SEC Files Fraud Suit Against UniVerse
A San Clemente software company fraudulently sold $3.9 million worth of unregistered securities to more than 100 investors throughout the United States, the Securities and Exchange Commission charged Monday.
The SEC alleged that UniVerse Inc. and its predecessor, VikingWare LLC, recruited a network of mostly unregistered brokers who made 40% to 47% commissions while investors were told the commissions were between 10% and 15%.
Federal regulators view the sales as fraudulent since investors weren’t informed that nearly half of the funds raised went to salespeople rather than to finance the company or its operations, said Kay Lackey, an assistant regional director in the SEC’s New York office.
The SEC suit, filed in federal court in New York, named 14 defendants. Seven people, including four defendants in the SEC case, also face criminal charges.
The suit named UniVerse, chief executive Susan Richards, 43, of Mission Viejo, and her husband, John, 38, formerly the firm’s chief financial officer and chief operating officer. Also named was UniVerse’s president, Richard Fenning, 44, of San Clemente. No criminal charges were filed against Fenning or the Richards.
According to the SEC, the couple recruited a network of people to sell private placements in their firms, drumming up $2.3 million for VikingWare between 1996 and 1997, and raising about $1.6 million for UniVerse between September 1997 and April 1999.
Among those the Richards allegedly recruited was Robert Hasho, 41, of St. James, N.Y., and his firm, Landmark Corp. of Northport, N.Y. In 1991, Hasho, formerly a broker at J.T. Moran, settled a fraud case brought by the SEC without admitting or denying the charges, and was subsequently barred from the securities industry.
Federal prosecutors said Monday that Hasho and six other New York brokers connected with the UniVerse and VikingWare offerings were arrested on criminal charges of “conspiring to participate in stock fraud schemes.”
In one private placement, brokers sold investors $785,000 worth of $20,000 “membership units” in VikingWare, and received about $351,050 in commissions, according to the U.S. attorney for the Eastern District of New York. Only $94,200 of those commissions were disclosed to the purchasers, the U.S. attorney said.
Hasho’s attorney declined to comment on the latest SEC charges, or criminal charges of conspiracy to commit stock fraud.
David Weichert, an attorney who represents UniVerse and Fenning, declined to comment on the case. The attorney for John Richards couldn’t be immediately identified.
James Riddet, a Santa Ana attorney who represents Susan Richards, said UniVerse sells software that translates text from one language to another, and hoped to put the United Nations on its client list. “Sue is a hard-working woman trying to make a go of this business,” said Riddet. He said he believes she has acted in good faith to finance the firm.
The six other New York brokers facing federal charges are: Alfred Napolitano of St. James, Tore Larsen of Middletown, Mayer Dallal of Great Neck, Steven Feldman of Woodbury, Howard Toomer of Bayshore, and Danoo Noor of Ozone Park, the U.S. attorney said.
If convicted, the defendants face a maximum sentence of five years in prison.
Dallal “was shocked and surprised to learn of these allegations and intends to vigorously defend against them,” said his lawyer, David Smith.
Hasho, Noor, Larsen and Toomer also were charged by the SEC, as well as Jeffrey Burton of North Patchogue, N.Y., and Lawrence Blocker of Islip, N.Y.
The SEC also charged Third Tier Marketing Corp., a Hauppauge, N.Y.-based corporation controlled by Burton and Blocker; Landmark Corp., a Northport, N.Y.-based corporation owned by Hasho; Toomer & Associates, a Hauppauge-based corporation owned by Toomer, and Fiberlinks Inc., a Middletown corporation owned by Larsen.
The SEC is seeking an order that bars the defendants from violating federal securities laws and requires repayment.
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Dow Jones News Service and Bloomberg News were used in compiling this report.
