Indiana Issues Order Against Irvine Firm : Regulation: National Micro Vision Systems and a Phoenix firm are told to stop soliciting potential investors in a wireless cable-TV system being planned for South Bend.
Indiana regulators have issued a cease and desist order against companies in Orange County and Phoenix for allegedly selling unlicensed securities as part of a plan to launch a wireless cable-TV system in South Bend.
National Micro Vision Systems Inc. of Irvine and KYMO Microwave Systems Inc. of Phoenix were ordered last month to stop soliciting potential investors in Indiana, said Robert Lott, an investigator in the Indiana secretary of state’s securities division. The order was the third against National Micro Vision Systems.
The order also applied to Gary Rineberger, chief executive of KYMO. Calls to National Micro Vision Systems were not returned, and Rineberger could not be located for comment.
Wireless cable-TV network operators seek to compete with cable television monopolies by using microwave radio technology to broadcast as many as 33 pay-TV television channels without the need for cable installation.
Although the industry has legitimate operators that have lured more than 450,000 subscribers away from cable-TV operators, it has also drawn scam artists across the nation.
“This can be a legitimate offering, but a lot of entities are making exaggerated claims about profits and failing to disclose risks,” Lott said.
The North American Securities Administrators Assn., a professional regulators group in Washington, warned investors in April that they could lose as much as $25 million this year in fraudulent companies known as application mills, which charge high fees for processing applications for FCC licenses although such applications are rarely successful. Investigations of such firms are underway in at least 18 states.
In April, the Federal Communications Commission stopped accepting wireless applications because it had received more than 36,000 applications for licenses in about 250 available markets. The licenses are awarded by lottery.
Lott said the state of Indiana continues to warn potential investors about possible con artists who exploit the infant wireless cable-television industry despite the crackdown.
Some of the fraudulent companies now claim to have licenses for particular markets and are soliciting money to build wireless networks. Such companies exaggerate the potential rewards of the systems and minimize risks related to the difficulty of obtaining licenses for each market and financing construction, Lott said.
The Indiana order is the third cease-and-desist issued to National Micro Vision Systems. L. Richard Tamplin, chief executive of National Micro Vision Systems, is also a principal in GMT Group, another application services firm in Irvine.
Washington and Illinois officials have also ordered both companies to stop soliciting investors.
National Micro Vision Systems and KYMO failed to register their partnerships in Indiana as securities, Lott said.
“We’re still waiting for a response from them,” Lott said.
In the order, the state alleged that KYMO’s promotional material misrepresented the South Bend venture’s potential profits. It offered 1% of the company to investors for $30,000 each.
Lott said National Micro Vision Systems was to have operated the station, but it had not received FCC licenses to operate in South Bend. Rineberger of KYMO allegedly told a potential investor that National Micro and his company had FCC approval to build more than 10 stations, according to the order.
