U.S. Securities and Exchange Commission
LITIGATION RELEASE NO. 18793 / July 26, 2004
SECURITIES AND EXCHANGE COMMISSION V. NORTHSTAR NETWORKS, INC., ET AL., ACTION NUMBER 3:02-CV-1788M (USDC/Northern District of Texas).
On July 19, 2004, Judge Barbara M. Lynn, United States District Judge for the Northern District of Texas, permanently enjoined Texas residents Timothy Buzzelli and David Dutton from future violations of the federal securities laws and barred both from again serving as officers or directors of public companies. Buzzelli and Dutton, formerly officers of NorthStar Networks, Inc. ("NorthStar"), a Dallas-based Internet service company, consented to the order. Buzzelli, a CPA, also consented to the entry of an administrative order suspending him from appearing or practicing before the Commission as an accountant. The Commission waived the payment of disgorgement and did not impose civil penalties against the defendants in light of their financial inability to pay.
In its civil action, the Commission alleged that Buzzelli and Dutton raised over $1 million from approximately 250 investors through the fraudulent offer and sale of NorthStar's common stock. The Commission alleged that Buzzelli and Dutton falsely represented to investors, among other things, that NorthStar had over $10 million in assets, that major defense contractors were interested in its purportedly patent pending computer cooling system, and that the company had multi-million dollar contracts with large, publicly traded telecommunications companies. Further, the Commission alleged that Buzzelli aided and abetted NorthStar's filing of a misleading registration statement with the Commission and its subsequent failure to file periodic reports.
The defendants consented, without admitting or denying the allegations in the complaint, to the entry of a final judgment permanently enjoining each from future violations of 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 Rules 10b-5 thereunder. Buzzelli additionally consented to be enjoined from future violations of Section 13(b)(5) of the Exchange Act and from aiding and abetting violations of Section 13(a) and 13(b)(2)(A) of the Exchange Act and Rules 13a-1 and 13a-13 thereunder.
NorthStar previously settled the Commission's action against it, consenting to an injunction against future violations of the anti-fraud and reporting provisions of the federal securities laws. Additionally, NorthStar consented to the entry of an administrative order revoking the registration of its securities.