UNITED STATES OF AMERICA Before the SECURITIES AND EXCHANGE COMMISSION SECURITIES ACT OF 1933 Release No. 7303 / June 11, 1996 SECURITIES EXCHANGE ACT OF 1934 Release No. 37299 / June 11, 1996 ADMINISTRATIVE PROCEEDING File No. 3-9022 - - - - - - - - - - - - - - - x : In the Matter of : ORDER INSTITUTING : PUBLIC PROCEEDINGS : PURSUANT TO SECTION 21C HENRY P. BECKER, : OF THE SECURITIES : EXCHANGE ACT OF 1934 : AND SECTION 8A OF THE : SECURITIES ACT OF 1933, : MAKING FINDINGS, AND : ORDERING RESPONDENT TO : CEASE AND DESIST Respondent. : - - - - - - - - - - - - - - - x I. The Securities and Exchange Commission ("Commission") deems it appropriate and in the public interest that public administrative proceedings be, and they hereby are, instituted pursuant to Section 21C of the Securities Exchange Act of 1934 ("Exchange Act") and Section 8A of the Securities Act of 1933 ("Securities Act") to determine whether Henry P. Becker ("Becker" or "Respondent") violated Section 10(b) of the Exchange Act and Rule 10b-5 thereunder and Section 17(a) of the Securities Act in connection with the purchase or sale, or in the offer or sale, of securities of T.B.F.G. International Ltd. ("TBFG"). II. In anticipation of the institution of this administrative proceeding, Becker has submitted an Offer of Settlement ("Offer") to the Commission, which the Commission has determined to accept. Solely for the purpose of these proceedings and any other proceedings brought by or on behalf of the Commission or to which the Commission is a party, and without admitting or denying the findings contained herein, Becker admits the jurisdiction of the Commission over him and the subject matter of this proceeding and consents to the issuance of this Order Instituting Public Proceedings Pursuant to Section 21C of the Exchange Act and Section 8A of the Securities Act, Making Findings, and Ordering Respondent to Cease and Desist ("Order"). III. On the basis of this Order and the Offer, the Commission finds the following: Respondent A. Becker, age 37, was the vice president for operations of TBFG from in or about January 1993 through in or about February 1994. Other Relevant Entity and Person B. T.B.F.G. International Ltd. is a Wyoming corporation, with its principal place of business in Whitesboro, New York. TBFG was founded by Randall E. Bradbury ("Bradbury"), who served as its president and chief executive officer. According to its offering documents, TBFG sought to engage in trade with, financing for, and consulting to, developing businesses in Russia and other states of the former Soviet Union. In 1993, TBFG filed a Form D with the Commission concerning a purported private offering of stock. TBFG ceased operations in or about May 1994, shortly after Bradbury left the country. Introduction and Summary C. Becker began working for TBFG in October 1992. In or about January 1993, Becker became TBFG's vice president for operations. From in or about March 1993 through in or about February 1994, Becker was left in charge of TBFG's office during Bradbury's frequent trips to Russia. In Bradbury's absence, among other duties, Becker dealt with TBFG's creditors and investors. Becker handled payment of TBFG's bills and withdrew funds from, and deposited funds into, TBFG's bank accounts. Becker offered and sold TBFG stock, bonds, and notes to investors, and signed numerous TBFG common stock certificates, bonds, and notes, as well as certain sales material. D. From in or about August 1993 through in or about February 1994, TBFG raised approximately $70,000 from the sale of TBFG stock and approximately $80,000 from the sale of TBFG bonds and notes. The bonds, which were purchased by at least two investors, were convertible into TBFG stock. Most of the investors in the notes also invested in TBFG stock or convertible bonds. Investors in the TBFG stock, bonds, and notes were generally solicited by means of the same offering documents and oral representations. TBFG defaulted on most of the notes and bonds, and failed to pay almost all of the promised interest. E. From at least August 1993 through in or about February 1994, Becker made material misrepresentations, and failed to disclose material information, to prospective investors concerning the purchase of securities issued by TBFG. Becker's Misrepresentations and Omissions of Material Facts Concerning TBFG in the Offer and Sale of TBFG Securities F. Becker solicited investors by means of bulletins, memoranda, and other offering documents, and oral representations. Becker participated in the drafting of, and/or signed, several of the TBFG offering documents that he disseminated. In the documents he drafted and/or signed, and in oral statements to prospective investors, Becker represented that the money raised by the sale of the TBFG stock, bonds, and notes would be used to finance TBFG or particular ventures in which the company was purportedly engaged. G. In soliciting investments in TBFG, Becker made false representations, and omitted information, concerning TBFG's business plans and projected stock price, the status of TBFG's purported projects, and its financial condition and history on at least the following occasions and in the ways set forth below: 1. On or about September 3, 1993, Becker met with a prospective investor in TBFG. Becker told the investor that TBFG was planning an initial public offering ("IPO") and that the price of TBFG stock, which was then being sold by TBFG for $2.50 per share, would increase to $5 per share by September 15, 1993. That individual subsequently purchased TBFG stock. 2. Becker also disseminated to another investor a document which falsely suggested that an IPO was imminent. The document, which was entitled "Investment Opportunity," dated September 7, 1993, and signed by Becker, concluded by stating: "We are quickly approaching our target of $650,000 for this offering. We have extended the time to September 20, 1993. We cannot guarantee any future offerings will be made prior to our going public." 3. The "Investment Opportunity" also stated that TBFG had in the preceding thirty days received "confirmation of funding for almost all our projects." The individual to whom Becker disseminated the "Investment Opportunity" subsequently purchased a TBFG convertible bond and a TBFG note. 4. Becker also prepared false and misleading financial projections contained in another TBFG offering document, entitled "Corporate Overview," which was disseminated by Becker and Bradbury to prospective investors. The financial projections prepared by Becker consisted of purported cash flow statements, projecting income and expenses for 1994, 1995, and 1996. The cash flow statements reflected projected profits of approximately $14.7 million in 1994, $23 million in 1995, and $23 million in 1996. The "Notes" to these projections stated only that the projections were "conservative" in that they did not include income from additional expected ventures, at least one of which TBFG purportedly expected to be "very lucrative." H. The representations by Becker described at Paragraph III. G. above were false and misleading, for the following reasons, among others: 1. Becker's representations concerning an imminently expected TBFG IPO and the expected increase in the price of TBFG's stock were false. TBFG never made a public offering, never retained counsel, an auditor, or an underwriter, and never otherwise took any substantial steps toward commencement of an IPO. Moreover, in light of the company's financial condition and lack of operating history or genuine business prospects, there was no reasonable basis for Becker's representation concerning the projected increase in TBFG's stock price. Becker's statement concerning the purportedly imminent completion of a purported $650,000 offering was also false. TBFG raised substantially less than $650,000 from its "offerings" of stock, bonds, and notes. 2. Becker's statement concerning the receipt of confirmation of funding for TBFG's projects was false, because TBFG never completed arrangements for financing any of its major projects and never entered into firm agreements concerning those projects. 3. The financial projections Becker prepared for the Corporate Overview lacked any reasonable basis, in light of TBFG's lack of operating history, lack of revenues, and the lack of firm agreements concerning the company's proposed projects and numerous undisclosed conditions precedent to TBFG's realization of revenues from those projects. I. Becker also failed to disclose to prospective investors information concerning the risks associated with investing in TBFG, including TBFG's lack of operating history, poor financial condition, and the numerous obstacles in the way of the successful completion of its purported projects. J. Becker knew or recklessly disregarded that his representations were false, knew of the risks associated with investing in TBFG, and knew that he was not disclosing information concerning such risks. By reason of his position as vice president for operations, and specifically his dealings with TBFG's creditors and investors and his familiarity with TBFG's bank records, Becker was aware of TBFG's financial condition. Becker knew or recklessly disregarded that TBFG had never earned any revenues (other than a de minimis amount from the sale of Russian craft items), and that all of TBFG's operating funds came from individual investors in TBFG. Furthermore, Becker also knew or recklessly disregarded that TBFG had never completed a financing project and that TBFG had not entered into firm agreements concerning its purported projects and that there were numerous obstacles to the successful completion of the projects. Violations of the Exchange Act and Securities Act K. As a result of the conduct described in paragraphs III.A. through J. above, from in or about August 1993 through at least in or about February 1994, Becker, directly and indirectly: 1. violated Section 10(b) of the Exchange Act and Rule 10b-5 thereunder in that, in connection with the purchase or sale of the securities of TBFG, Becker knowingly or recklessly employed devices, schemes or artifices to defraud, made untrue statements of material facts or omitted to state material facts necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading, and engaged in acts, practices, or courses of business which operated as a fraud or deceit upon any person; and 2. violated Section 17(a) of the Securities Act in that, in the offer or sale of the securities of TBFG, Becker knowingly, recklessly, and negligently employed devices, schemes or artifices to defraud, obtained money or property by means of untrue statements of material facts or omissions to state material facts necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading, and engaged in transactions, practices, or courses of business which operated as a fraud or deceit upon the purchaser. L. While engaged in the conduct described above, Becker, directly and indirectly, used the means or instrumentalities of interstate commerce or the mails. IV. Based upon the foregoing, the Commission finds that Becker violated Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, and Section 17(a) of the Securities Act. V. Based on the foregoing, the Commission deems it appropriate and in the public interest to accept Respondent's Offer, and, accordingly, IT IS HEREBY ORDERED, pursuant to Section 21C of the Exchange Act and Section 8A of the Securities Act, that Becker cease and desist from committing or causing any violation and any future violation of Section 10(b) of the Exchange Act, and Rule 10b-5 thereunder, and Section 17(a) of the Securities Act. By the Commission. Jonathan G. Katz Secretary