SEC Accuses Software Company of Fraud

A Southern California 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 San Clemente-based UniVerse Inc. and its predecessor, VikingWare, recruited a network of mostly unregistered brokers who made 40% to 47% commissions while investors were told the commissions were between 10% and 15%.

The salespeople--including a former broker who’d been barred from the industry--failed to disclose the commissions to investors, while the company itself misled investors by issuing a “private placement memorandum” asserting that the sales commissions would not exceed 12%, the SEC said.

The fraud took place from 1996 to 1999, the SEC said.

Federal prosecutors also announced the arrests of seven brokers connected with the UniVerse and VikingWare offerings, 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 was disclosed to the purchasers, the U.S. attorney said.

The SEC, in addition to charging UniVerse, brought civil charges against Richard Fenning of San Clemente, president of UniVerse; Susan Richards of Mission Viejo, chief executive of UniVerse; and her husband, John Richards, chief operating officer of UniVerse until last September.

Lawyers for the civil defendants couldn’t be reached for comment.