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1
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SEC LITIGATION RELEASE
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EXTRACTED KEY WORDS
INVESTORS SECURITIES PONZI SCHEME EXCHANGE COMMISSION DISTRICT COURT CALIFORNIA PAY FRAUD VICTIMS RADIOLOGY PROMISING REVENUES PAYMENTS DISGORGEMENT ACT CLASSIC PONZI SCHEME PAYMENTS LED INVESTORS CAUSED INVESTORS HEVELL STOPPED MAKING WORTHLESS COMPANY STOCK CIVIL ACTION CONSENTING ENTRY PERMANENT INJUNCTION SPECIFIED DISGORGEMENT FUTURE VIOLATIONS THEREUNDER SUM WAIVER |
U.S. Securities and Exchange Commission
Litigation Release No. 17529 / May 22, 2002
, Criminal Action No. SACR 01-72 (C.D. Cal.)(AHS)
The Securities and Exchange Commission announced that on May 14, 2002,
a federal judge in Santa Ana, California sentenced a Corona Del Mar
man to 84 months in federal prison and ordered him to pay $8,669,724
in restitution arising out of a securities fraud scheme. Steven
Hevell, 38, pleaded guilty to three counts of mail fraud derived from
a Ponzi scheme that defrauded 350 victims out of nearly $8.7 million.
The Honorable Alicemarie H. Stotler of the U.S. District Court for the
Central District of California imposed the sentence on Hevell,
commenting that his companies were "a fairly straightforward Ponzi
scheme."
Hevell defrauded his victims using three companies-MicroWest
Industries, Inc., Advanced I.D. Technology and Consolidated Imaging
Centers Radiology Network. During the period from 1994 to 1997, Hevell
sold investments in these high-technology companies by falsely
promising that the companies would have substantial revenues from
selling software that electronically transmitted radiological images
over telephone lines. Hevell promised his investors an annual interest
return of 14 to 17.5 percent. The companies actually had no revenues
and Hevell used new investor dollars to pay interest owed to previous
investors, a classic Ponzi scheme. The interest payments led investors
to believe that the companies were profitable and caused investors to
make additional investments. Eventually, Hevell stopped making the
interest payments and converted the investors' interests into
worthless company stock.
Hevell had earlier settled a civil action brought by the Commission by
consenting to the entry of a permanent injunction and specified
disgorgement. In the Commission's case, the District Court enjoined
Hevell from future violations of Sections 5(a), 5(c) and 17(a) of the
Securities Act of 1933 and Sections 10(b) and 15(a) of the Securities
Exchange Act of 1934 and Rule 10b-5 thereunder. The Court also ordered
Hevell to disgorge the sum of $400,000 with a waiver of all but
$30,000 based upon financial statements submitted by Hevell.
_________________________________________________________________
Modified 05/22/2002
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