2001-10-24 sec-litreleases litigation_release 65 KB 2,525 chars

SEC v. Web Hosting Headquarters Partnership; Donald E. Rhoades; Kenneth R. Grossfeld; Wayne L. Prichason; Eduardo Villar; and Karyn Miller, No. LR-17202, Southern District of Florida (Oct. 24, 2001) — Press Release

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

Web Hosting Headquarters Partnership, Donald E. Rhoades, Kenneth R. Grossfeld, Wayne L. Prichason, Eduardo Villar, and Karyn Miller, et al., No. LR-17202 (Oct. 24, 2001)

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

Source JSON

summary

Kenneth R. Grossfeld, a principal of the Miami-based boiler-room operation Web Hosting Headquarters Partnership, consented to a permanent injunction and $697,533 in disgorgement (waiving over $1.63 million in total relief) after the SEC alleged he concealed prior fraud histories of operators and diverted at least 62% of investor funds to pay principals and telemarketers, with no civil penalty imposed due to his inability to pay.

paragraph

Kenneth R. Grossfeld, a principal of the fraudulent boiler-room operation Web Hosting Headquarters Partnership, consented to a permanent injunction without admitting or denying allegations that he concealed the prior fraud histories of the company’s controllers and diverted at least 62% of investor funds to pay principals and telemarketers. The SEC sought $1.63 million in disgorgement plus $36,675 in prejudgment interest, but the court waived all but $697,533 due to Grossfeld’s demonstrated inability to pay, and imposed no civil penalty for the same reason. He was enjoined from 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.

narrative

Kenneth R. Grossfeld, a principal of the Miami-based boiler-room operation Web Hosting Headquarters Partnership, consented to a permanent injunction without admitting or denying the SEC’s allegations that the company systematically defrauded investors by concealing that its operators had prior histories of securities fraud. The SEC alleged that at least 62% of funds raised from investors were diverted to pay Grossfeld and other principals and telemarketers, rather than being used for legitimate business purposes. On December 28, 2000, the SEC filed an emergency action against Grossfeld and others, leading to a final judgment entered on October 15, 2001. Grossfeld was ordered to disgorge $1.63 million in ill-gotten gains plus $36,675 in prejudgment interest, but payment of amounts exceeding $697,533 was waived due to his demonstrated financial hardship. No civil penalty was imposed because he could not afford to pay one. The injunction prohibits him from violating key provisions of the Securities Act of 1933 and the Securities Exchange Act of 1934, including anti-fraud and registration rules under Sections 5(a), 5(c), 17(a), 10(b), and 15(a)(1), as well as Rule 10b-5. This case was part of a broader SEC enforcement action targeting multiple defendants in the same fraudulent scheme.

Enriched metadata

Scheme: boiler-room (100%)
Court: Southern District of Florida
Outcome: settled
Disgorgement: $1,630,000
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

$1.63M $1,630,000 $1M–$10M
$698K $697,533 $100K–$1M
$697K $697,000 $100K–$1M
$37K $36,675 $10K–$100K

Entities 4

person final judgment
person kenneth r. grossfeld
agency Securities and Exchange Commission
court united states district court for the southern district of florida

Triples 12

Securities and Exchange Commission 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
United States District Court for the Southern District of Florida Entered A Judgment of Permanent Injunction and Other Relief
United States District Court for the Southern District of Florida Ordered Kenneth R. Grossfeld to pay disgorgement in excess of $697,000
Kenneth R. Grossfeld Consented to The entry of the final judgment
Securities and Exchange Commission Filed An emergency action against Grossfeld and others seeking to enjoin the alleged ongoing fraudulent securities offering
Securities and Exchange Commission Alleges That the boiler-room, Web Hosting Headquarters Partnership, failed to disclose to investors that it was controlled by individuals with a prior history of defrauding investors
Securities and Exchange Commission Alleges That the boiler-room, Web Hosting Headquarters Partnership, had diverted at least 62% of funds raised from investors to pay its principals and telemarketers
Kenneth R. Grossfeld 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
Kenneth R. Grossfeld Consented to The entry of a Final Judgment of Permanent Injunction and Other Relief that enjoins him from violating Sections 10(b) and 15(a)(1) of the Securities Exchange Act of 1934
Final Judgment Imposes Disgorgement and prejudgment interest on disgorgement against Grossfeld in the amounts of $1,630,000 and $36,675, respectively
Final Judgment Waives Payment of disgorgement and interest in excess of $697,533 based upon his demonstrated inability to pay
Final Judgment Does not impose A civil penalty based upon Grossfeld's demonstrated inability to pay a civil penalty

View original SEC litigation releasesec.gov

Extracted body text (2,525c)

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.

OCR text (2,525c · plain-text · 99% conf)

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.