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SEC LITIGATION RELEASE
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EXTRACTED KEY WORDS
SECURITIES JUDGEMENT EXCHANGE COMMISSION PERMANENT INJUNCTION PAY DISGORGEMENT RELIEF KENNETH WEB HOSTING FLORIDA PRINCIPALS ALLEGES BOILER-ROOM COMPLAINT INVESTORS DISTRICT EXCESS FRAUDULENT OFFERING MIAMI ENTRY ADMITTING DENYING ALLEGATIONS ENJOIN TELEMARKETERS ACT IMPOSES CIVIL PENALTY |
SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 17202 / October 24, 2001
JUDGMENT OF PERMANENT INJUNCTION AND OTHER RELIEF ENTERED AGAINST
KENNETH R. GROSSFELD
SECURITIES AND EXCHANGE COMMISSION V. WEB HOSTING HEADQUARTERS
PARTNERSHIP, DONALD E. RHOADES, KENNETH R. GROSSFELD, WAYNE L.
PRICHASON, EDUARDO VILLAR, AND KARYN MILLER, ET AL., Case No.
00-4975-CIV-HIGHSMITH-GARBER (S.D. Fla., filed Dec. 28, 2000)
The Securities and Exchange Commission (SEC) announced that on October
15, 2001, the United States District Court for the Southern District
of Florida entered a Judgment of Permanent Injunction and Other Relief
("final judgment") against Kenneth R. Grossfeld ("Grossfeld"),
ordering him to pay disgorgement in excess of $697,000. Grossfeld was
a principal of a company involved in the alleged fraudulent offering
of securities conducted from a classic "boiler-room" operation in
Miami, Florida. Grossfeld consented to the entry of the final
judgment, without admitting or denying the allegations in the SEC's
Complaint, in connection with his settlement of the SEC's injunctive
action.
On December 28, 2000, the SEC filed an emergency action against
Grossfeld and others seeking to enjoin the alleged ongoing fraudulent
securities offering being conducted by a Miami, Florida boiler-room
and its principals and telemarketers. Among other things, the SEC's
Complaint alleges that the boiler-room, Web Hosting Headquarters
Partnership (Web Hosting or the Company), failed to disclose to
investors that it was controlled by individuals with a prior history
of defrauding investors, and that it had diverted at least 62% of
funds raised from investors to pay its principals and telemarketers.
Grossfeld, without admitting or denying the allegations of the SEC's
Complaint, consented to the entry of a Final Judgment of Permanent
Injunction and Other Relief that enjoins him from violating Sections
5(a), 5(c) and 17(a) of the Securities Act of 1933 (15 U.S.C.
77e(a), 77e(c) and 77q) and Sections 10(b) and 15(a)(1) of the
Securities Exchange Act of 1934 (15 U.S.C. §§ 78j(b) and 78o(a)(1))
and Rule 10b-5 thereunder (17 C.F.R. 240.10b-5). The Final Judgment
also imposes disgorgement and prejudgment interest on disgorgement
against Grossfeld in the amounts of $1,630,000 and $36,675,
respectively, but waives payment of disgorgement and interest in
excess of $697,533 based upon his demonstrated inability to pay. The
Final Judgment also does not impose a civil penalty based upon
Grossfeld's demonstrated inability to pay a civil penalty.
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