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SEC LITIGATION RELEASE
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EXTRACTED KEY WORDS
MOLOVINSKY COMMISSION SECURITIES COMPLAINT INVESTOR EXCHANGE COMMISSION DISTRICT TVI STOCK SOLD SHARES SECURITIES ACT UNITED STATES MARYLAND ALLEGES SALES CREDITORS MISLEADING STATEMENTS REVENUES COURT CIVIL CONTRACTOR CONTROL PROCEEDS PLAN REORGANIZATION BANKRUPTCY CODE EXEMPTING DEMAND ACCORDING |
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
LITIGATION RELEASE NO. 15088 / September 27, 1996
SECURITIES AND EXCHANGE COMMISSION V. BRENT MOLOVINSKY, (United
States District Court for the District of Maryland, Civil Action
No. PJM-963046)
On September 27, 1996, the Securities and Exchange
Commission ("Commission") filed a complaint in the U.S. District
Court for the District of Maryland 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, seeking a
permanent injunction, disgorgement and prejudgment interest,
civil penalties and an order barring Molovinsky from acting as an
officer or director of any public company. The Commission
alleges 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 charges 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 demand generated by his false and misleading statements
by selling almost all of the 14 million shares of TVI stock
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