2003-04-23 sec-litreleases litigation_release 65 KB 2,485 chars

SEC v. Web Hosting Headquarters Partnership; Donald E. Rhoades; Kenneth R. Grossfeld; Wayne L. Prichason; Eduardo Villar; and Karyn Miller, No. LR-18101, Southern District of Florida (Apr. 23, 2003) — Press Release

raw: Web Hosting Headquarters Partnership, Donald E. Rhoades, Kenneth R. Grossfeld, Wayne L. Prichason, Eduardo Vallar, and Karyn Miller, et al.

Web Hosting Headquarters Partnership, Donald E. Rhoades, Kenneth R. Grossfeld, Wayne L. Prichason, Eduardo Vallar, and Karyn Miller, et al., No. LR-18101 (Apr. 23, 2003)

Caption: SEC v. Web Hosting Headquarters Partnership, et al.

Source JSON

summary

Donald E. Rhoades and Karyn Miller consented to permanent injunctions without admitting guilt for orchestrating a fraudulent boiler-room scheme through Web Hosting Headquarters Partnership, diverting at least 62% of investor funds to insiders, with Rhoades ordered to pay over $1 million in disgorgement, interest, and a civil penalty, while Miller’s disgorgement was waived due to financial hardship.

paragraph

Donald E. Rhoades and Karyn Miller were found liable for violating Sections 5(a), 5(c), and 17(a) of the Securities Act and Sections 10(b) and 15(a)(1) of the Exchange Act, along with Rule 10b-5, for their roles in a fraudulent securities offering by Web Hosting Headquarters Partnership. Rhoades was ordered to pay $764,272 in disgorgement, $98,664 in prejudgment interest, and a $185,000 civil penalty, with funds distributed to victims under the Sarbanes-Oxley Act’s Fair Funds provision; Miller was ordered to pay $154,015 in disgorgement plus interest, but payment was waived based on sworn financial hardship documentation, and no civil penalty was imposed. Both consented to the judgments without admitting or denying the allegations, which included concealing the operators’ prior fraudulent histories and diverting over 62% of investor funds to pay principals and telemarketers.

narrative

The Securities and Exchange Commission filed an emergency action on December 28, 2000, against Web Hosting Headquarters Partnership and its principals, including Donald E. Rhoades and Karyn Miller, alleging a fraudulent boiler-room scheme that misled investors by concealing the operators’ histories of prior fraud. The SEC claimed that at least 62% of investor funds were diverted to pay the company’s principals and telemarketers rather than being used for legitimate business purposes. On April 21, 2003, the U.S. District Court for the Southern District of Florida entered final judgments against Rhoades and Miller by consent, permanently enjoining them from violating key provisions of the Securities Act and Exchange Act. Rhoades was ordered to pay $764,272 in disgorgement, $98,664 in prejudgment interest, and a $185,000 civil penalty, with the penalty to be distributed to harmed investors under the Sarbanes-Oxley Act’s Fair Funds provision. Miller, based on sworn financial documentation showing hardship, was ordered to pay $154,015 in disgorgement plus interest, but the payment was waived and no civil penalty was imposed. Both parties consented to the judgments without admitting or denying the allegations. The case concluded a nearly three-year enforcement action initiated to halt an ongoing fraudulent offering centered in Miami, Florida.

Enriched metadata

Scheme: boiler-room (100%)
Court: Southern District of Florida
Outcome: settled
Disgorgement: $764,272
Civil penalty: $185,000
Entity: Web Hosting Headquarters Partnership

Classified boiler-room(confidence 100%). EDGAR detection: forms Form D· recall 50% / precision 4%. detection rule →

Extracted insights

Dollar amounts 4

$764K $764,272 $100K–$1M
$185K $185,000 $100K–$1M
$154K $154,015 $100K–$1M
$99K $98,664 $10K–$100K

Entities 6

person emergency action
person final judgment
person final judgments
agency Securities and Exchange Commission
court us district court
person web hosting headquarters partnership

Triples 8

US District Court Entered Final Judgments Donald E. Rhoades and Karyn Miller
Final Judgments Enjoin Rhoades and Miller from Violations
SEC Filed Emergency Action
Web Hosting Headquarters Partnership Failed to Disclose Control by Individuals with Prior History
Web Hosting Headquarters Partnership Diverted 62% of Funds Raised
Final Judgment Orders Rhoades to Pay Disgorgement of $764,272
Final Judgment Imposes Civil Penalty of $185,000
Final Judgment Orders Miller to Pay Disgorgement of $154,015

View original SEC litigation releasesec.gov

Extracted body text (2,485c)

Litigation Release No. 18101 / April 23, 2003 FINAL JUDGMENTS OF PERMANENT INJUNCTION AND OTHER RELIEF ENTERED AGAINST DONALD E. RHOADES AND KARYN MILLER 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-TURNOFF (S.D. Fla., filed Dec. 28, 2000) The Securities and Exchange Commission (SEC) announced that on April 21, 2003, the United States District Court for the Southern District of Florida entered Final Judgments of Permanent Injunction and Other Relief ("Final Judgments") against Donald E. Rhoades ("Rhoades") and Karyn Miller ("Miller"), entered by their consent, without admitting or denying the allegations of the Commission's Complaint. The Final Judgments enjoin Rhoades and Miller from violations of 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]. On December 28, 2000, the SEC filed an emergency action against Rhoades, Miller 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), 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. In addition to the permanent injunction, the Final Judgment entered as to Rhoades also orders him to pay disgorgement in the amount of $764,272, plus prejudgment interest thereon in the amount of $98,664, and imposes a civil penalty of $185,000. The penalty will be distributed to investors of Web Hosting pursuant to the Fair Funds provisions of Section 308(a) of the Sarbanes-Oxley Act of 2002. The Final Judgment entered as to Miller orders her to pay disgorgement in the amount of $154,015, plus prejudgment interest thereon, but waives payment of disgorgement and does not impose a civil penalty based upon Miller's sworn financial statement and supporting documentation submitted to the Commission. See also, Litigation Release No. 16846 (December 29, 2000).

OCR text (2,485c · plain-text · 99% conf)

Litigation Release No. 18101 / April 23, 2003 FINAL JUDGMENTS OF PERMANENT INJUNCTION AND OTHER RELIEF ENTERED AGAINST DONALD E. RHOADES AND KARYN MILLER 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-TURNOFF (S.D. Fla., filed Dec. 28, 2000) The Securities and Exchange Commission (SEC) announced that on April 21, 2003, the United States District Court for the Southern District of Florida entered Final Judgments of Permanent Injunction and Other Relief ("Final Judgments") against Donald E. Rhoades ("Rhoades") and Karyn Miller ("Miller"), entered by their consent, without admitting or denying the allegations of the Commission's Complaint. The Final Judgments enjoin Rhoades and Miller from violations of 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]. On December 28, 2000, the SEC filed an emergency action against Rhoades, Miller 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), 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. In addition to the permanent injunction, the Final Judgment entered as to Rhoades also orders him to pay disgorgement in the amount of $764,272, plus prejudgment interest thereon in the amount of $98,664, and imposes a civil penalty of $185,000. The penalty will be distributed to investors of Web Hosting pursuant to the Fair Funds provisions of Section 308(a) of the Sarbanes-Oxley Act of 2002. The Final Judgment entered as to Miller orders her to pay disgorgement in the amount of $154,015, plus prejudgment interest thereon, but waives payment of disgorgement and does not impose a civil penalty based upon Miller's sworn financial statement and supporting documentation submitted to the Commission. See also, Litigation Release No. 16846 (December 29, 2000).