SEC Files Fraud Charges Against Universal Express, CEO
By Judith Burns, Of DOW JONES NEWSWIRES
WASHINGTON (Dow Jones)--The Securities and Exchange Commission filed fraud charges Wednesday against Universal Express Inc.(NASDAQ-OTCBB:USXP) (USXP), claiming it sold 500 million shares of unregistered stock and issued false press releases about the company's finances.
Universal Express Chief Executive Richard Altomare, 55, of Boca Raton, Fla., was charged with fraud and falsely certifying financial results of Universal Express, which has offices in Boca Raton and New York.
A federal court in New York agreed Wednesday to an SEC request for a temporary restraining order against Universal Express, requiring it to provide a full accounting of proceeds received from the stock sales.
According to the SEC lawsuit filed in New York, Universal Express concealed a deal in which it provided stock at hefty discounts to resellers who sold it at market prices.
Universal Express identified the resellers as consultants paid in stock, but only registered 50 million shares, not 500 million, the SEC said. It charged the company's in-house lawyer, Chris Gunderson, of Queens, N.Y., produced bogus documents to disguise the alleged scheme. The resellers, including a New York race car driver and an investment advisory firm employee, also were charged.
Universal Express had 650 million shares outstanding by the end of 2003, up from about 19 million before the alleged scheme began, according to the SEC. Resellers paid about $9 million to Universal from April 2001 through 2003, and Altomare diverted about $1 million into his personal accounts, the SEC claimed.
In addition, "the company issued a series of false and misleading press releases," said Katherine Addleman, assistant regional director of enforcement at the SEC's Denver office, which brought the lawsuit. She said the company vastly inflated claims to have an extensive private postal network of up to 9, 000 members.
The SEC also cited an April 2003, deal with Coach USA, saying Universal Express announced it even though Coach USA hadn't committed to it. Universal Express stock nearly tripled on the report and three of its resellers sold about 18 million shares, the SEC said.
A deal with North American Airlines, which Universal announced last October, also prompted resellers to sell as the stock price rose, the SEC claimed. It said the release was misleading.
A preliminary hearing is set for April 5.
Universal Express sued the SEC in federal court in Florida earlier this month, claiming it was being subjected to "retaliatory harassment" for complaining about the SEC's failure to combat abusive short selling.
Arthur Tifford, the attorney representing Universal Express, Altomare and Gunderson, said the SEC lawsuit is "curiously timed" considering it was sued by Universal Express only 10 days ago.
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