SEC Accuses O.C. Man, Others of Securities Fraud

Federal regulators have sued two Southern California residents, one from Orange County, and three companies they controlled for alleged securities fraud.

Named in the Securities and Exchange Commission’s complaint were Eugene M. Carriere of Westminster and Ronald T. Mulhall of El Segundo and three affiliated corporations. Carriere also is known as Gene Carrier, according to the agency.

The SEC’s complaint alleges that, from January to the present, the defendants sold unregistered securities of Las Vegas-based Yes Entertainment LLC, which operates “channels” offering family-oriented programming over the Internet, and raised more than $8.8 million from more than 600 investors. The suit also names affiliated corporations Yes Entertainment Network LLC and Yes Entertainment Network Inc., which has its principal office in Los Angeles.

The SEC said the shares were sold through at least two “boiler rooms” in Beverly Hills and Lake View Terrace.

The SEC claims that investors were told, among other things, that sales commissions were 12% when, in fact, they were 45% and that Mulhall, the president and chief executive of Yes Entertainment Network, was “a highly successful lawyer” when in fact he had been disbarred by the State Bar of California for misappropriating client funds.

Attorneys for Mulhall and Carriere could not be immediately identified. Neither Mulhall nor Carriere are listed in the phone book.

To add a “sense of urgency regarding the proposed investment,” the SEC said, investors were falsely told that the company had received, and would continue to receive, buyout offers from interested third parties, including Intel Corp.

The SEC also maintains that the defendants have diverted substantial sums for personal use and have wired almost $3.2 million to Hong Kong.

The SEC’s complaint was filed Thursday and a court order was issued the same day requiring the defendants to cease alleged fraudulent activities. But the documents were sealed until Friday to allow authorities to search the defendants’ premises and the alleged “boiler rooms,” the SEC said.

The court order also froze the defendants’ assets for 10 days pending a hearing to determine the full extent of their conduct.

The SEC is seeking a preliminary and permanent injunction, repayment of any ill-gotten profits and a civil penalty.