SECURITIES AND EXCHANGE COMMISSION

Litigation Release No. 17065 \ July 10, 2001

SECURITIES AND EXCHANGE COMMISSION v. PACKETSWITCH.COM and STEVEN A. RISTAU, United States District Court for the Northern District of California, Civil Action No. C-01-20626-RS

SEC SUES STEVEN A. RISTAU AND PACKETSWITCH.COM FOR SECURITIES FRAUD

The Securities and Exchange Commission (SEC) announced today that it filed securities fraud charges against PacketSwitch.Com, Inc., a California corporation purportedly set up to develop a wireless internet technology by which movies could be viewed through the Internet, and its former president and chief executive officer, Steven A. Ristau. In its complaint, filed in the United States District Court in the Northern District of California, the SEC alleges that the defendants sold $3.7 million of stock in PacketSwitch.Com to between 700 and 900 investors, many of whom included individuals that Ristau knew through his relationships with large churches in the San Jose area, in an unregistered offering and made numerous misrepresentations in soliciting investors.

The Commission's complaint alleges that the defendants' numerous misrepresentations included representing that the Company had a new technology that allowed it to broadcast movies wirelessly over the Internet; either had or was in the process of obtaining patents for its purported Internet technology; had substantial operations in Africa and Asia, including a billion dollar contract with the Republic of Korea; and had strategic partnerships and alliances with various large, publicly traded telecommunications companies. According to the complaint, contrary to these representations, PacketSwitch.Com was a start-up with no revenue and no real product; its technology was an off-the-shelf commercial product that did not have the capability of transmitting movies wirelessly from over ten miles away. The complaint states that the Company did not have and was not in the process of obtaining patents for its purported Internet technology and that the Company did not have substantial overseas operations, and it did not have any significant contracts, strategic partnerships or alliances with any governments or large companies.

The complaint further alleges that the defendants failed to disclose that a significant portion of the funds the Company raised went to Ristau for his own personal use, including purchasing a $1.8 million home in San Jose, paying for the Ristaus' family vacation to Hawaii, $66,000 of Ristau's delinquent child support, payments for Ristau's Lexis automobile, a camper/trailer for Ristau's wife and various other personal items. The complaint also alleges that Ristau received sales commissions based on a percentage of proceeds raised by the company and that Ristau didn't disclose to investors that any of the funds raised would go to pay for sales commissions.

The Commission's complaint alleges violations of Sections 5 and 17(a) of the Securities Act of 1933 (the "Securities Act") and Sections 10(b) of the Securities Exchange Act of 1934 and rule 10b-5 thereunder against Ristau and PacketSwitch.Com, as well as violations of the broker-dealer registration provisions as set forth in Section 15(a) of the Exchange Act against Ristau. The Commission's complaint seeks an injunction against defendants' future violations of the registration, antifraud and broker-dealer registration provisions of the federal securities laws, disgorgement of all ill-gotten gains and an order prohibiting Ristau from acting as a director or officer of a public company and civil money penalties.