Wireless Cable Firm Once Based in Irvine Sued for Fraud by SEC
The U.S. Securities and Exchange Commission said Thursday that it has filed a lawsuit against a former Irvine wireless cable company, alleging that its top executives defrauded investors of as much as $27.3 million.
The suit against La Jolla-based Continental Wireless Cable Television, filed Wednesday in U.S. District Court in Los Angeles, effectively shuts down the company’s operations, said SEC spokesman Kelly Bowers.
Bowers said that under the direction of company executives Robin J. McPherson, Jay R. Bishop and Gene R. Cardenaz, Continental Wireless raised almost $34 million from investors.
The executives were not available for comment.
The company told investors that the money would be used to develop and market wireless cable television systems in Nashville, Tenn., and in New Orleans, Bowers said.
But investigators claim that only $6.85 million of investors’ money was actually used to build the company’s wireless cable system. They believe that at least $15 million was misappropriated and an additional $11.9 million is missing.
At least $11 million of the misappropriated funds accounted for were used to pay sales representatives and executives, Bowers said.
“Most was used to sell the investment itself rather than to build the system,” Bowers said. “We’re trying to account for the rest of the money.”
The lawsuit was the latest action against what regulators say is an industry increasingly rife with financial and legal problems.
A federal judge on Wednesday ordered the liquidation of Vision Communications, an Irvine wireless cable company. Regulators allege that company officers at Vision Communications were illegally selling securities.
Continental Wireless has had earlier problems with the SEC. A year ago, it and two out-of-state wireless cable companies were ordered to cease operations in Tennessee.
“I can say we have seen a proliferation of problems with the wireless offerings,” Bowers said.
He also cautioned investors to study investment proposals carefully before making any decisions or reacting to promises of quick returns in an industry that is still in its infancy.
“As with any investment, they should invest with caution and become fully informed about the nature of the investment,” Bowers said.
