Securities and Exchange Commission
Litigation Release No. 17717 / September 10, 2002
SEC v. Marlen V. Johnson, (U.S. District Court for the Northern District of Texas, Dallas Division, Civil Action No. 3:95-CV-0250-G).
SEC Files Contempt Action Against R&RX Group President, Marlen V. Johnson, Seeking $120,000 Penalty; Proceedings Instituted To Deregister R&Rx Group's Stock
The SEC announced that on September 5, 2002, it filed a motion in U.S. District Court against Marlen V. Johnson for violating a 1996 federal court order ("1996 Order"). The 1996 Order permanently barred Johnson from acting as an officer or director of any SEC reporting company and permanently enjoined him from future violations of certain provisions of the federal securities laws. The SEC's motion seeks to hold Johnson in contempt for his alleged violations of both provisions of the 1996 Order.
The SEC alleges that, in violation of the officer-and-director bar, Johnson is currently acting as an officer and director of R&RX Group, Inc., formerly known as Neoteric Group, Inc., an SEC reporting company based in Nevada. Johnson became an officer and director of R&RX Group on October 19, 2001. Since then, the motion alleges that he has exercised control over R&RX Group and has filed several SEC reports on behalf of the company. Second, Johnson violated the injunction by omitting information about his 1996 officer-and-director bar from R&RX Group reports filed with the SEC. The SEC asked the court to issue an order holding Johnson in contempt of the 1996 order based upon this conduct. The SEC also asked the court to order him incarcerated and to fine him up to $128,000 per day for each day he remains in violation of the court's order.
The SEC also filed a related motion against Johnson requesting that the court impose a civil money penalty of $120,000 against him for his recent violations of the anti-fraud and reporting provisions of the Exchange Act while acting as an officer and director of R&RX Group.
According to the SEC's motions:
On August 7, 1996, the federal district court for the Northern District of Texas entered a final judgment against Johnson in an SEC case involving a fraudulent, market-manipulation scheme. SEC v. Jeffrey C. Hays, Marlen V. Johnson and James N. Nilsson, Case No. 3:95-CV-0250-G [N.D. TX (Dallas Division)]. The judgment permanently barred Johnson from acting as an officer or director of any issuer that has a class of securities registered pursuant to Section 12 or that is required to file reports pursuant to Section 15(d) of the Securities Exchange Act of 1934. The judgment also permanently enjoined Johnson from, among other things, future violations of the anti-fraud and reporting provisions of the Exchange Act, specifically Sections 10(b) and 13(a) and Rules 10b-5, 13a-1, and 13a-13 thereunder.
Finally, on September 6, 2002, the SEC issued an Order Instituting Public Proceedings and Notice of Hearing Pursuant to Section 12(j) of the Exchange Act against R&RX Group. The Division of Enforcement alleges that R&RX Group's SEC reports were materially false and misleading because they failed to disclose Johnson's officer-and-director bar. As a result, R&RX Group failed to comply with Sections 10(b) and 13(a) of the Exchange Act and Rules 10b-5, 13a-1, and 13a-13 thereunder, for which an order is sought revoking the registration of R&RX Group's common stock. [See SEC Administrative Proceedings Release No. 34-46470 / September 6, 2002].