SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 17183 / October 12, 2001
Securities and Exchange Commission v. 21st Century Satellite Communications, Inc., Robert Byrch and Spencer Tyrrell, No.8:01CV1875-T-30TGW (M.D. Fla., Tampa Division) (filed September 28, 2001).
The Securities and Exchange Commission (SEC) announced that on September 28, 2001, it filed a civil complaint against 21st Century Satellite Communications, Inc. (21st Century) for engaging in the fraudulent and unregistered sale of approximately $23 million in securities to investors nationwide. The complaint also named as defendants two senior officers of 21st Century, Robert S. Byrch and Spencer G. Tyrrell. Simultaneously, and without admitting or denying the allegations against them, 21st Century, Byrch and Tyrrell settled the cases against them by agreeing to permanent injunctions and other relief.
According to the complaint, between 1997 and September 2000, 21st Century sold approximately $23 million worth of promissory notes and purchase-leaseback agreements to more than 700 investors across the country. The company purported to sell the notes in order to purchase satellite television equipment that the company would use to install, maintain, and service private satellite television systems for closed communities throughout northern and central Florida. 21st Century's offering materials claimed that the investments were fully secured by the value of the equipment purchased with the investors' funds. In fact, the investments were not fully secured; in addition, the company used approximately $6.1 million of investors' funds to pay undisclosed commissions to the sales agents who sold the securities. Most of these sales agents were independent insurance agents located in Florida and other parts of the United States, who sold the investments to their clients.
In September 2000, 21st Century defaulted on its promissory note payments, and the company filed voluntarily for reorganization under Chapter 11 of the United States Bankruptcy Code on May 8, 2001.
Without admitting or denying any of the allegations in the SEC's complaint, 21st Century, Byrch and Tyrrell agreed to settle the charges by consenting to the entry of permanent injunctive relief from further violations of the securities registration and antifraud provisions of the federal securities laws, specifically Sections 5(a), 5(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 thereunder. In addition, 21st Century consented to disgorge $6,110,736, representing the investor funds paid to the agents who sold 21st Century securities, which the SEC will seek to enforce in the bankruptcy proceedings. Finally, Byrch agreed to pay civil money penalties of $25,000, with the civil money penalties to be paid by Tyrrell, if any, to be determined by the Court. The Court entered final judgments against 21st Century, Byrch and Tyrrell on October 3, 2001.
For more information about promissory note fraud, please visit www.sec.gov/investor/pubs/promise.htm. The SEC thanks the State of Florida Department of Banking and Finance, Division of Securities for its assistance with this matter.