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SEC LITIGATION RELEASE
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EXTRACTED KEY WORDS
TVI COMMISSION JUDGEMENT INVESTOR SECURITIES DISTRICT TVI STOCK SOLD SHARES EXCHANGE COMMISSION UNITED STATES MARYLAND SALES MISLEADING STATEMENTS REVENUES CIVIL TVI CORPORATION CONTRACTOR ENTRY IMPOSE CONTROL PROCEEDS CREDITORS PLAN REORGANIZATION BANKRUPTCY CODE EXEMPTING COMPLAINT DEMAND |
SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 16380 / December 7, 1999
(United States District Court for the District of Maryland, Civil Action No.
PJM-963046)
The Securities and Exchange Commission ("Commission") announced today
that, on December 2, 1999, the United States District Court for the
District of Maryland entered a Final Judgment and Order against Brent
Molovinsky ("Molovinsky"), the former president and chairman of the
board of TVI Corporation ("TVI"), a publicly held military defense
contractor headquartered in Beltsville, Maryland. Entry of the
judgment serves to settle the Commission's case against Molovinsky.
Without admitting or denying the Commission's allegations, Molovinsky
consented to the entry of the judgment which permanently enjoins him
from violating Sections 5(a), 5(c) and 17(a) of the Securities Act of
1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule
10b-5 thereunder. The judgment also requires Molovinsky to pay
disgorgement and prejudgment interest, but waives payment of these
amounts and does not impose a civil penalty based on his demonstrated
inability to pay. In addition, the judgment bars Molovinsky from
acting as an officer or director of any public company.
The Commission alleged that, between October 1992 and April 1995,
Molovinsky, who had exclusive control over TVI's day-to-day operations
and finances, engaged in a scheme in which he misappropriated more
than $1 million of investor proceeds raised from the sale of over $2.9
million of TVI stock to at least 699 investors. The stock was to be
offered and sold to existing TVI investors and creditors pursuant to a
court-approved plan of reorganization, and was to be subject to a
provision in the United States Bankruptcy Code exempting such sales
from registration.
In its complaint, the Commission charged that Molovinsky fraudulently
stimulated demand for TVI stock by making materially false and
misleading statements concerning the company's revenues, earnings and
assets. Molovinsky disseminated the misleading information through
investor correspondence and a series of TVI press releases which he
prepared and issued. Among other things, he overstated TVI's revenues
and income during 1992 and 1993, falsely represented that TVI had
contracts to build tank gunnery ranges that would generate revenues
exceeding $2.5 million, and falsely stated that TVI held patents for
low-cost stealth material and thermal targets used in military
applications.
According to the complaint, Molovinsky took advantage of the increased
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