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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
Litigation Release No. 15730 / May 4, 1998
Accounting and Auditing Enforcement Release No. 1032
SECURITIES AND EXCHANGE COMMISSION v. HOLLYWOOD TRENZ, INC., EDWARD R.
SHOWALTER, TRACY A. BRAIME, AND ROBERT E. BURTON, JR., Civil Action
No. 98- 1106 (RMU) (D.D.C. May 4, 1998).
In the MATTER OF TIMOTHY J. BRANNON, Administrative Proceeding File
No. 3-9597, Securities Act of 1933 Release No. 7533, Securities
Exchange Act of 1934 Release No. 39949.
In the MATTER OF WILLIAM D. TETSWORTH, JR., CPA, Administrative
Proceeding File No. 3-9598, Securities Exchange Act of 1934 Release
No. 39950, Accounting and Auditing Enforcement Release No. 1031.
The Securities and Exchange Commission today filed a complaint in the
United States District Court for the District of Columbia seeking
permanent injunctions against Hollywood Trenz, Inc. ("HTI"), a
Florida-based company that has been attempting to open a chain of
family entertainment restaurants; Edward R. Showalter, HTI's Chairman
of the Board, President, Chief Executive Officer, and Chief Financial
Officer; Robert E. Burton, Jr., HTI's former Chief Operating Officer
and Vice-Chairman; and Tracy A. Braime, Showalter's wife and a former
consultant of the company. The Commission also seeks civil penalties
from Showalter, Braime, and Burton; disgorgement of illegal gains and
prejudgment interest from Showalter and Braime; and an order barring
Showalter from serving as an officer or director of a public reporting
company.
The complaint alleges that from 1993 through at least 1996, HTI
engaged in two fraudulent schemes to raise capital illegally, both of
which were orchestrated by Showalter. Specifically, the complaint
alleges
In the first scheme, HTI materially overstated the value of its
primary asset, a portfolio of defaulted bank loans, by inflating its
cost of $22,000 to over $7 million in two public filings. In the
second scheme, HTI fraudulently raised over $2.57 million by using
Forms S-8 to register stock purportedly to compensate consultants,
when, in fact, the majority of the stock was transferred to HTI's
creditors, other third parties, and outside investors who paid HTI
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SECURITIES AND EXCHANGE COMMISSION
SECURITIES AND EXCHANGE COMMISSION v. HOLLYWOOD TRENZ, INC., EDWARD R. SHOWALTER, TRACY A.
In the MATTER OF TIMOTHY J. BRANNON, Administrative Proceeding File No. 3-9597, Securities
The Securities and Exchange Commission today filed a complaint in the United States District
y A. Braime, Showalter's wife and a former consultant of the company.
The Commission also seeks civil penalties from Showalter, Braime, and Burton; disgorgement of
The complaint alleges that from 1993 through at least 1996, HTI engaged in two fraudulent
In the first scheme, HTI materially overstated the value of its primary asset, a portfolio of
In the second scheme, HTI fraudulently raised over $2.57 million by using Forms S-8 to
Showalter entered into undisclosed agreements with the consultants whereby the consultants
The Commission alleges that by engaging in such conduct, HTI, Showalter and Burton violated
Finally, the Commission alleges that Showalter violated Section 13of the Exchange Act and
In the first, the Commission issued an Order against Timothy J. Brannon, a former registered
Without admitting or denying the findings contained therein, Brannon consented to the
In the second related proceeding, the Commission simultaneously instituted and settled
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