies thereof), as the Commission
may prescribe, and
b. filing or causing to be filed with the
Securities and Exchange Commission any report required to be filed
pursuant to Section 13(a) of the Exchange Act [15 U.S.C. Section
78m(a)] and the rules and regulations promulgated thereunder, which
contains any untrue statement of material fact, which omits to state
any material fact necessary in order to make the statements made, in
the light of the circumstances under which they were made, not
misleading, or which omits to disclose any information required to be
disclosed,
in violation of Sections 10(b) and 13(a) of the Exchange Act [15 U.S.C.
Sections 78j(b) and 78m(a)], and Rules 10b-5, 12b-20, 13a-1, 13a-11, and
13a-13, thereunder [17 C.F.R. Sections 240.10b-5, 240.12b-20, 240.13a-1,
240.13a-11, 240.13a-13, 240.13a-13], thereunder.
5. Defendant Systems of Excellence, Inc., and its
officers, agents, servants, employees, attorneys, and those persons in active
concert or participation with
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<PAGE> 8
it, ARE HEREBY RESTRAINED AND ENJOINED from,
a. Failing to make and keep books, records, and
accounts, which, in reasonable detail, accurately and fairly reflect
the transactions and dispositions of its assets, and
b. Failing to devise and maintain a system of
internal accounting controls sufficient to provide reasonable
assurance that,
(1) transactions are executed in
accordance with management's general or specific
authorization,
(2) transactions are recorded as
necessary (I) to permit preparation of financial statements in
conformity with generally accepted accounting principles or
any other criteria applicable to such statements, and (II) to
maintain accountability for assets,
(3) access to assets is permitted only
in accordance with management's general or specific
authorization, and
(4) the recorded accountability for
assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any
differences,
in violation of Sections 13(b)(2)(A) and 13(b)(2)(B) of the Exchange Act [15
U.S.C. Sections 78m(b)(2)(A) and 78m(b)(2)(B)].
6. Defendant Charles O. Huttoe and his agents, servants,
employees, attorneys, and those persons in active concert or participation with
him, ARE HEREBY RESTRAINED AND ENJOINED from,
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<PAGE> 9
a. Falsifying or causing to be falsified, any
book, record or account subject to Section 13(b)(2)(A) of the Exchange
Act, or
b. making or causing to be made a materially
false or misleading statement, or
c. omitting to state, or causing another person
to omit to state, any material fact necessary to make
statements made, in light of the circumstances under which
such statements were made, not misleading,
to an accountant in connection with (1) any audit or examination of
the financial statements of the issuer required to be made pursuant to
the Commission's rules and regulations, or (2) the preparation or
filing of any document or report required to be filed with the
Commission pursuant to the Commission's rules and regulations,
in violation of Section 13(b)(5) of the Exchange Act [15 U.S.C. Section
78m(b)(5)], and Rules 13b2-1 and 13b2-2 thereunder [17 C.F.R. Sections
240.13b2-1 and 240.13b2-2].
7. Defendant Charles O. Huttoe, IS HEREBY RESTRAINED AND
ENJOINED FROM, with respect to any non- exempt equity security, when he is
directly or indirectly the beneficial owner of more than 10 per centum of any
class of such security, or a director or an officer of the issuer of such
security,
failing to file, at the time of the registration of such
security on a national securities exchange or by the effective
date of a registration statement filed pursuant to Section
12(g) of the Exchange Act [15 U.S.C. Section 78l(g)], or
within ten days after he becomes such beneficial owner,
director, or officer,
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<PAGE> 10
a statement with the Commission (and, if such security is
registered on a national securities exchange, also with the
exchange) of the amount of all equity securities of such
issuer of which he is the beneficial owner, and within ten
days after the close of each calendar month thereafter, if
there has been a change in such ownership during such month,
failing to file with the Commission (and if such security is
registered on a national securities exchange, also with the
exchange) a statement indicating his ownership at the close of
the calendar month and such changes in his ownership as have
occurred during such calendar month,
in violation of Section 16(a) of the Exchange Act [15 U.S.C. Section 78p(a)],
and Rules 16a-2 and 16a-3 thereunder [17 C.F.R. Sections 240.16a-2 and
240.16a-3].
II.
ASSET AND ACCOUNTS FREEZE
IT IS FURTHER ORDERED that, pending determination of the Order To Show
Cause, see IX, below,
A. That the defendants, other than SOE, along with their
directors, officers, agents, servants, employees, attorneys, depositories,
banks, and those persons in active concert or participation with any one or
more of them, and each of them, BE AND THEY HEREBY ARE RESTRAINED FROM,
directly or indirectly, transferring, setting off, receiving, changing,
selling, pledging, assigning, liquidating or otherwise disposing of, or
withdrawing any assets or property, including cash, free credit balances, fully
paid for securities, and/or property pledged or hypothecated as collateral for
loans, legally or
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<PAGE> 11
beneficially owned by, controlled by, or in the possession of:
1. Charles O. Huttoe,
2. Huttoe & Associates,
3. National Trading Services, Inc.,
4. Word Corporation,
5. Karen Purvis, also known as Karen Purvis Huttoe
6. Tammy Jo Perkins,
7. Josephine Brooks,
8. SGA Goldstar Research, Inc.,
9. Theodore R. Melcher, Jr.,
10. Shannon B. Terry,
11. Alpha Securities Ltd., and
12. Dunbar Holdings Ltd.,
provided, however, that defendant Huttoe may expend up to a maximum of $5,000
each month for reasonable living expenses, $1,000 each month for travel
expenses, and a maximum of $5,000 each month beginning on December 1, 1996, for
legal expenses. Purvis, Brooks, and Perkins may each expend a maximum of
$5,000 per month for living expenses, and may apply to the Court for a
reasonable allowance for travel and legal expenses. Any party may petition the
Court for modification of these limits in the event of hardship.
B. That any financial or brokerage institution or other person or
entity located within the territorial jurisdiction of the United States courts
and holding any such funds
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<PAGE> 12
or other assets, in the name, for the benefit or under the control of Charles
O. Huttoe, Huttoe & Associates, National Trading Services, Inc., Word
Corporation, Karen Purvis, also known as Karen Purvis Huttoe, Tammy Jo Perkins,
Josephine Brooks, SGA Goldstar Research, Inc., Theodore R. Melcher, Jr.,
Shannon B. Terry, Alpha Securities Ltd., or Dunbar Holdings Ltd., and which
receives actual notice of this order by personal service or otherwise, shall
hold and retain within its control and prohibit the withdrawal, removal,
transfer, disposition, pledge, encumbrance, assignment, set off, sale,
liquidation, dissipation, concealment, or other disposal of any such funds or
other assets.
Such banks and brokerages include, without limitation, the following
bank and brokerage accounts, controlled by Huttoe, into which unregistered SOE
shares were deposited,
1. M.H. Meyerson & Co., Inc. brokerage accounts in the
names of:
a. Karen Purvis, opened March 13, 1996,
b. Josephine Brooks, opened June 5, 1996, and
c. Tammy Jo Perkins, opened May 31, 1996,
2. Commonwealth Associates brokerage account in the name
of National Trading Services, Inc., opened August 8,
1995, and
3. J.S. Securities, Inc. brokerage account in the name
of National Trading Services, Inc.,
and the following bank accounts, controlled by Huttoe, which then received
proceeds from the sales of unregistered SOE shares previously deposited into
the above-referenced M.H. Meyerson and Commonwealth brokerage accounts,
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<PAGE> 13
4. City National Bank accounts in the names of:
a. Huttoe & Associates, account 5001578052,
b. Huttoe and Brooks, account 5002950802,
c. Huttoe and Purvis, account 5002950828, and
d. Huttoe and Perkins, account 5002950815,
and the following bank accounts controlled by Huttoe, into which the
above-referenced City National Bank account SOE unregistered stock sale
proceeds, and the proceeds from the sales of SOE unregistered shares in the
J.S. Securities account were then transferred,
5. Patriot National Bank account in the name of National
Trading Services, Inc., account 10033254,
and the following bank accounts into which the above-referenced Patriot
National Bank account SOE unregistered stock sale proceeds were then
transferred,
6. Tyson's National Bank account of Nancy Ellis, account
number 1011553,
7. Barnett Bank account of Mary Jane Hubbard, account
number 1460192390,
8. Commercial Bank of Florida accounts of:
a. David Goldstein, account number 4052182208,
and
b. Goldstein & Goldstein, P.A. Trust Account,
account number 0405100-77310,
9. First Union Bank (Jacksonville, Florida) accounts of:
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<PAGE> 14
a. Starlog Franchise Corp., account number
2090001257271,
b. J.S. Holdings, Inc., account number
8880404828, Pt. Pleasant Branch,
10. Bank of Tampa account of Evans & Domica, P.A.,
account number 21900639,
11. City National Bank account of Nancy Davis, and
12. Bank of Montreal account of Lynda Lou Kane,
and any other brokerage or bank account controlled by any defendant, including
the Patriot National Bank account under Huttoe's control in the name of Word
Corporation, account 10033165, or which contains proceeds or transfers from the
sales of unregistered SOE stock, and
C. That Charles O. Huttoe, Huttoe & Associates, National Trading
Services, Inc., Word Corporation, Karen Purvis, also known as Karen Purvis
Huttoe, Tammy Jo Perkins, Josephine Brooks, SGA Goldstar Research, Inc.,
Theodore R. Melcher, Jr., Shannon B. Terry, Alpha Securities Ltd., Dunbar
Holdings Ltd., and each of them, shall
1. Take such steps as are necessary to repatriate to the
territory of the United States of America, in a
manner to be directed by the Court, all such funds
and assets of investors described in the Commission's
complaint in this action which are held by them or
are under their direct or indirect control, jointly
or singly; and
2. Provide the Commission and the Court a written
description of all such funds and assets so
repatriated.
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<PAGE> 15
III.
TEMPORARY PASSPORT SURRENDER AND TRAVEL
RESTRICTION PENDING ACCOUNT IDENTIFICATION
IT IS FURTHER ORDERED that:
A. Charles O. Huttoe shall immediately surrender to the Clerk of
the Court all passports that he holds. Huttoe's passport(s)
will be retained by the Court pending (1) Huttoe's filing and
provision to the Commission of a sworn identification of
assets and accounts as set forth in VIII(3), below, and (2)
resolution of the Order To Show Cause, see IX below, after
which Huttoe may apply for return of the passport(s).
B. Huttoe is prohibited from travelling outside of the United
States pending (1) Huttoe's filing and provision to the
Commission of a sworn identification of assets and accounts as
set forth in VIII(3), below, and (2) resolution of the Order
To Show Cause, see IX below, after which Huttoe may apply to
lift this restriction.
C. Within five (5) calendar days from the date of this Order,
Huttoe shall provide to the Commission, and file with this
Court, a document sworn to before a notary public setting
forth all assets (whether real or personal) and accounts
(including, but not limited to, bank accounts, savings
accounts, securities accounts and deposits of any kind) in
which he (whether solely or jointly), directly or indirectly
(including through a corporation, partnership, relative,
friend, or nominee), either has an interest or over which he
has the power or right to exercise control.
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<PAGE> 16
IV.
RECORDS PRESERVATION
IT IS FURTHER ORDERED that all defendants, their directors, officers,
agents, servants, employees, attorneys, depositories, banks, and those persons
in active concert or participation with any one or more of them, and each of
them, BE AND THEY HEREBY ARE RESTRAINED AND ENJOINED from, directly or
indirectly, destroying, mutilating, concealing, altering, disposing of, or
otherwise rendering illegible in any manner, any of the books, records,
documents, correspondence, brochures, manuals, papers, ledgers, accounts,
statements, obligations, files and other property of or pertaining to the
Defendants wherever located.
V.
EXPEDITED DISCOVERY
IT IS FURTHER ORDERED that expedited discovery is ordered as follows:
A. prior to the expiration of thirty (30) calendar days after
service of the summons and complaint upon defendants, pursuant
to Rules 30(a) and 45 of the Federal Rules of Civil Procedure,
plaintiff may take depositions upon oral examination and
obtain documents from defendants and non-parties subject to
five (5) calendar days notice, and depositions may be taken by
telephone or other remote electronic means;
B. pursuant to Rules 33 and 36 of the Federal Rules of Civil
Procedure, the defendants shall answer all requests for
admissions and interrogatories within five (5) calendar days
of service of any such requests;
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<PAGE> 17
C. pursuant to Rule 34(b) of the Federal Rules of Civil
Procedure, defendants and non-parties shall produce all
documents requested by the Commission within five (5) calendar
days of service of any such requests; and
D. all written responses to the Commission's requests for
discovery under the Federal Rules of Civil Procedure shall be
delivered to the Commission at 450 Fifth Street, N.W., Mail
Stop 4-2, Washington, D.C. 20549 (FAX: 202-942-9581) or to
such other place as counsel for the Commission may direct, by
the most expeditious means available.
E. Service of discovery requests shall be sufficient if made upon
the defendants by facsimile or overnight courier.
VI.
EXPEDITED BANK RECORDS PRODUCTION UNDER RFPA
IT IS FURTHER ORDERED that expedited production of bank records
discovery is ordered as follows:
A. Pursuant to 12 U.S.C. Section 3409((a)(3)(E), the Commission
may delay notification of the customer of any banks it subpoenas in this
action, under to the Right to Financial Privacy Act, 12 U.S.C. Sections 3401,
et seq., as the notification and ten-day delay provisions of the statute would
prevent the parties from obtaining necessary bank records in time for the Order
To Show Cause.
B. Banks served with a Commission subpoena for customer records
and this Order shall produce the records in the expedited fashion provided in
Section V, above, and shall not decline to produce the records because the ten
day waiting period has not
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<PAGE> 18
passed, nor because the Commission has not provided a RFPA certification.
VII.
SERVICE
IT IS FURTHER ORDERED that
A. Defendants shall serve their Answers to the Commission's
complaint within five (5) calendar days of the issuance of this Order,
B. Service of this Order by FAX shall be sufficient to provide
notice.
VIII.
ACCOUNTING
IT IS FURTHER ORDERED that the defendants, other than SOE, and each of
them, shall make a sworn accounting within five (5) calendar days of the
issuance of this Order to this Court and to the Commission of:
A. any and all assets, funds, or other properties held in their
names, jointly or individually, or for their direct or
indirect beneficial interest, or over which they maintain
control, wherever situated, stating the location, value, and
disposition of each such asset, fund, and other property;
B. each account with any financial or brokerage institution
maintained in either of their names, or for their direct or
indirect beneficial interest, or over which they maintain
control, wherever situated, and the names and last known
addresses of all bailees, debtors, and other persons and
entities which have held or are holding any of their assets,
funds or other properties;
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<PAGE> 19
C. the disposition of all funds, assets or other properties
removed or transferred from each account, bailee, debtor or
other person or other entities, from January 1, 1995 to the
present; and
D. each sale or other disposition of SOE securities by them or
for their benefit, stating for each the brokerage firm(s)
used, the date, amount and price of each transaction, and the
current location of the proceeds.
IX.
SHOW CAUSE HEARING
IT IS HEREBY ORDERED that the Defendants, individually and
collectively, show cause, if any, before the Honorable Gladys Kessler of this
Court, at 4 o'clock p.m., on November 21, 1996, in Courtroom 19 of the United
States Courthouse, Washington, D.C., or as soon thereafter as the matter can be
heard, why a Preliminary Injunction pursuant to Rule 65 of the Federal Rules of
Civil Procedure should not be granted against defendants, as requested by the
Commission.
X.
RETENTION OF JURISDICTION
IT IS FURTHER ORDERED that this Court will retain jurisdiction over
this matter and the Defendants in order to implement and carry out the terms of
all Orders and Decrees that may be entered and/or to entertain any suitable
application or motion for additional relief within the jurisdiction of this
Court, and will order other relief that
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<PAGE> 20
this Court deems appropriate under the circumstances.
IT IS SO ORDERED.
Dated: -----------------
Washington, D.C.
----------------------------
UNITED STATES DISTRICT JUDGE
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<PAGE> 21
CERTIFICATE OF SERVICE
I, the undersigned, hereby certify that on this 7th day of November,
1996, I caused true and correct copies of the foregoing ORDER GRANTING
PLAINTIFF'S REQUEST FOR TEMPORARY RESTRAINING ORDER, ASSET FREEZE, AND OTHER
RELIEF, to be FAX'ed, and that same day, placed in properly sealed, first
class, postage-paid wrappers, addressed to the following listed counsel for all
parties to the action, and placed into an official depository of the United
States Postal Service:
Gary Goodenow, Esq.
341 Northeast 104th Street
Miami, FL 33138
Tel: 305-757-0570
FAX: 305-757-4475
[Attorney for SGA Goldstar defendants]
John Fedders, Esq.
1742 N Street, N.W.
Washington, D.C. 20036
Tel: 202-659-2424
FAX: 202-785-2210
[Attorney for Charles Huttoe defendants]
Elliot G. Sagor, Esq.
Squadron, Ellenoff, Plesent & Sheinfeld, LLP
551 Fifth Avenue
New York, New York 10176
Tel: 212-476-8287
Fax: 212-697-6686
[Attorney for Systems of Excellence, Inc.]
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