U.S. Securities and Exchange Commission

   Litigation Release No. 16642 / August 2, 2000

   Securities and Exchange Commission v. Phoenix Telecom, L.L.C., Jerold
   Benjamin Clawson, Jerry Deland Beacham and H. Ellis Ragland, Jr.,
   Civil Action File No. 1 00-CV-1970-JTC (N.D.Ga.)

   The Securities and Exchange Commission ("Commission") announced that
   on August 2, 2000, it filed a civil law suit with an application for a
   temporary restraining order against Phoenix Telecom, L.L.C.
   ("Phoenix") and Jerold Benjamin Clawson ("Clawson") and other
   emergency relief against all of the defendants. The complaint seeks
   permanent injunctions against Phoenix, Clawson, and two other
   individual defendants, Jerry Deland Beacham ("Beacham") and H. Ellis
   Ragland, Jr. ("Ragland"). The complaint alleges that Phoenix, Clawson,
   Beacham, and Ragland engaged in fraud in the offer and sale of
   unregistered securities in the form of investment contracts. The
   Commission also announced that, on August 2, 2000, Judge Jack T. Camp
   of the United States District Court for the Northern District of
   Georgia entered a temporary restraining order against Phoenix and
   Clawson, appointed a receiver for Phoenix, and directed that assets of
   all of the defendants be frozen.

   The Commission's complaint alleges that the defendants promoted a
   massive fraudulent scheme through the use of insurance agents and over
   the Internet, in which Phoenix raised more than $74 million from more
   than 2,000 mostly elderly investors. The complaint asserts that the
   scheme is based upon purported investments in customer owned,
   coin-operated telephones offered and sold in units, involving a
   telephone, site lease, lease/back agreement and buy/back agreement,
   that constitute securities. In addition, the lease/back agreements
   contain a provision that, under certain circumstances, would allow
   Phoenix to substitute shares of common stock for the securities. No
   registration statement was filed with the Commission in connection
   with these securities. The complaint also asserts that although
   Phoenix is the source of lease payments on the telephones and is the
   insurer of the investment, investors were not told that Phoenix was
   losing money, had a negative net worth, and was dependent on revenue
   from new investors to sustain its operations. It further contends that
   a prior securities law injunction and related criminal prosecution
   against Ragland was not disclosed, and that Phoenix failed to meet its
   monthly lease obligations to investors for the month of July 2000.

   The complaint seeks preliminary injunctions against defendants Phoenix
   and Clawson and permanent injunctions against all defendants to
   prevent future violations of Sections 5(a), 5(c) and 17(a) of the
   Securities Act of 1933 and Section 10(b) of the Securities Exchange