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he...@sec.gov
FOR IMMEDIATE RELEASE 2001-136
SEC ORDERS THREE COMPANIES TO CEASE
MAKING FALSE ANTI-TERRORISM CLAIMS
Washington, DC, November 15, 2001 - The Securities and
Exchange Commission announced today that it has ordered
three publicly-traded companies to cease committing fraud in
connection with their issuance of false press releases that
sought to exploit the publics anxiety over bio terrorism.
In each case, the company consented to the order
without admitting or denying the Commissions findings. The
Commission found that two companies, Disease Sciences, Inc.,
of Boca Raton, Florida, and The Classica Group, Inc., of
Lakewood, New Jersey, each had misrepresented that they had
technologies capable of killing anthrax in mail and
packages. In fact, neither company had a technology that
had been tested or otherwise shown to be effective or
economical for that purpose.
The Commission further found that a third company, R-
Tec Technologies, Inc., of Flanders, New Jersey, had falsely
claimed that it had developed and patented a Chemical and
Biological Alarm and Neutralization Defense system, or C-
BAND, which the company described as the first
mechanically operated system designed to protect civilians
in every day life from biological and chemical terrorism
attacks.
The Commission found, among other things, that R-Tec
Technologies has not currently developed such a system,
holds no patent on the C-BAND, and no prototype of the C-
BAND has ever been tested.
The conduct that led to these enforcement actions is
reprehensible, said SEC Enforcement Division Director,
Stephen M. Cutler. Any effort to profit by spreading false
information that plays on peoples fear is unconscionable.
Todays enforcement actions make clear that the Commission
will act in real-time to sanction such conduct.
The Commissions Orders found that:
On October 16 and 17, 2001, Disease Sciences issued
press releases concerning a purported remedy - High Pressure
Pulse processing - for anthrax contamination of food, water
and mail. Disease Sciences press releases, however,
omitted to state that High Pressure Pulse had not been
tested for, or shown to be practical or economical for the
uses suggested in the Disease Sciences October 16 press
release; and that Disease Sciences did not yet have a
license to use High Pressure Pulse for any of the uses
suggested in the October 16 press release.
On October 11 and 12, 2001, Classica Group issued press
releases concerning the use of microwave technology to kill
anthrax in packages and mail. The Classica Group press
releases omitted to state that its microwave technology had
not been tested for or shown to be practical, economical, or
effective for killing anthrax in packages or in mail.
On September 24, 2001, R-Tec Technologies issued a
press release that claimed that it had developed and
patented a Chemical and Biological Alarm and
Neutralization Defense system, or C-BAND, which the
company described as the first mechanically operated system
designed to protect civilians in every day life from
biological and chemical terrorism attacks. The true facts
were otherwise. For example, as R-Tec Technologies
acknowledged in a November 7, 2001 press release: (i) a
prototype of C-BAND has never been tested; (ii) R-Tec
Technologies does not have any immediate plans for the
production of C-BAND, and does not know if the system will
ever be commercially available; (iii) R-Tec Technologies did
not create any of the technologies it proposes to use in C-
BAND; and (iv) R-Tec Technologies does not hold any patent
for C-BAND.
The Orders issued today by the Commission order
respondents to cease and desist from committing or causing
any violation and any future violation of Section 10(b) of
the Securities Exchange Act of 1934 (Exchange Act), and Rule
10b-5 promulgated under the Exchange Act.
For further information, contact Linda Chatman Thomsen
at (202) 942-4501 concerning Disease Sciences and Classica
Group and Barry W. Rashkover at (646) 428-1856 concerning R-
Tec Technologies.
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he...@sec.gov
FOR IMMEDIATE RELEASE 2001-138
SEC BARS RECIDIVIST TAMPA BROKER
Washington, DC, November 16, 2001 The Securities and
Exchange Commission today announced that it had barred a
former broker and investment adviser, with a history of
violating the securities laws, from association with any
broker, dealer, or investment adviser, and prohibited him
from, among other things, employment with a registered
investment company. On November 6, 2001, the United States
Attorneys Office for the Middle District of Florida
unsealed an indictment against the same individual, charging
him with seven counts of wire fraud and 13 counts of mail
fraud. The indictment arises from the same conduct that was
the basis for the SECs actions.
The SECs administrative Order against Tampa, Florida-
based Steven H. Adler, arises from allegations that between
October 1994 and September 1998, Adler fraudulently
misappropriated $1,995,600 from 11 investors in a purported
market-timing program. The SEC found that Adler
fraudulently promised the investors that he would use their
money to buy and sell shares of ASM Fund (ASM), which was
at that time a Tampa-based mutual fund of which Adler was
President and Chairman of the Board.
Adler told investors that he would maintain market
timing accounts through the registered investment adviser
of which Adler was also President, and that he would
maximize investor returns by correlating the purchase and
sale transactions to fluctuations in the market. In
contrast to Adlers representations to investors, the SEC
found that he stole their money to pay for the expenses of
his investment advisory company and for his own expenses.
The SEC also found that Adler prepared, and furnished to the
investors, fictitious monthly statements purportedly
reflecting gains in their market-timing accounts.
As this case illustrates, the SECs enforcement
program will quickly act to stamp out recidivism, said
David Nelson, Director of the Commissions Southeast
Regional Office. Our mission is clear: we can, and will,
impose significant sanctions on those who take advantage of
investors, and will seek criminal prosecutions, especially
for those who are two- or three-time offenders.
Adler previously consented to a 1996 SEC order that
required him to cease-and-desist from violating Section
17(a)(3) of the Investment Company Act of 1940. That
section restricts borrowing from registered investment
companies. The SECs 1996 order found that Adlers
investment advisory company had illegally borrowed money
from ASM and that Adler had aided and abetted and caused his
advisory companys violation.
The Commission instituted its more recent proceedings
against Adler on July 18, 2000. Adler settled the
proceedings on November 15, 2001, without admitting or
denying the SECs findings, and consented to the SECs Order
requiring him to cease and desist from committing or causing
violations of Section 17(a) of the Securities Act of 1933,
Section 10(b) of the Securities Exchange Act of 1934 and
Rule 10b-5 thereunder, and Sections 204, 206(1), 206(2) and
206(4) of the Investment Advisers Act of 1940 and Rules 204-
2(a)(8), 204-2(a)(10) and 206(4)-2, thereunder.
In addition, the November 15, 2001 Order bars Adler
from associating with any broker, dealer or investment
adviser, and from affiliating, in certain specified
capacities, with any investment company. The Order also
directs Adler to disgorge $1,995,600, plus prejudgment
interest, but waives payment of the disgorgement amount and
interest based upon Adlers demonstrated inability to pay.
The Commission thanks the U.S. Attorneys office and
the FBI for their partnership in pursuing this case.
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he...@sec.gov
FOR IMMEDIATE RELEASE 2001-140
Alan Beller to Be Next Director of the Commissions Division of
Corporation Finance
Washington, DC, November 19, 2001 -- We are extremely pleased,
and proud, to announce that, effective January 14, 2002, Alan L.
Beller will become our next Director of the Division of Corporation
Finance. In addition, he will be Senior Counselor to the Commission,
a new position we created to take maximum advantage of Alans unique
qualifications and ability to make meaningful contributions to
all facets of our work, both within and without the Division of
Corporation Finance.
At this time in our history, there is an urgent need to reform our
capital raising and disclosure regimes. We are committed to improving,
streamlining and expediting corporate disclosure dissemination, and
to enabling seasoned corporate issuers to access our capital markets
more efficiently than at present. Mr. Beller will oversee and direct
these Commission reform efforts, as well as lead all facets of our
corporate disclosure and corporate transactional programs.
Chairman Harvey L. Pitt said, The reform of the way in which capital
is raised and corporate disclosures are made and disseminated is the
most critical project on our current agenda. These undertakings are
complex and challenging, and require the guidance of one of the worlds
foremost authorities on corporate and securities laws. Alan Beller is
uniquely qualified to perform that role, and the Commission is
enormously fortunate that he is willing to join and lead us in this
critical endeavor.
At present, Alan Beller, 52, is a distinguished and well-recognized
expert on corporate and securities laws at the international law firm
of Cleary, Gottlieb, Steen & Hamilton, where he became a partner in 1984.
Mr. Beller has worked in three of Cleary Gottliebs worldwide offices
New York, Paris and Tokyo and his practice has focused on the entire
spectrum of corporate, securities and derivatives issues, both domestic
and international. Mr. Beller is co-chair of the International Sub-
committee of the American Bar Associations Committee on Federal
Regulation of Securities and has published extensively, including
co-authoring a treatise entitled U.S. Regulation of the International
Securities and Derivatives Markets (Sixth Edition, 2001). He received
a J.D. degree, magna cum laude, from the University of Pennsylvania
Law School and graduated from Yale College in 1971.
Chairman Pitt added, Alan Beller brings the most distinguished
breadth of experience ever to the position of Director of Corporation
Finance a considerable accomplishment given the other notable
lawyers who have served in this capacity. In our extensive seven-
decade history, Alan is the most qualified and well-established
expert ever to assume this critical Commission position.
Mr. Beller said: We are at a critical crossroads in government
regulation of capital formation and disclosure in the U.S. and global
securities markets. The need for reform and modernization of the
regulatory framework, and SEC Chairman Harvey Pitts commitment to
moving forward on these issues, makes this an irresistible opportunity.
I am honored that the SEC has invited me to help shape these critical
decisions.
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