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SEC v. Page Airways et al.

SEC v. Page Airways et al.

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Published by Mike Koehler

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Categories:Business/Law
Published by: Mike Koehler on Aug 25, 2011
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08/27/2013

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SECY.PAGE
AIRWAYS.
INC.
(Complaint
moobySEC4/12/7&)
SBCURITlESANDEXCHANGECOMMISSION
W~D.c.20549
LlTIGA'I,'ION
R.ELEASB
NO.8372/Apr1J13,1978
SECURITIES'ANDEXcHANGECOMMJ8sroN
v.
PAGE
AIRWAYS,INC.,ET
AI..
Civ.ll
ActionNo~78-064S(DDc}'The
Secw:itiesand
.BxcbanfP
Commissionmnounccd
that
on
April12,1978
a
civR
Jnjm!ct:iveactiOn
was.
filed
in
theUnitedSfaV:S
DIstrict
Courtfor
the
District
-of
eo-
lumbia
c:baIf!ing
Page
Ahways.
Inc.
(''P.'').
aRoche~.
NewYoxkcorporation,engaged.
in
bUllinessrelatingto
SIdes.
and'
service
of
aircraft
and
six
of
its
officets
and/or
direc·
tors:James
P.WIlmot.Chairman:
Gerald
G.Wilmot,.
Pmident;.
Douglas.
W.
Juston,
ExecutiVe
Vice
Piesident;
Ross
C.
Chapin.Vice
Presidmt:.fames.P.
"Lawler,
Vic6~
ident;
andT.
I&han1
Olney.
'flee
Plesidetlt,
with
violation
of
$e¢011$
1O(b)("antifraud")and13(a)
(":reporting")
of
tbe
Sccuri1ies
Bxc1IaJl&e
Act
'of
1934
("Exchange
Act")
and
Rules
thereuncler.
TheComplaint.also
charges
Page,
JIlmCS
P.Wilmot.
Gend4
G.Wilmot,
Douglas
W.Suston
and
ItO$S
C.
Chapin
with
'Violations-ofSee1ion
14(a)("proxy"}ofthe
ExchangeAct
andfurther
charse$
Page.
with
'Viola·
tions
of
Section
13(bX2)
of
the
ExCiba:np
Act
("TJle
Por'.
ejgn
CoItUpt~
Actof1977")..
 
The-
plslntiff
Securities
and
Exchange
CommissioJ1
("Contmiadon")
alleges
that:
1.
DefeniJants
PAGEAlRWA~,INC.
("PAGE").
JAMBSP.WII.MQT("1.
WILMOn.
GERALDG.
WIL-
MOT
("G.
WlI.MOT").
DOUGLASW.rusTON
("JUS..
TON"),ROSSC.
aiAPfN
("CfJAPIN").JAMESP.LAW.
LER("LAWlER").
T.
RICHARDOINBY
("aI.NEY")
and
othm
have
engaged,
arenow
engaged
and
areabout
toenpge
in
acts,
practicei
andcoutsesofbusiness
whiCh
con-
stitute
andwill
consdtute
v.iIllationsofSections
1
O(b)
and
13(a)of
the
Securities
E.xclumie
Act
of1934(~e
TheCommission
also
charges
that
page
andtheindMd-
Act")
[15U.s-C.78j(b)and18m(a)]
and
Rules
1Ob.5.
uaJ
defendants,.
variously,failed
to
file
requitedreports12b-20.13a·1and1~:a-1l117C.F.R.24U.lOb-S,240.12b-
with
theCommissionandffiedfalseandmisieading;uinual20,24O.131and240.l3a·ll}promulgated
tfler.eunder.
reportsandproxysolicitationmaterialwiththe
CommIs·
siOll
relating
to
theaforemell.ti~dmatteD:.2.DefendantPAGEbas
engag¢,
Is
nowengagadand
Is
about
to~
in
acts.
p.r.actices
ande()~
of
bllSiJJe.ss
The
action
tiled
by
the
Cammfssioninaddition
to
which
COlistitutc
and
will
constitute
vio1ations
of
Seet!oa
$OeldDgan
1njunctiOll
prohibitins
the
aboveviolativecon-
13(b){2)
("F6reignCon:upt~
Actof
197,.,
of
the
duct
also
scob
otherequitablerelief,
iIlc1ucling
amaoda-
BxchanpActllSU.s.C.78m(b)(2»).
'....-'tOry.
injunctiondirectillg'l'age..
to
CQnClCtltsfil:lngswith.
'the
Commission
and
the
ap~tmentofa
BpeciaJ
Officer-to~-3.Def'eDdantll'AGE.1.
Wll.MOi,
G.r.u..MOT.--
amongother
things.
investigate
the
matteJ:s
aReged
in
theroSTON,CHAPINand
others
haveengaged,arenow
en-
CommissIon'$Complaintandrenderacorrectaccounthlg
gaged
and
are&boot
to
CfiPP
in
ac1I,
pacticesand
COLI2'Sd
ofPage'$
fmanc1aI
positi~.
of
business
wlUch
comtitllte
$ld
will
constitute
violatiOns
of
Section14(8)
ofthe
Bxchmge
Aot
US
Us.c.
18n(a)}
andRule
14a~(17C.F.R.240.144-9]
pnnn1ilp.ted
theze.
~r.'
4.
Defendants
will,~
restIainedan4enjoined,
oontin~
10
engage.
in
the
acts,
pzactk:es
an(l
cot.u#I
of
business
set
forthin~
Complaint.
S.
Pwmant
to
tho
mthority
granted
to
it
by
Sectioas
1O(b).
12(b).
13{a).14(a)and23(a)ofthe
Bxchangc
Act
(IS
usc,
78j(b)
781(b),
78m{a),78n(a)and78w(a»)the
Commission
baB
promulgate4
therulesenummrtedin
paIl-
grnpha
1
and
3
abow
and
the
rubstance
of
aid
tu1es
was
in
effilctat
r!IJ
timesmentionedherein,and
these
IUles
are
nOW
in
efl'ect.
TheCommIssion'sComplaint
alleges
thatPageand
the
individualdefCDdants
variously
engaged
in
ascheme
to
sellGuIfmeam
n
aiICI'aft.
andother
ail'ctaft.
products
and
ser·
vice;;
by.
directly
and
indUectly
t
llllIldng
payments
to
for~
eigngovernmentofficialsandmployeesand.otherconupt,illegal,improperorunaccountable
pay~ta.
TheCom-
pl:alnt
further
charges.
that
in
connection
With
1hfs
scheJne.
thedefendantsfalsifiedthebooksandrecotds
ofPage,
madefalsestatementi'.m
tM
Export-Import
Bank
andfailed
tom3kerecord.
of
thereceipt
and~
of
cash
in
connection
with
certainaspeets
ofthecompany'a
opera:lions..
TheComplaint
also
charge$
that
shattx
entities
and
tllW'2Ctions
Wflte
utilia'edasconduitsfor
payments
fOlD
warded
tothird
parties
in
connection
with~
of
certain
airoIaft.
DNlDSTATESDISTRICTCOURT
FOil
'!'HE
DISTRICTOFCOLUMBIAelVILACTIONNO.78.0656
SECURITIESANDEXCHANGECOMMlSSION
SOONorth
Capitol
Street
wBsbington.
D.C.20549
v,
PAGEAIRWAYS,INC.
lAMESP.\VILMOTGERALDG.WIlMOT
DOUGLASW.
rosros
ROSSC.CHAPINJAMESP.LAWLERT.RICHARDOLNEY
Defendants.
COMPLAINT
FOR
PRELIMINARYANDPERMANENT
INJUNCTIONANDFOR
0TaBR.
EQUITABLERELIEFJURISDICTIONANDWNUE
6.
T.be
C()mJ[Ijssionbrlo&'l
this
action
PUml3llt
to
Sections
Zl(d)IIDd
(e)
of
the
Bxchauge
Act[15U.s.C.7SU(d)and(e)]toenjoin
stwb
acts,practil:esand
COIme$
ofbuslness.7.
1bi:
Court
hal:
jUJ:islliction
of
this
action
pursuant
to
Section27
of
the
Exchange
Act
{ISU.s.c.
78aa.1
8.
Certain
ofthe
acts,
practices,
andcoursesof
buill-
 
nessconstituting
violatiOIJ$
OT
theExclwIgeActhaveee-
cumdandareocwr.dng
within
theD!ruict
of
Columbia.
mE
DEFENDANTS
9.
J)efendant
PAGE
Is
a
NewYork
cmporation
t1uJt
maintains
its
principal
offICeS
in
Rochester,
New
York
PAGE'soommon
$lOOk
:is
registered
withthe
Commis-
sion
pursuant
toSecfum12(g)ofthe~
.Act
[15
U.s.c.
78100]
and
is
traded
in
theover-the-countermarket.
At
all
times
referred
to
inthisComplaint.
PAGB
has
been
and
is
thewodd-widedistributor
of
the
Gulfstream
II,an
executiVe
jet.
aixcIaft
man.ufac~
by
Grumm~Corpora-·:
tton,and
has
derived;md
does
dedvesu'bstantbd
i'eVCtl1:lC$
from
its
llilClaftoutfttUngand
sales:
opexations
which
have
been
andareclosolycoordinated
with
Grumman
sales
ef·
forts.
10.
Defendant
1,
WlLM01'is;-andhai~foroyer20
years,the
Chairman
and
Chief
BxecufiveOfficer
of
P"AGE
andaDitector
since
1939.
He
presently
ownt
approXi-
mately49.34%
of
PAGE'soutstanding
stock.
J.
WlUdOT
resides
at
217
SoUth
Road.
Pittstqrd,
NewYoik.
.11.
Defendaut
G.W'lLMOT
is,
and
has
beenfor
OYer
lOyaan,ilicP%=ide."lt
=nil
Ch!!:if
OperannJ
Officer
.of..
PAGEand
aDirector
sinI;e
1941.BetaYOllllFrbrothBr
of
1.WILMOT
and
owns
approximately14.76%ot"PAGE's
outstanding
stook.O.WJLMOTresides
at
m
Mendon
CenterRoad,Pitbbord,
New
York.
12.
Defendant
rusTON
is,and
has
beensinceatleast
1971.
the
Executive
VICe
Pre$ident
of
PAGEand
theincfiv..
id\lai
in
oharge
of
PAGE',
Oulfsteam
n
salBli
opemtioa$.
He
is
andhas
beenaDirectorof
PAGE
since
1972.lUSTON
residesat
Senaca
Point,Naples,New
York.13.DefendantCHAPlN
Was
named
Preai~t
of
PAGE's
whoUy-owned
subsidiary,
Page
GcIlfBIl"eam,
Inc.,
in
1971and
is
and
has
been
aVwe
President
andDuectorof
PAGE.
since
1975.
CHAPIN
maintainsresidences
at
3508'
MerrelRoad.
Dallas,
Texas
and7039
San
l'odro,
San
lUJ·
tanio,
Texas.14.
Defendant
LAWLBR
is
and
ba$
been
the
Chief
Financial
Officerof
PAGE
&m
1967.LAWLER
resides
at
9BentOak
Road..RDcb.emt,
New
York.
15.
Defendant
OLNEYCOItUI1eIlCed
employmentwith
PAGE
In
1968
asaViae
Ptosi~-e
~r
the
company.
In
1973.OLNEY
tenninatedhisempioym8nt
wHhPAOB.He
returnedtoPAGE
in
1915
as
Vice
President
of
PAGB-Oulf.
streamand
has
siDce
continuedemployment
with
PAGE
ill
1hlscapacity,OLENY
lCSides
at63SoIbome
Chase,
Fair-
port,NewYork.
COUNT!
SectionlO(b)oftheExdlange
Act.
[15U.s.C.1Sj(b)]and
Rule
ice-s,
[17c.P.R.240.1Ob.S]
thereunder
16•
.Pamgraphs
1
nd
4
thDl:Jl.8h
15
are
horeb)'
rea1leged
and
fnc:mporated
he~by
referenQll.
17.
Since
at
least
about
1971
andoontinuing
to
the
dare
hereof,
defendants
PAGE,
J.
WIlMOT,G.
WlLMOT.JUSTON,
CHAPIN,LAWLBR,OLNEYandotheJs,
singly
and
in
concert,and
aiding
and
abetting
each
other•.
dinIctly
and
indireetty.
in
connection
with.
the
purchase
mu1
sale
of
securities
of
PAGE
by
use
of
the
maDs
and
means
and
in-
sttontentalltIes
of
Interstate
c:ommerce.
have
been
and.
are
now!
(1)
emp10yiDg
d8vJces,
BCbemes
and
arlfficcs
tode·
frand.
(2)
making
lUltruestatements
of
mateIial
facts,
and
omitting
to
atato
mal\Wllfacts
necessary
in
order
to
make
the
statements
made,
ill
tight
of
1bt
circumstaiIces
under
which
they
were
made
not
ml'Slca<Ung;
and.
(3)
eJIgiIging
in
acts.
practic:e.s.
and
cou:ses
ofbusin.ess
which
have
Dparated
and
lIe
operating
asa
fraud
or
deceit
upon
peJ:SOQ$
In
vio-
Jation
of
Seetion
1
D(b)
of
the
Bxcbanse
Act
[15
UAC•.
78j(b)]
aud
Rule
10M[17C.F.R.240.1Ob-Sl
promul·
ptecl1:heleunQer
umore
fun)'
alleged
in
subsequent
pata-graphs
of
this
Count
L
18.
From
at
!cut
1971~
the
present,
PAGE
acting
u
sole
distributorand
pdncipal
outfitterforGlIlfstream
n
aUcraft
and
defeadmta
I.WILMOT.G.WILMOT,
JUS.
TON.
CHAPJN,
tAWLBR.OLNEY
an<l
others,
singly
and
in
concext,
directly
sud.
indirectly.
haw.
parti~
m
COo
operative:
IIalesefforts
with
Grumman
Cozp.
and
its
affil·
iates
andemployees
to
sell
Oulfi;tream
n
Ihcnft
thro\Igh.
out
the
world.
In
CODDection
'll!ith
these
sales
efforts.
the
detl:ndWs
in
tlU$
Count
andothersmade..
directly
and
in·
directly.
pqmentsto
gtWemme.at
oBIcials
and
employees,
andothorcorrupt~illegal,improper
or
:unaccountable
pay-
ments.
PAGB
anddefendants1.
WJLMOT,
lUSTON,
CHAPIN;LAWLBR
atId
OI.NBY
abo
utilized
sum
pay-
menb
in
C<llIOOci&m
with
the
saleJ;
of
other
aimaft
and
spareparts
sold
by
PAGS.
Between
1971andtho
PfOieIlt.
1iUcl!.
payments~
made
in
CtlilJUICtion
with
over
$60mn.
lion
Qf
sales
ofgoods
and
mvices
by
PAGE.
Between
1971
and1976,
PAGB
l'ep()l'ted
total
sales
of
S2S1
million..
19.
As
a
firdh!n'
part
of
the
afomafd
scheme
and
.COUlSe
ofbuslness.
defendants
PAG£,
J.
VIlLMOT,
G,W'IL-
MOT,
rosros;
CHAPIN.LAWLER,OLNEY
and
othen,
8$
part
of
the
afomnentioned
sales
efforts
paid
Of
caused
to
be
paidin
excessof
S2.S
million
ofPAGB'scorpOIate
timds
to
otl'idal$
of
foreign
goYeuunants,
to
entitles
contro1led
by
such
officials
ortoP'WPortedcommission
agents
withOut
adequateCOIltrolstoinsure
that
$UCh
disbursementswere

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