Binion trial witness accused of securities fraud

Grace Leong

Monday, April 29, 2002 | 9:23 a.m.

The Securities and Exchange Commission sued Las Vegas businessman Larry Stockett, whom it accused of being a "recidivist securities violator ...with a lengthy disciplinary record" with both state and federal regulators since 1989, alleging he defrauded penny stock investors out of $1.37 million.

Stockett, the owner of defunct cement plant operators, The S.I.N.C.L.A.R.E. Group Inc., its affiliate Hightec Inc. and its subsidiaries U.S. Cement Inc. and Basalt Fiber Industries Inc., was accused in Friday's U.S. District Court suit of disseminating "flagrantly false and misleading" financial statements about the companies through press releases, spam e-mails, infomercials and the Internet to induce investors to buy Hightec stock.

Stockett, who was accused of selling at least 8 million shares of unregistered Hightec stock from Jan. 12, 2000, through March 21, 2001, and generating "illicit" profits of about $804,687, also allegedly misappropriated $569,505 in investors' funds to pay for a luxury home, a Jaguar, a boat and other personal expenses.

The SEC said Stockett was previously sanctioned in California in 1989 and in Oregon in 1999 for violations of federal securities laws and ordered to pay a $50,000 civil penalty.

Stockett earlier gained attention in Las Vegas during the Ted Binion murder trial.

Stockett testified that he tried to buy MRT Transport, a trucking company owned by Binion's convicted killer Rick Tabish, days before Binion's death.

Stockett was arrested in April 2000 in Las Vegas, following his testimony, on charges of passing three bad checks.

Dan Ahlstrom, deputy district attorney with the Clark County District Attorney Office's Bad Check Diversion Unit, said the agency dismissed the bad check charges against Stockett after he paid about $8,800 in restitution and penalties in August 2001.

The SEC, which raided Stockett's home in Las Vegas in March 2001 and collected a number of documents, said it found Stockett had disseminated false statements about the legal status, business operations and financial projections of Hightec and S.I.N.C.L.A.R.E. -- both former Delaware corporations with offices located at Stockett's home.

Stockett, who allegedly failed to disclose to investors his "track record" of securities law violations as well as a 1991 personal bankruptcy filing in Oregon, also allegedly failed to disclose that Hightec and S.I.N.C.L.A.R.E. had their corporate charters revoked in 1999 by the state of Delaware because he failed to file mandatory reports and pay taxes owed by the two companies.

Stockett was also accused of appearing in infomercials that claimed U.S. Cement -- which the SEC said has no current operations and has never sold any cement -- had an established cement distribution network, access to millions of dollars in financing and had prominent retail customers including The Home Depot, Home Base and Lowe's Cos. Inc. The suit said Stockett, who is allegedly the author of information contained in a U.S. Cement website, displayed photographs of himself standing next to forklifts and a large ship that was unloading bags of cement -- allegedly owned by other companies -- from September 2000 through May 15, 2001.

The SEC said Stockett's "false promotional releases" caused Hightec stock -- which had traded in an 8 cent to 25 cent range between December 1999 and mid-February 2000 -- to climb to a high of 75 cents a share in late February 2000.

Stockett was also accused of violating federal securities laws when his company Hightec failed to file five annual reports and 16 quarterly reports from February 1997 through the present and S.I.N.C.L.A.R.E. failed to file six annual reports and 15 quarterly reports from November 1996 through the present.

The suit said Stockett violated SEC reporting requirements -- which intended to alert investors when insiders are buying or selling securities of companies of which they are large investors -- when he allegedly failed to disclose to the SEC he owns 60 percent of Hightech's stock and 47 percent of S.I.N.C.L.A.R.E. stock.

Stockett could not be reached for comment on the SEC's allegations.