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SEC LITIGATION RELEASE
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EXTRACTED KEY WORDS
COMMISSION ALLEGES EXCHANGE LEE DIROBERTO INVESTORS ACT SOUTHERN DISTRICT CALIFORNIA DRAGON WATSON VIOLATIONS DEFENDANTS COMPLAINT ALLEGES SUIT SAN DIEGO ZANDRIA OFFERINGS LEVELRED INVESTMENTS DISCLOSE THEREUNDER ZANDRIA ENTERTAINMENT NETWORKS FRAUDULENT CONVICTED FELONS HIGH-PRESSURE BOILER-ROOM SALES TACTICS FEES EXCEEDED FORTY |
U.S. Securities and Exchange Commission
Litigation Release No. 18390 / October 3, 2003
, Civ. Action No. 03CV - 1957 H (JFS) (Southern District of California)
Today, the Securities and Exchange Commission filed suit in the United
States District Court for the Southern District of California against
Brian Lee, Todd DiRoberto, Lonnie Dragon and Trevor Watson, all San
Diego, California, for violations of the antifraud, securities
registration, and broker-dealer registration provisions of the federal
securities laws. Each of the defendants had previously been associated
with Zandria Corp., a defunct Internet company previously located in
San Diego.
In the suit, the Commission alleges that between November 1998 and
September 2000, Lee, DiRoberto, Dragon and Watson offered more than
$10 million in securities and raised approximately $6 million from
more than 200 investors nationwide in two purported private placement
offerings of stock in Zandria Entertainment Networks, Inc. ("ZEN") and
LevelRed Investments, Inc. The Commission further alleges that the ZEN
and LevelRed Investments offerings were fraudulent because, among
other things, the defendants failed to disclose that Lee and
DiRoberto, both convicted felons, owned and controlled ZEN. In
addition, the Complaint alleges that the defendants used
high-pressure, "boiler-room" sales tactics and failed to disclose to
investors the full extent of their commissions and other fees, which
exceeded forty percent.
The Complaint alleges that Lee, DiRoberto and Dragon violated Sections
5(a), 5(c) and 17(a) of the Securities Act and Sections 10(b) and
15(a) of the Exchange Act and Rule 10b-5 thereunder. The complaint
further alleges that Watson violated Sections 5(a), 5(c) and 17(a) of
the Securities Act and Section 10(b) of the Exchange Act and Rule
10b-5 thereunder.
_________________________________________________________________
Modified 10/06/2003
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