LITIGATION RELEASE NO. 16961 / April 13, 2001
SECURITIES AND EXCHANGE COMMISSION v. J&K GLOBAL MARKETING CORP.
et al., Civil Action No. 01-JLK-0645 (USDC D. Colo.)
The Commission announced today that it filed an action and obtained an emergency restraining order against J&K Global Marketing Corp. and its president, Kenneth R. Weare a/k/a Roy Weaver for operating a fraudulent investment scheme on the Internet. The complaint alleges that since at least November 1999, Weare has been promoting on his website the J&K Global investment program in which investors make an initial investment with expectations of at least a 600 percent yearly rate of return to be generated from "high yield ventures." According to the complaint, J&K Global and Weare made no such investments but used the funds from the over 13,000 investors to pay purported returns to other members and to pay his personal expenses. The temporary restraining order, entered on April 11 by Judge John L. Kane, Jr. enjoins J&K Global and Weare, a Lakewood, Colorado resident, from making false statements, freezes their assets, requires them to account for investor proceeds, and requires the repatriation of assets held outside the United States. The order also freezes the funds of AAA-Auction.com, Inc., a company used by Weare for a previous fraudulent offering.
According to the complaint, from at least November 1999 to the present, J&K Global has offered memberships in an investment program through an Internet website and in postings to Internet bulletin boards. The complaint alleges that J&K Global claims that by making an initial investment of $375, after six months investors will receive $375 a month for six months and have the ability to continue receiving returns the following year with another investment. Additionally according to the complaint, Weare falsely claims he has established a bank in Grenada in which all investors are or will become shareholders. Bank records reveal that J&K Global raised at least $6.4 million. Weare claims that money obtained is invested in high-yield ventures. The Commission alleges that the J&K Global program is a Ponzi scheme in which money from new investors is used to make payments to prior investors. The complaint alleges that no investments were made in high-yield ventures but that Weare used investor money for his personal expenses such as clothing, limousine services and medical expenses.
The complaint further alleged that Weare also fraudulently raised money for AAA-Auction, which operated an Internet auction site in 1998 and 1999. According to the complaint, Weare raised at least $415,000 from 35 AAA-Auction investors by misrepresenting that their money would be used to purchase inventory for AAA-Auction to sell on its website, that AAA-Auction would pay quarterly returns and repay their principal after a year, and that investments would be secured by AAA-Auction's inventory. The complaint alleged that Weare used substantial amounts of investor monies for other purposes, including general business expenses, child support payments and undisclosed sales commissions of up to 40 percent.
The Commission alleged that through their false and misleading statements
and omissions, Weare, J&K Global and AAA-Auction violated the antifraud
provisions, Section 17(a) of the Securities Act of 1933 and Section 10(b)
of the Securities and Exchange Act of 1934 and Rule 10b-5 thereunder and
that Weare and J&K Global violated the securities registration provisions,
Section 5(a) and (c) of the Securities Act of 1933. The Commission requested
emergency action to prevent the defendants from transferring or liquidating
any funds and to halt the ongoing fraudulent statements being made in connection
with the offer and sale of securities.
http://www.sec.gov/litigation/litreleases/lr16961.htm
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Litigation Release No. 17804 / October 24, 2002
Securities and Exchange Commission v. Kenneth Roy Weare, a/k/a Roy Weaver, J&K Global Marketing Corporation, and AAA-Auction.Com, Inc., Civil Action No. 01-K-0645 (D. Colo.)
Commission Seeks Civil Contempt Against Weare and J&K Global
Marketing for Violation of Asset Freeze
The Commission announced that on October 21, 2002 it filed a motion
seeking entry of a civil contempt order against Kenneth Roy Weare, also
known as Roy Weaver, a resident of Littleton, Colorado, and his company,
J&K Global Marketing Corporation. The Commission alleged that Weare
and J&K have violated orders entered by the United States District
Court for the District of Colorado freezing the defendants' assets, requiring
the defendants to repatriate funds held in offshore accounts, prepare an
accounting of funds raised by the defendants in an investment scheme, and
pay disgorgement of over $6.2 million in funds illegally obtained from
investors. A hearing on the matter is set for October 29, 2002.
On January 8, 2002 the District Court entered a permanent injunction by default against Weare, J&K and AAA-Auction.com, another Colorado company operated by Weare. The Court found that Weare and J&K violated the anti-fraud and registration provisions of the federal securities laws when they used the Internet to sell $375 investments in a "rent/mortgage free" program that promised investors returns of 600 percent annually from funds that were suppose to be invested offshore. In fact, the defendants operated a Ponzi scheme where funds raised from later investors were used to pay purported returns to earlier investors. An analysis of the company's bank records disclosed no investments.
The Court also found that Weare and AAA-Auction.com had engaged in securities fraud by making false representations to investors in connection with their investments in merchandise resale agreements offered by AAA-Auction, funds from which were to be used to buy merchandise that would be sold through AAA-Auction's live auction website allegedly for a large profit.
The Court permanently enjoined Weare and J&K from violating Sections 5(a) and (c), and 17(a) of the Securities Act of 1933, and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5, and ordered Weare and J&K together to pay disgorgement of $6,278,334.91 and prejudgment interest of $486,848.02. The Court also ordered Weare to pay a civil penalty of $220,000 and J&K to pay a civil penalty of $110,000. The Court permanently enjoined AAA-Auction from violating Section 17(a) of the Securities Act, and Section 10(b) of the Exchange Act and Rule 10b-5, and ordered Weare and AAA-Auction together to pay disgorgement of $623,250.00 and prejudgment interest of $142,724.40. The Court also ordered the defendants' assets frozen until the judgments were satisfied, and ordered the defendants to repatriate funds held in offshore accounts.
http://www.sec.gov/litigation/litreleases/lr17804.htm
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LITIGATION RELEASE NO. 17811 /October 29, 2002
SECURITIES AND EXCHANGE COMMISSION v. KENNETH ROY WEARE, A/K/A ROY WEAVER, J&K GLOBAL MARKETING CORPORATION, AND AAA-AUCTION.COM, INC., Civil Action No. 01-K-0645 (D. Colo.)
COURT HOLDS WEARE AND J&K GLOBAL MARKETING IN CONTEMPT FOR VIOLATION OF ASSET FREEZE
The Commission announced that on October 29, 2002 the Honorable John L. Kane, Jr., of the United States District Court in Colorado found Kenneth Roy Weare, also known as Roy Weaver, a resident of Lakewood, Colorado, and his company, J&K Global Marketing Corporation in civil contempt for failing to comply with the court's earlier orders freezing the defendants' assets obtained from an Internet stock fraud, requiring the defendants to return to the United States investors' funds held in offshore accounts, requiring the defendants to prepare an accounting of funds raised from investors, and ordering the defendants to pay disgorgement of over $6.2 million in funds illegally obtained from investors plus prejudgment interest of $486,848. The Court required Weare and J&K to comply with the court's orders by November 1, 2002 or an arrest warrant will be issued for Weare and a $500 daily fine will be imposed on J&K until they comply with the Court's orders.