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SEC v. WIMER

January 21, 1948

SECURITIES AND EXCHANGE COMMISSION
v.
WIMER



The opinion of the court was delivered by: GOURLEY

This proceeding comes before the Court on defendant's motion to dismiss on the grounds of forum non conveniens or that this Court is an inconvenient and inappropriate forum for the trial of the government's claim for relief.

The Securities and Exchange Commission of the United States on the 29th day of October, 1947 requested the Court, upon the basis of a verified complaint and sworn affidavits, to grant a temporary restraining order in which the defendant would be enjoined from continuing the acts set forth in the complaint. Said motion was duly considered and the following order made by the Court:

 'On motion of the plaintiff and upon the verified complaint herein and the sworn affidavits of Edmund Dean, Ira Singleton and James T. Murray, and it satisfactorily appearing that unless defendant is restrained from continuing the acts alleged in the complaint, immediate and irreparable injury, loss and damage will result to members of the investing public, in that they will be induced by the defendant's fraudulent representations to purchase additional shares of stock of Tennessee Schuylkill Corporation and Great Western Exploration Company at prices substantially in excess of the true value of such stock, it is hereby

 'Ordered, adjudged and decreed that the defendant, his agents, servants, employees, attorneys and assigns, and all persons acting in concert or participation with him, be and they are hereby restrained from:

 '(1) Directly or indirectly,

 '(a) making use of the mails or of any means or instrument of transportation or communication in interstate commerce, to sell or offer to sell the 10 cent par value common stock issued by Tennessee Schuylkill Corporation, or the $ 1 par value common stock issued by Great Western Exploration Company, or any other security, through the use of medium of any prospectus or otherwise:

 '(b) carrying any such security or causing it to be carried through The mails or in interstate commerce, by any means or instrument of transportation, for the purpose of sale or delivery after sale, unless and until a registration statement is in effect with the Securities and Exchange Commission as to such securities; provided that the foregoing shall not apply to any security or transaction which is exempt from the provision of Section 5 of the Securities Act of 1933 (15 U.S.C.A. § 77e).

 '(2) Directly or indirectly, in the sale of the securities described in paragraph (1) hereof, or any other security, by the use of the mails or of any means or instrument of transportation or communication in interstate commerce, obtaining money or property by means of any untrue statement of a material fact or omission to state any material fact necessary to be stated in order to make the statement made, in the light of the circumstances under which it is made, not misleading, concerning:

 '(a) the consideration to be given for the security offered;

 '(b) the identity of the person offering the security for sale;

 '(c) the price at which the defendant is making sales of the security;

 '(d) the value of ore encountered; or

 '(e) the payment of dividends.

 'This order shall expire ten days after entry in the office of the Clerk of this Court; hearing to be held November 7th, 1947, at 10:00 A.M., E.S.T., Court Room No. 2

 '(s) Wallace S. Gourley, D.J. 'United States District Judge

 'Pittsburgh, Pa. 'October 29, 1947 '10:45 o'clock, A.M., E.S.T.'

 On the 8th day of November, 1947 the plaintiff moved the Court to extend the temporary restraining order from November 8, 1947 to November 18, 1947, for the reason that service could not be made of the original restraining order in accordance with the provisions of the Federal Rules of Civil Procedure 28 U.S.C.A.following section 723c. After hearing was duly held, the Court extended the effectiveness of the temporary restraining order from November 8, 1947 to November 18, 1947.

 It appears that service was duly made of the issuance of said temporary restraining order on the defendant in accordance with the Federal Rules of Civil Procedure on the 12th day of November, 1947.

 The motion for a preliminary injunction came on for hearing before the Court on November 18, 1947, and was duly argued by counsel for the Securities and Exchange Commission. No one appeared in opposition thereto, and on the basis of the argument, the verified complaint, and the sworn affidavits of individuals informed as to the facts together with the exhibits attached to said affidavits, the Court made the following findings of fact and conclusions of law:

 'Findings of Fact

 '1. Since on or about February 27, 1942, defendant has been and is now president of Tennessee Schuylkill Corporation, a Delaware corporation, and since February 15, 1946, defendant has been and is now president of Great Western Exploration Company, a Nevada corporation. The principal place of business of both corporations has been and is now, at Chloride, Arizona.

 '2. Since February 27, 1942, to the present time, defendant has dominated and controlled Tennessee Schuylkill Corporation and Since February 15, 1946 to the present time, defendant has dominated and controlled Great Western Exploration Company.

 '3. No registration statement with respect to any securities issued by Tennessee Schuylkill Corporation has ever been or is now in effect with the Securities and Exchange Commission.

 '4. Edmund Dean, of 1235 Sole Street, McKeesport, Pa., purchased on the solicitation of Nye A. Wimer, stock of the corporation known as the American Venture Company, the predecessor of the Tennessee Schuylkill Corporation.

 '5. In January 1942, Wimer through long distance interstate telephone informed Dean that he could exchange his American Venture Company stock at the rate of one share of Tennessee Schuylkill Corporation stock for each four shares of American Venture stock by making a payment of $ 2.25 per share in addition to turning in Tennessee Schuylkill Corporation stock.

 '6. Dean was not informed that no cash consideration was required to effect a change of American Venture Company stock to Tennessee Schuylkill Corporation stock.

 '7. Wimer falsely represented to Dean that the Tennessee Schuylkill Corporation stock offered for sale was then owned by such corporation and that the proceeds from the sale were going to the corporation, whereas in fact the stock offered and sold by Wimer was his personally-owned stock and the entire proceeds of the sale went to the defendant Wimer.

 '8. Defendant falsely represented to Dean that he would not sell any of his Tennessee Schuylkill Corporation stock for less than $ 20 a share, whereas in fact defendant was actually selling his own Tennessee Schuylkill Corporation stock at 50 cents a share.

 '9. On or about February 5, 1943, Dean received at his residence through the mails, from defendant Wimer, Certificate No. 193 covering 300 shares of Tennessee Schuylkill Corporation stock.

 '10. On or about February 1, 1945, Dean received at his residence through the mails from Defendant Wimer, Certificate No. 917 in the amount of 4,000 shares of Tennessee Schuylkill Corporation stock.

 '11. On or about February 5, 1945, Dean received at his residence through the United States mails from defendant Wimer Certificate No. 923, representing 5,700 shares of Tennessee Schuylkill Corporation stock.

 '12. Defendant represented by telephone to Ira J. Singleton, of Blainesburg Addition to West Brownsville, Pa., that Great Western Exploration Company had uncovered 400,000 tons of very valuable ore, when in fact no ore having any commercial value had been encountered.

 '13. Defendant represented by telephone to Singleton that the company would pay a good dividend before Christmas, 1946.

 '14. There was no reasonable basis for predicting the payment of any dividend at that time in the foreseeable future and since the defendant became president, the only operations of the company consisted of unsuccessful attempts to find ore in commercial quantity.

 '15. Defendant represented by telephone to Singleton that the stock Singleton was purchasing was being offered for sale by the Great Western Exploration Company in order to finance its operations, whereas in fact the stock offered for sale to and purchased by ...


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