Document:

Exhibit 10.22  Secruities and Exchange Commission Civil Action

<PAGE>

UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF FLORIDA
(Orlando Division)
------------------------------------------
UNITED STATES SECURITIES AND                )
   EXCHANGE COMMISSION,                     )
                                                              )
                           Plaintiff,                         )        C.A. No.
                                                              )
                  v.                                          )
                                                              )
CORPORATE RELATIONS GROUP, INC.,    )       COMPLAINT
STRATCOMM MEDIA LTD.,                       )        INJUNCTIVE RELIEF
GULF ATLANTIC PUBLISHING, INC.,             )        SOUGHT
NEW CONCEPTS L.L.C.,                                 )
CJL CORPORATION,                            )        [Violations of Federal
POW WOW, INC.,                                       )          Securities Laws]
FONDO DE ADQUISICIONES E                    )
INVERSIONES INTERNACIONALES XL, S.A.,       )
C.A. OPORTUNIDAD, S.A.,                              )
AMMONIA HOLD, INC.                                   )
         and                                                  )
ROBERTO E. VEITIA, JAMES W. SPRATT  )
III, JAMES A. SKALKO, JACK R. RODRIGUEZ,    )
JOSE ANTONIO GOMEZ CORTES,          )
ARNOLD ZOUSMER, CHARLES J. LIDMAN   )
and MICHAEL PARNELL,                                 )
                                                              )
                           Defendants.                        )
------------------------------------------)

                                     Thomas C. Newkirk
                                     James A. Kidney (Trial Counsel)
                                     Jerry A. Isenberg
                                     Christopher R. Conte
                                     Jeffrey P. Weiss

                                     Attorneys for Plaintiff
                                     U.S. Securities and Exchange Commission
                                     Mail Stop 8-8 (Kidney)
                                     450 Fifth Street, N.W.
                                     Washington, D.C. 20549-0808
                                     (202) 942-4797 Fax: (202) 942-9581 (Kidney)
Date:  September 27, 1999                   kidneyj@sec.gov

TABLE OF CONTENTS

SUMMARY OF THE COMPLAINT   2
VIOLATIONS ALLEGED         4
JURISDICTION AND VENUE     5
DEFENDANTS        5

I.    Fraud in the Distribution, Promotion, Purchase and Sale of Securities    8

II.   Unlawful Touting of Securities        14

III.  Violations of the Registration Requirements of the Securities Act
       Through Phony Regulation S Sales and Inapplicable Exemptions    14
<PAGE>

IV.  Specific Securities Transactions in Which Defendants Violated the
       Antifraud, Touting and Registration Provisions of the Securities Laws  17

A. The Tracker Corporation of America       17
1. The Regulation S Offering        18
2. The S-8 Offering        20
3. CRG Promotion of Tracker Stock to Investors       21

B. Delta Petroleum         23
1. August 1995 through February 1996        24
2. March 1996 through May 1996      26
3. May 1996 through December 1996   27
4. CRG Promotion of Delta Stock     28

C. Ammonia Hold   29
1. Stock Loans Repaid with Regulation S Stock        29
a. Olympus Investment Loan 29
b. Grace Holdings Loan     30
2. The Ammonia Hold Offering Purporting to Use Regulation D and S
    Exemptions    32
3. August Regulation S Sales        33
4. CRG Promotion of Ammonia Hold    34

D. Information Management Technologies Corporation   35

E. Foreland Corporation    39

 V.    Specific Securities Transactions In Which Defendants Violated the
        Antifraud and Touting Provisions of the Securities Laws        41

A. Atlas Pacific Ltd.      42

B. ECO2  43

C. Global Intellicom       45

D. Global Spill Management, Inc.    47

E. Golf Ventures  49

F. Jreck Subs     51

G. Sobik's Subs   53

H. Vector Aeromotive       54

I.  Viking Management Group         56

VI.     Stratcomm Acted as an Unregistered Dealer and, with CRG, Caused an
          Unregistered Distribution of Stratcomm Common Stock Which CRG
          Touted Without Disclosing Its Relation to  Stratcomm         58

VII.    CRG Acted as an Unregistered Broker and Dealer        60

VIII.   Ammonia Hold Fraudulently Reported Stock Sales as Revenues     61
<PAGE>

FIRST CLAIM -- Securities Fraud     62

SECOND CLAIM -- Securities Fraud    65

THIRD CLAIM -- Touting     66

FOURTH CLAIM -- Sale of Unregistered Securities      67

FIFTH CLAIM -- Sales by Unregistered Persons         69

PRAYER FOR RELIEF 70

UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF FLORIDA
(Orlando Division)
------------------------------------------
UNITED STATES SECURITIES AND                )
   EXCHANGE COMMISSION,                     )
                                                              )
                           Plaintiff,                         )        C.A. No.
                                                              )
                  v.                                          )
                                                              )
CORPORATE RELATIONS GROUP, INC.,    )       COMPLAINT
STRATCOMM MEDIA LTD.,                       )        INJUNCTIVE RELIEF
GULF ATLANTIC PUBLISHING, INC.,             )        SOUGHT
NEW CONCEPTS L.L.C.,                                 )
CJL CORPORATION,                            )        [Violations of Federal
POW WOW, INC.,                                       )          Securities Laws]
FONDO DE ADQUISICIONES E                    )
INVERSIONES INTERNACIONALES XL, S.A.,       )
C.A. OPORTUNIDAD, S.A.,                              )
AMMONIA HOLD, INC.                                   )
         and                                                  )
ROBERTO E. VEITIA, JAMES W. SPRATT  )
III, JAMES A. SKALKO, JACK R. RODRIGUEZ,    )
JOSE ANTONIO GOMEZ CORTES,          )
ARNOLD ZOUSMER, CHARLES J. LIDMAN   )
and MICHAEL PARNELL,                                 )
                                                              )
                           Defendants.                        )
------------------------------------------)

         Plaintiff,  the Securities and Exchange  Commission ("the Commission"),
alleges  for its  Complaint  that the  defendant  corporations  and  individuals
violated  provisions of the  securities  laws of the United States in connection
with the  issuance,  offer,  distribution,  purchase or sale of securities of at
least 15 small  corporations  during the period  beginning in at least September
1994 and  continuing  beyond  December  1996 to a date to be  determined.  These
violations  resulted  in  unlawful  profits  estimated  to be in  excess  of $20
million. SUMMARY OF THE COMPLAINT

 1. Defendant  Corporate  Relations Group, Inc. ("CRG"), a Winter Park, Florida,
company, by and through its principal  associates,  defendants Roberto E. Veitia
("Veitia"),  James W.  Spratt III  ("Spratt")  and James A.  Skalko  ("Skalko"),
directed  and  operated a fraudulent  scheme in which they  acquired  investment

<PAGE>

control of large blocks of  securities  from small public  companies  either for
free or at a steep  discount  from the  market  price.  They then  touted  these
securities to the public in CRG  publications  and ordered  employees to promote
the stocks to brokers,  some of whom were bribed to sell the securities to their
customers.  CRG,  sometimes  by and  through  other  defendants,  then  sold the
securities at a profit while promoting them to the public. The statements in the
CRG  publications  were  materially  false and  misleading  because  CRG  failed
adequately  to disclose that it was paid for the  promotions,  the amount it was
compensated,  or that at the same time it was  promoting the stock to the public
as a worthy investment, it was selling the stock.

 2. CRG also acquired unregistered  securities for ultimate resale in the United
States by  persuading  client  companies  (who  retained  CRG to  promote  their
securities)  to issue  unregistered  securities  to  offshore  entities,  either
defendant  Fondo  de  Adquisiciones  E  Inversiones   Internacionales  XL,  S.A.
("Fondo") or defendant C.A. Oportunidad, S.A. ("Oportunidad").  These securities
also  were  acquired  from  issuers  by CRG  at a  substantial  discount  to the
prevailing  market  price.  Although  securities  sold by an issuer to  non-U.S.
entities may be exempt from the registration requirements of the securities laws
if  certain  conditions  are  met,  the  securities  distributed  to  Fondo  and
Oportunidad  remained  under  the  control  of CRG.  CRG and its  principals  --
sometimes with defendants New Concepts L.L.C.  ("New Concepts"),  Arnold Zousmer
("Zousmer"),  CJL Corporation ("CJL") and Charles J. Lidman ("Lidman") -- funded
or  arranged to fund the  purchase of the  discounted  securities  and  retained
investment control. CRG then directed the sale of these unregistered  securities
back into the United States for unlawful  sale on the open market,  usually at a
price well above the deeply discounted price for which they were acquired and at
a  substantial  profit  to the  defendants.  Sometimes  CRG  directed  Fondo  or
Oportunidad to sell the securities to New Concepts,  usually  through  defendant
Spratt,  to "cover"  short  positions  which CRG and New Concepts used to insure
ultimate  distribution  of the stock and to lock in  profits  from the  original
discounted purchase.

 3. In addition to the scheme described above,  defendants  Stratcomm Media Ltd.
("Stratcomm")   and  Ammonia  Hold,  Inc.   ("Ammonia   Hold")  sold  their  own
unregistered  securities in the United  States.  CRG and  Stratcomm,  the parent
company  of CRG and  operated  by the  same  principals,  did so  through  their
employees,  although CRG,  Stratcomm and the  employees  were not  registered to
offer  securities  for sale to the public as required by law. CRG also  promoted
Stratcomm  stock in its  publications,  often without  disclosing that Stratcomm
owned CRG. To make itself appear to be more successful than it was, Ammonia Hold
falsely  reported  the  proceeds  of its  stock  sales as  revenue  rather  than
infusions of capital in a report filed with the  Commission,  in a press release
and on its web site. VIOLATIONS ALLEGED

 4. By virtue of the conduct  described  herein,  defendants  CRG, Gulf Atlantic
Publishing,  Inc.  ("Gulf  Atlantic,"  but  collectively  included  with "CRG"),
Veitia, Spratt, Skalko, a CRG employee, Jack R. Rodriguez ("Rodriguez"),  Fondo,
Oportunidad,  Jose Antonio  Gomez  Cortes  ("Gomez"),  who was the  president or
control person of both Fondo and Oportunidad working at CRG's direction, Ammonia
Hold and Michael Parnell  ("Parnell")  violated  Section 17(a) of the Securities
Act of 1933  ("Securities  Act") [15 U.S.C.  ss.  77q(a)],  Section 10(b) of the
Securities Exchange Act of 1934 ("Exchange Act") [15 U.S.C. ss. 78j(b)] and Rule
10b-5  promulgated  thereunder [17 C.F.R.  ss.10b-5].  Additionally,  defendants
Stratcomm  and Veitia are liable for CRG's  violations  of these  provisions  as
controlling persons of CRG under Section 20 of the Exchange Act [15 U.S.C. ss.
78t]. (Fraud).

<PAGE>

 5. By virtue of the conduct  described  herein,  defendants CRG, Gulf Atlantic,
Veitia,  Spratt and Skalko  violated  Section  17(b) of the  Securities  Act [15
U.S.C. ss. 77q(b)]. Additionally, defendants Stratcomm and Veitia are liable for
CRG's violations of these provisions as controlling persons of CRG under Section
20 of the Exchange Act. (Touting).
 6. By virtue of the conduct  described  herein,  defendants  CRG, Pow Wow, Inc.
("Pow Wow"), Veitia,  Spratt,  Skalko,  Rodriguez,  Fondo,  Oportunidad,  Gomez,
Ammonia Hold, Parnell, Stratcomm, New Concepts, Zousmer, CJL and Lidman violated
Section 5 of the Securities Act [15 U.S.C.  ss. 77e].  Additionally,  defendants
Stratcomm  and Veitia are liable for CRG's  violations  of these  provisions  as
controlling  persons of CRG under  Section  20 of the  Exchange  Act.  (Sales of
unregistered securities).

 7. By  virtue of the  conduct  described  herein,  defendants  CRG,  Stratcomm,
Spratt,  Skalko and Rodriguez  violated Section 15(a)(1) of the Exchange Act [15
U.S.C. ss. 78o(a)(1)]. Additionally,  defendants Stratcomm and Veitia are liable
for CRG's  violations of these  provisions as  controlling  persons of CRG under
Section 20 of the Exchange Act. (Sales of securities by unregistered brokers and
dealers). JURISDICTION AND VENUE
 8. This Court has  jurisdiction  over this action  under  Section  20(b) of the
Securities Act [15 U.S.C.  ss. 77t(b)] and Sections  21(d),  21(e) and 27 of the
Exchange  Act [15 U.S.C.  ss.ss.  78u(d),  78u(e) and 78aa].  Venue lies in this
Court  pursuant  to  Section  20 of the  Securities  Act and  Section  27 of the
Exchange Act.
 9. In  connection  with the  transactions,  acts,  practices,  and  courses  of
business  described in this  Complaint,  each of the  defen-dants,  directly and
indirectly,  has  made  use of the  means  or  instrumentalities  of  interstate
commerce,   of  the  mails,  and/or  of  the  means  or   instrumentalities   of
transportation or communication in interstate commerce.

DEFENDANTS

 10. CRG, a  wholly-owned  subsidiary of Stratcomm,  is a public  relations firm
located  in Winter  Park,  Florida.  CRG,  and,  later,  Gulf  Atlantic  (again,
collectively herein,  "CRG"),  produced a variety of publications,  ranging from
one-page fax bulletins to monthly,  full-color magazines.  CRG charged companies
for its "public relations" services, which included touting securities of client
companies  to  investors  through CRG  publications,  press  releases and direct
contact with brokers.

 11. Stratcomm is a Vancouver,  Canada corporation with its principal offices in
Winter  Park,  Florida.  It is the parent  company  of CRG and of several  other
subsidiaries.  Stratcomm,  which conducted  business  through its  subsidiaries,
traded  on the Over The  Counter  ("OTC")  Bulletin  Board  [a  trading  vehicle
utilized by "micro cap"  companies  whose market  capitalization  is  relatively
small] until October 5, 1994,  when trading was halted.  Trading  resumed on the
OTC Bulletin Board on July 28, 1998. In the interim, Stratcomm offered its stock
off-market through brokers as described herein.

 12. Gulf Atlantic is a wholly-owned  subsidiary of Stratcomm  located in Winter
Park,  Florida.  In late 1995, Gulf Atlantic succeeded CRG as the primary entity
publishing magazines and newsletters that touted stock to the public.

 13.  Veitia,  age 51,  lives in  Orlando,  Florida.  He was the  president  and
chairman of CRG and the president,  chief executive  officer and chairman of the
board of Stratcomm  until July 1997. He reassumed the presidency of Stratcomm in
1999.  For  most of the  relevant  period,  he was  the  sole  director  of Gulf
Atlantic.  In 1988,  Florida and Michigan ordered Veitia to, among other things,
cease and desist from offering and selling unregistered,  non-exempt securities.
These orders arose from activities not related to the matters alleged herein.

<PAGE>

 14. Spratt, age 43, lives in Longwood,  Florida. He was a vice president of CRG
from  September  1994  to  late  1996.   Spratt   previously  was  a  registered
representative with several brokerage firms.

 15. Skalko, age 41, lives in Heathrow, Florida. He was a senior employee of CRG
beginning in September  1994.  Skalko also was a registered  representative  for
several  broker-dealers  before  joining CRG and was the principal for defendant
Pow Wow beginning in May 1996.

 16.  Rodriguez,  age 37, lives in Casselberry,  Florida.  He was a CRG employee
from June 1992 through  September  1995 and was a registered  representative  at
various times from 1987 through late 1996.

 17.  Pow Wow is a Florida  corporation  located at CRG's  offices.  Pow Wow was
incorporated in August 1994 with Veitia as its initial  director.  Skalko became
Pow Wow's president and sole director in May 1996.

 18. Fondo is a Costa Rican entity formed in August 1993.
 19.  Oportunidad is a Costa Rican entity formed in October 1994. Until February
1997, Gomez's daughter was president of the company.
 20. Gomez was president of Fondo and, after February 1997 when he succeeded his
daughter, president of Oportunidad.
 21. New Concepts, an Illinois corporation,  has been a registered broker-dealer
 since May 1994. 22. Zousmer,  age 57, lives in Rancho Santa Fe, California.  He
 is a partner in New Concepts and has been a
registered representative since 1975.  He has been registered as a broker-dealer
since 1993.
 23. Lidman, age 55, lives in Del Mar, California. He is the owner and president
of CJL and has been a business  associate of CRG since at least 1993. Lidman had
a beneficial interest in a New Concepts proprietary account.

 24. CJL is a California consulting firm Lidman formed in 1981.
 25. Ammonia Hold's principal offices are in Little Rock, Arkansas.  Ammonia
Hold manufactures odor-eliminating products for consumer and industrial markets.
The company's  common stock trades on the OTC Bulletin  Board.  Ammonia Hold and
Stratcomm are the only public companies named as defendants in this action.

 26. Parnell, age 41, lives in Little Rock,  Arkansas.  He has been a registered
representative  since  March 1981 and  currently  is  registered  with  Peterson
Investments,   Inc.   During  the  relevant  time,   Parnell  was  a  registered
representative at PaineWebber Inc. and a major Ammonia Hold shareholder. In July
1996, Parnell became president and chief executive officer of Ammonia Hold.

         I.       Fraud in the Distribution, Promotion, Purchase and Sale of
Securities

 27. CRG, through its principals, Veitia, Spratt and Skalko, designed, developed
and implemented a fraudulent scheme to enrich themselves and their co-defendants
by causing CRG's corporate  clients to distribute  securities -- both registered
and  unregistered,  non-exempt  securities  -- to CRG and its nominees at a deep
discount to the prevailing  market price.  CRG then promoted these securities to
the public through CRG publications and directly to brokers,  sometimes  bribing
brokers to recommend the securities to their customers.  CRG realized profits by
selling the securities while recommending that the public buy the stock.

 28. CRG  produced a variety of  publications  to  showcase  recommendations  to
investors  of  securities  that CRG was paid to promote.  The most  prominent of
these was  MoneyWorld.  Veitia was the publisher of most of these  publications.
Spratt and Skalko solicited companies to promote, wrote articles and columns and
otherwise  assisted  in  preparing   publications   promoting  the  purchase  of
securities by companies they knew paid for the promotions. The statements in the
publications were materially false and misleading because they failed adequately
to disclose either the compensation or that CRG was selling  recommended stocks,
which benefited Spratt and Skalko, as well as Veitia. In many instances,  Spratt
placed  the  orders  in  brokerage  accounts  controlled  by  CRG in  which  the
defendants  realized  their  profits.  Skalko,  as Pow Wow's  president and sole
director after May 1996, was responsible for trading in the Pow Wow account.

<PAGE>

 29. CRG also provided direct promotion to the  broker-dealer  community through
its "Broker Relations Executives" ("BREs"), whom CRG paid to interest brokers in
soliciting their clients to purchase the securities CRG was promoting.  The BREs
typically  did not  adequately  disclose to brokers  they were  compensated  for
promoting  the  securities.  During  the  promotions  of at least  one  customer
company, The Tracker Corporation of America  ("Tracker"),  brokers accepted cash
bribes from CRG to recommend stock to their clients.

 30. CRG often  received  securities as payment for its  promotional  activities
from cash-short  small capital  companies.  As described  below, CRG also owned,
directly or  indirectly,  or exercised  investment  control  over,  unregistered
securities sold at deep discounts by its clients to Fondo or Oportunidad,  which
held  these  securities  until CRG  directed  they be sold back into the  United
States  for the  direct or  indirect  benefit of the  defendants,  sometimes  to
"cover"  a short  position  in a  security  arising  from  CRG and New  Concepts
selling.

 31. A short  position  is  created  when  stock is  borrowed  to sell  with the
understanding  that the borrowed stock will be replaced at a later date. Selling
short  generally  means the seller expects the price of the stock to go down, so
that the borrowed stock can be replaced with stock  acquired a lower price.  CRG
could sell securities short even  anticipating some increase in price because it
expected to receive,  directly or indirectly,  stock at a deep discount from its
issuer-clients  which it could use to replace the borrowed  stock.  In addition,
purporting to "wash"  restrictive  legends off of restricted stock through sales
to supposedly  independent foreign accounts,  Fondo and Oportunidad provided CRG
with a reliable  source of stock to cover large short positions in thinly traded
issues.

 32. While CRG was promoting the securities of its customers as wise investments
to the public,  CRG was selling the securities of these same  companies,  taking
advantage of whatever  increase in price or market  activity  their  promotional
efforts  encouraged.  The statements in these publications were materially false
and  misleading  because  CRG failed  adequately  to  disclose  that it acquired
discounted securities of the companies it was promoting in its publications,  or
that many of the securities sold were not subject to a registration statement or
an exemption,  or that CRG was paid to promote the securities by the issuer,  or
that CRG was promoting  purchase of the securities  through  brokers,  sometimes
using bribes, or that CRG,  directly or through New Concepts,  Fondo Oportunidad
or Pow Wow, was selling these securities while it was promoting them as a buying
opportunity to the public.

 33. Veitia was the mastermind behind CRG's fraudulent  scheme. As president and
chairman of CRG, president, chief executive officer and chairman of the board of
Stratcomm,  and as the sole  director  of Gulf  Atlantic,  Veitia  directed  and
controlled the activities of those  entities,  all of which had their  principal
offices in Winter Park,  Florida.  Veitia  convinced  CRG clients that Fondo and
Oportunidad  were  legitimate,  independent  offshore  purchasers  qualified  to
acquire  U.S.   securities  under   Regulation  S,  a  special   exemption  from
registration  with  the  Commission  for  offshore  sales  by  issuers.   Veitia
negotiated  on behalf of Fondo and  Oportunidad  with client  issuers.  In fact,
Fondo and Oportunidad  were  controlled by CRG or were purchasing  securities on
behalf of CRG and, therefore, securities sold to those entities never truly were
sold offshore and, therefore, were not exempt from the registration requirements
of the Securities Act.

 34.  Veitia  was the  publisher  of  most  CRG and  Gulf  Atlantic  promotional
materials  and, as such,  exerted  influence,  control and direction  over those
firms'  promotional  activities and  disclosures.  Veitia also caused CRG to pay
bribes  to  brokers  and  caused  Stratcomm  to  sell  unregistered,  non-exempt
securities  through  the  BRE  work  force.  Veitia  executed  public  relations
contracts  on behalf of CRG and signed the majority of checks,  account  opening
papers,  legal  documents and  authorizations  to transfer money and securities.
Veitia  also  signed  the  profit-sharing  agreement  with New  Concepts,  which
provided a vehicle for Spratt to short  stocks in which CRG had taken  positions
through its nominees,  Fondo and Oportunidad.  Veitia also opened many brokerage
accounts for CRG and directed at least some of the trading through the accounts.

<PAGE>

 35.  Spratt  actively  participated  in CRG's  overall  fraudulent  scheme.  He
functioned  as CRG's  second-in-command  and  supervised  many of the  company's
day-to-day activities. Spratt executed some of the contracts between CRG and its
clients and  approved  trade  confirmations  collected  by BREs to evidence  the
buying  activity  they  generated.  Spratt  traded  the New  Concepts  and other
accounts in connection with the profit-sharing arrangement with New Concepts and
Spratt created the large short positions at New Concepts which locked in profits
from, and insured the ultimate  distribution  of, the discounted,  unregistered,
non-exempt  securities  through  Fondo  and  Oportunidad.  Spratt  also  was  an
aggressive  promoter  of CRG clients  whose stock was being sold by CRG.  Spratt
wrote a column  in  MoneyWorld  entitled  "Rumor  Mill" and  published  separate
promotional materials, all of which were materially false and misleading because
they failed  adequately to disclose CRG's fraudulent scheme or that issuers paid
for Spratt's promotions. Spratt also directed Rodriguez to bribe brokers. Spratt
received  compensation  from  CRG  in  the  form  of  free  stock,  bonuses  and
commissions for his promotional activities.

 36. Skalko  participated  in CRG's  fraudulent  scheme.  He assisted Veitia and
Spratt in running day-to-day  operations at CRG. Skalko also supervised the BREs
in their promotional activities,  occasionally published promotional articles in
CRG publications, and was responsible for the trading in Pow Wow after May 1996.
Skalko personally bribed a broker to sell securities and also directed Rodriguez
to bribe  brokers.  Skalko  received  compensation  from CRG in the form of free
stock, bonuses and commissions for his promotional activities.

 37. Gomez,  Fondo and  Oportunidad  participated  in the  fraudulent  scheme by
allowing CRG to direct trading and other  transactions  in Fondo and Oportunidad
brokerage and bank  accounts and by acting at the  direction of CRG,  Veitia and
Spratt. They did so for the purpose of evading the registration  requirements of
the Securities Act by deceiving issuers for the purpose of acquiring stock under
the guise of Regulation S in order to sell the unregistered  stock back into the
United  States  at the  direction  of and for the  benefit  of CRG while CRG was
promoting the same securities to the public in its publications.

 38. Section 17(a) of the Securities Act,  Section 10(b) of the Exchange Act and
Rule 10b-5  promulgated  thereunder  all prohibit  use of any device,  scheme or
artifice to defraud in the offer or sale of any security. Section 10(b) and Rule
10b-5 also prohibit  fraud in the purchase of securities.  The scheme  described
above and identified in more detail below violated these statutes.

         II.      Unlawful Touting of Securities

 39. The anti-touting  provision of the Securities Act,  Section 17(b),  forbids
promotion of securities for consideration  without disclosure of the receipt and
amount of such consideration.  Some CRG publications  contained  statements that
CRG,  its  officers,  directors  and  employees  "may  from  time to time have a
position  in  the   investments   referred   to  in  this   advertiser-supported
publication" or similar representations.  Some promotional articles were labeled
"Advertorials."  Other  publications  did  not  even  include  these  inadequate
"disclaimers." The quoted disclaimers, labels and similar others were inadequate
under the anti-touting  law because they failed  adequately to disclose both the
receipt and amount of compensation paid CRG by its issuer-clients.

         III.     Violations of the Registration Requirements of the
                  Securities Act Through Phony Regulation S Sales and
                  Inapplicable Exemptions
<PAGE>

 40. Section 5 of the Securities Act forbids any person, directly or indirectly,
to sell a security unless an appropriate registration statement is in effect, or
to offer to sell or offer to buy a security  unless the applicable  registration
statement has been filed. The act provides certain exemptions from registration.
One of those  exemptions,  Regulation  S [17  C.F.R.  ss.ss.230.901,  et  seq.],
permits the offer and sale of unregistered  securities outside the United States
if  certain  requirements  are met.  Among  those  requirements  are that use of
Regulation  S not  be  part  of a plan  or  scheme  to  avoid  the  registration
provisions of the Securities Act [17 C.F.R. ss. 901 (Preliminary Statement)] and
that the offshore  purchaser be neither a U.S. person nor a person acquiring the
securities  for a the account or benefit of a U.S.  person.  [17 C.F.R.  ss. 903
(c)(3)(iii)(B)(1)].  Regulation  S does not provide an  exemption or safe harbor
for the  distribution  or resale of  securities  back  into the  United  States.
Persons  who  purchase  Regulation  S  stock  with a view to  distributing  such
securities  in the  United  States  are  "underwriters"  and may not  sell  such
securities except pursuant to a filed and effective registration statement.

 41. CRG solicited its public relations  clients to sell  unregistered  stock to
Fondo  or  Oportunidad  at  a  substantial  discount,  relying  on  an  apparent
Regulation  S  exemption  as  presented  by  CRG.  Fondo  and  Oportunidad  were
incorporated in Costa Rica but maintained  stock trading  accounts in Canada and
the United States.  However, these sales did not qualify under Regulation S and,
therefore,  were not exempt from  registration,  because the securities  sold to
Fondo and  Oportunidad  at all times remained under the direction and control of
CRG.  CRG,  sometimes  with New  Concepts,  Zousmer and Lidman,  usually  funded
purchase of these securities by Fondo and Oportunidad or arranged for funding by
other  U.S.  investors.  Further,  CRG  acted as an  underwriter  by  purchasing
securities from issuers through Fondo and Oportunidad for the purpose of selling
such securities into the U.S. market.  Therefore, the subsequent sales back into
the  United  States  by the  Costa  Rican  companies  violated  Section 5 of the
Securities Act.

 42.  After the  Regulation S deception  involving  The Tracker  Corporation  of
America described below, CRG's strategies grew more  sophisticated.  At or about
the time that a CRG public  relations  client was going to pay CRG for  services
with  heavily  discounted  securities  or,  at  CRG's  direction,  sell  heavily
discounted securities to Fondo or Oportunidad, CRG sold the same company's stock
"short" at the market  price in CRG  accounts or in accounts at New Concepts and
at  another  brokerage  firm,  A&S  Limited  Partners  ("A&S"),  over  which CRG
maintained  control and a beneficial  ownership  interest.  New Concepts and CRG
agreed to split  profits  from some of the trading  activity in the New Concepts
and A&S  accounts.  At other  times,  CRG  retained  all the profits  from these
accounts.  Spratt  directed  trading in the accounts  whether or not the profits
were to be split with New Concepts.  By selling the customer's  stock short, CRG
and New Concepts  insured that there would be a buyer (CRG and New Concepts) for
the thinly-traded securities when Fondo or Oportunidad sold the phony Regulation
S stock at a substantial profit in the United States. Selling short also "locked
in" the difference  between the  discounted  price of the Regulation S stock and
the  market  price  when  the  stock  was sold  short,  virtually  insuring  the
defendants a profit.  Promotional efforts by CRG, including use of the BRE sales
force,  helped to cushion  any  negative  impact on market  price from the short
selling.

 43.  CRG  also   unlawfully   purported  to  rely  on  other   exemptions  from
registration,  including Rule 504 under Regulation D [17 C.F.R. 230.504], which,
among other things,  permits the sale of  unregistered  securities for offerings
under $1 million.

 44. As  described in more detail  below,  defendants  Stratcomm,  CRG, Pow Wow,
Veitia,  Spratt, Skalko,  Rodriguez,  Fondo,  Oportunidad,  Gomez, New Concepts,
Zousmer,  CJL,  Lidman,  Parnell  and  Ammonia  Hold  violated  Section 5 of the
Securities  Act by selling  securities  which were not subject either to a valid
registration  statement on file with the  Commission or a valid  exemption  from
registration. <PAGE>

         IV.      Specific Securities Transactions in Which Defendants Violated
         the Antifraud, Touting and Registration Provisions of the Securities
         Laws

 45. Specific instances in which the defendants violated the antifraud,  touting
and  registration  provisions  of  the  securities  laws  are  described  below.
Additional instances of touting and fraud are alleged in Section V, below.

                  A.       The Tracker Corporation of America
 46. The Tracker  Corporation of America is a Delaware  corporation whose common
stock traded on the OTC Bulletin Board.  Tracker  retained CRG in February 1994,
agreeing to pay CRG $450,000, but CRG did not begin promoting the company in its
publications until the following summer.  From September 1994 to March 1996, CRG
directed for Tracker the two sets of private placements described below, raising
a total of more than $3.3 million from investors.  CRG, Veitia,  Spratt, Skalko,
Fondo and Zousmer  together  earned  profits of over $2.2  million  from trading
Tracker stock.

                           1.       The Regulation S Offering

 47. In or about September 1994,  defendants Veitia and CRG suggested to Tracker
that it  raise  funds by  selling  its  stock to  defendant  Fondo  pursuant  to
Regulation S. On September 16, 1994,  Tracker executed a subscription  agreement
to sell Fondo 785,000 shares of stock for $3,155,700, or $4.02 per share -- a 40
percent  discount from the closing price that day on the OTC Bulletin Board. The
subscription agreement and associated promissory notes provided that Fondo would
pay  Tracker's  $450,000  bill owed to CRG under the February  public  relations
contract,  pay Tracker $250,000 in 10 days and pay Tracker  $2,455,700 within 60
days.  Tracker issued Fondo two stock  certificates,  one for 210,000 shares and
another for 575,000 shares. It retained the smaller  certificate pending Fondo's
payment of the $2,455,700 balance.

 48.  Fondo paid nothing for the Tracker  stock.  Instead,  Zousmer,  Lidman and
three of their business  associates each sent Fondo $50,000 to cover the initial
$250,000  payment  to  Tracker.  Veitia  told  Zousmer  and Lidman it was a good
investment.  Simultaneously,  all five investors  opened  brokerage  accounts at
Torrey Pines Securities  ("Torrey  Pines").  Fondo wired Tracker the $250,000 in
two installments.

 49. Leonard Aronoff ("Aronoff"),  corporate counsel to Stratcomm and CRG, acted
as "attorney-in-fact" for Fondo and, later, Oportunidad. Aronoff opened U.S. and
Canadian bank and brokerage accounts for the Costa Rican entities in which funds
were deposited and securities were deposited, bought and sold.

 50. In late October 1994, roughly 40 days after the subscription  agreement was
executed,  Aronoff caused the stock transfer agent to cancel the certificate for
575,000  Tracker  shares in Fondo's name and reissue  nearly all of the stock to
CRG (516,440  shares) and the remainder to the five U.S.  investors who financed
the payment to Tracker (58,560 shares). CRG paid the transfer agent fee.

 51. CRG never paid Fondo for the 516,440  shares it received in October but the
defendants  later executed  documents that purported to show that the securities
were fully paid at the time of transfer.

 52. By early  November  1994, CRG deposited its 516,440 shares into a number of
brokerage accounts and transferred 8,500 shares each to Spratt and Skalko.  Each
sold his shares for more than $50,000. From November 1994 through June 1995, CRG
sold nearly all of its shares for a profit of $1.8 million. None of these shares
was the  subject of a  registration  statement  on file with the  Commission  or
exempt from registration. <PAGE>

 53. Fondo never paid Tracker the $2,455,700 balance owed under the Regulation S
subscription  agreement.  From  December  1994  through  January  1995,  CRG and
Stratcomm  paid  Tracker,  on Fondo's  behalf,  approximately  $700,000 from the
proceeds of CRG's sale of some of the Tracker stock it received from Fondo.

 54.  Although  Fondo  failed  to meet its  commitments  to  Tracker  under  the
September  subscription  agreement,   CRG  demanded  that  Tracker  release  the
certificate for 210,00 shares it held in Fondo's name. In January 1995,  Tracker
gave  Aronoff  the  certificate  in return for Fondo's  promise to wire  Tracker
$600,000 by the end of the month. Days later,  Aronoff caused the transfer agent
to reissue all 210,000 shares to CRG. Finally, in June 1995, Veitia,  Spratt and
Skalko,  on behalf of CRG,  and  Tracker  agreed that CRG would  return  200,000
shares  of stock to  Tracker  as final  payment  by Fondo  under  the  September
subscription agreement. No one from Fondo was party to the agreement.

 55. This series of transactions beginning with a phony Regulation S transfer to
Fondo  resulted in payment of only $1.4  million to Tracker,  instead of over $3
million which was called for by the subscription agreement,  but CRG, Spratt and
Skalko  realized   profits  of   approximately   $1.8  million  by  selling  the
unregistered stock in the United States.

                               2. The S-8 Offering

 56. In the fall of 1995, CRG and Veitia orchestrated an investment  opportunity
for certain CRG employees and associates to buy Tracker stock for one dollar per
share through Fondo.  This stock was then sold while CRG publications  continued
promoting  Tracker stock,  resulting in  approximately  a 245 percent return for
each CRG investor.

 57. In August 1995,  Veitia  recommended  that Tracker  compensate  some of its
employees by issuing them stock pursuant to Form S-8, which permits distribution
of stock to employees, vendors and the like as compensation.  Tracker registered
770,000  shares  and sold Fondo  170,000  of them at one  dollar per share,  the
approximate market price.

 58. On October 2, 1995, Fondo paid Tracker's employees $170,000. On October 13,
CRG replaced these funds with those it collected from employees and  associates,
including  CRG,  Spratt,  Skalko,  Veitia and Zousmer.  CRG also  announced that
$15,000 in  commissions  was  available  for its BREs who  successfully  induced
brokers to buy Tracker stock for their customers.

 59. In mid-October,  Fondo opened a brokerage  account at Torrey Pines and sold
its 170,000 shares of Tracker stock. Fondo collected proceeds of nearly $420,000
and distributed all of it to the CRG investors.

                           3.       CRG Promotion of Tracker Stock to Investors

 60. During the entire period in which CRG was selling Tracker stock for its own
account and that of its Costa Rican  nominees,  CRG continued to promote Tracker
stock in its publications.  CRG featured Tracker in issues of MoneyWorld, Growth
Industry  Report,   Market  Express  and  Confidential  Fax  Alert  --  all  CRG
publications.  In January 1995,  while CRG was selling  Tracker  stock,  company
publications  proclaimed  Tracker as "The Stock to Watch" with "Growth  Outlook:
----- High" and projected  that earnings would soar from a loss of $11.5 million
in 1995 to a $40.9 million profit in 1997. In October and November  1995,  while
Fondo was selling  Tracker  stock on behalf of CRG employees for profits of over
200 percent,  CRG publications  urged investors to buy Tracker,  calling it "The
Stock to Watch" and describing its growth potential as "----- High."

 61. CRG also promoted  Tracker stock directly to brokers  through the BRE sales
force. CRG, through Spratt, Skalko, Veitia and Rodriguez, also paid brokers cash
to induce their clients to buy Tracker stock,  preferably  crossing the purchase
order with stock CRG owned. These payments usually represented 10 percent of the
dollar amount invested by the broker's client. CRG paid at least seven brokers a
total of over $85,000 to promote  Tracker stock to their  customers,  who bought
more than 140,000 shares of Tracker stock. None of these brokers disclosed these
bribes to their clients or prospects.

<PAGE>

 62. The statements in CRG's publications  touting Tracker were materially false
and misleading  because CRG failed adequately to disclose that it was being paid
to promote Tracker stock,  the amount of  compensation,  that it and entities it
controlled were selling Tracker stock while promoting it as a good investment to
readers,  that it was paying CRG employees  commissions to promote Tracker stock
to brokers or that it was bribing brokers to sell the stock to their clients.

 63. By  virtue  of the  conduct  described  above:  (1)  defendants  CRG,  Gulf
Atlantic,  Veitia, Spratt, Skalko,  Rodriguez,  Gomez and Fondo violated Section
17(a) of the  Securities  Act,  Section 10(b) of the Exchange Act and Rule 10b-5
thereunder; (2) defendants CRG, Veitia, Spratt and Skalko violated Section 17(b)
of the Securities Act; (3) defendants CRG, Veitia, Spratt, Skalko, Gomez, Fondo,
Lidman,  Zousmer  and CJL  violated  Section 5 of the  Securities  Act,  and (4)
Stratcomm and Veitia are liable for violations by CRG as controlling  persons of
CRG pursuant to Section 20(a) of the Exchange Act.

                  B.       Delta Petroleum

 64. Delta Petroleum  Corporation ("Delta") is a Colorado corporation engaged in
the oil and gas business.  Its stock is registered with the Commission  pursuant
to Section  12(g) of the Exchange Act [15 U.S.C.  ss.  78l(g)] and trades on the
NASDAQ Small Cap Market.
 65. In August 1995,  Delta paid CRG 54,546  shares of  restricted  Delta common
stock valued at $5.50 per share,  a 12 percent  discount  from the market price,
plus 300,000 options. The payment was in lieu of cash for promotional  services.
That same month,  CRG began  shorting Delta common stock in its account at Smith
Barney, and Spratt began shorting Delta stock in the New Concepts account. These
short  sales  at New  Concepts  were  the  first  transactions  pursuant  to the
profit-sharing arrangement between CRG and New Concepts.

 66.  Beginning in or about  October 1995 through  December  1996,  CRG and Gulf
Atlantic promoted Delta stock in their  publications.  During this time, CRG, in
its own name or through its nominees, Fondo and Oportunidad,  acquired more than
700,000 shares of stock from Delta through three private placements, in addition
to the stock received as promotion  compensation  in August 1995. CRG eventually
transferred  most  of  this  stock  to  Spratt  to  cover  the  short  positions
established in the account shared with New Concepts. CRG, Fondo, Oportunidad and
New Concepts made a profit of more than $2.5 million trading Delta securities.

                           1.       August 1995 through February 1996
 67. In early August 1995, CRG offered to invest in Delta.  On August 15, Veitia
executed an agreement  for CRG to buy 231,000  shares of common stock from Delta
in a "Rule 144" private placement.  Rule 144, at the time, permitted persons who
held restricted shares to resell them publicly without  registration and without
being deemed underwriters if certain conditions were satisfied including,  inter
alia,  that the  securities had been held, in most  instances,  for at least two
years.  CRG bought the stock for $3.24 per share, a 45 percent discount from the
market price. On August 17, 1995, CRG paid Delta  $750,000.  Half of these funds
came from New Concepts,  which had learned of the  investment  opportunity  from
Lidman.  In  mid-September  1995, Delta owed CRG 25,000  additional  shares as a
penalty  for  failing  to make  the  initial  Rule  144  stock  unrestricted  by
registering it by a certain date.

 68. On September 21, 1995, Delta issued CRG a restricted stock  certificate for
256,000  shares,  which CRG deposited in its account at Torrey  Pines.  CRG then
began to purportedly  sell the Rule 144 stock to Fondo pursuant to Regulation S,
in an effort to avoid the two-year holding period required by Rule 144.

<PAGE>

 69. In  December  1995,  CRG and Veitia  informed  Delta that it wanted to sell
117,000 Rule 144 shares to Fondo.  CRG  informed  Delta that the shares would be
sold pursuant to Regulation S for $702,000.  CRG and Aronoff supplied Delta with
a $702,000  canceled  check from Fondo to CRG as  evidence  the sale was lawful.
However, on the day Fondo wrote the check to CRG, CRG wrote a check for the same
amount to Fondo.

 70.  Between  December 5 and 11, 1995,  Spratt  increased the short position in
Delta stock in the New Concepts account from 51,500 to 115,300 shares.

 71. On December 22, 1995, CRG used Fondo to remove the restrictive  legend from
117,000  shares of the Rule 144 stock.  Delta  canceled  CRG's  certificate  for
256,000 shares and issued  certificates for 117,000  restricted  shares to Fondo
and the remaining 139,000 restricted shares to CRG. After approximately 40 days,
Aronoff   caused  the  transfer   agent  to  issue  Fondo  117,000   purportedly
unrestricted  shares of Delta common stock. On January 31, Fondo sold 115,300 of
those  shares  through  Torrey  Pines to  Spratt  at New  Concepts,  covering  a
substantial amount of the short position in the New Concepts account.

 72. Fondo realized  profits of nearly  $470,000 on the sale of 115,300  shares,
 which it split with New  Concepts.  73. On  January  25,  1996,  Fondo paid New
 Concepts $393,750, representing repayment of New Concepts' $375,000 loan
to CRG plus interest.
 74. CRG acquired another 20,000  restricted  shares from Delta in late December
1995 as a penalty for Delta's  failing to  register  the initial  Rule 144 stock
acquired in September.  Thus, by late December, CRG owned 159,000 shares of Rule
144 common stock.

 75. On December 28,  1995,  Veitia and Gomez agreed that CRG would "sell" Fondo
all of CRG's  remaining  Rule 144 stock for $981,276  pursuant to Regulation S..
CRG presented  Delta with another  canceled check from Fondo to CRG to establish
the sale was lawful.  As before,  on the day Aronoff  wrote a check to CRG,  CRG
wrote Fondo a check for the same amount.

 76. On  February  5, 1996,  CRG told  Delta to cancel  CRG's  certificates  for
159,000  shares of  restricted  stock and issue a new  certificate  to Fondo for
159,000  shares  of  unrestricted   stock.  Delta  issued  the  certificate  for
unrestricted shares to CRG, not to Fondo,  although Fondo was the supposed owner
of the stock.  Meanwhile,  Spratt increased CRG's short position in Delta at New
Concepts,  reaching  160,700  shares short by February 22, 1996. On February 26,
Spratt  received the 159,000  shares CRG obtained from Delta and covered most of
the short position. Fondo sold New Concepts 1,700 additional shares to wind down
the short position.  New Concepts and CRG split gross profits of over $1 million
from the December-February transactions in Delta stock.

                           2.       March 1996 through May 1996
 77. In early  1996,  CRG again  invited  Delta to issue  Regulation  S stock to
obtain  capital.  In late  February,  Delta sold  Oportunidad  100,000 shares of
restricted  stock  pursuant to  Regulation S for $5.50 per share -- a 15 percent
discount from the closing market price.  Delta later added an additional  15,000
shares at no cost after it learned that Oportunidad was unhappy with the size of
the discount on the first 100,000 shares.  This investment  through  Oportunidad
was not made pursuant to CRG's profit-sharing arrangement with New Concepts.

 78. In early  March,  CRG and Spratt again began  selling  Delta stock short at
both New Concepts and in an account at another broker-dealer.

 79. On April 29, Delta canceled the restricted  certificates  in  Oportunidad's
name and issued one certificate for 115,000 shares without a restrictive legend.
Oportunidad  transferred  the entire  position to CRG,  which used the shares to
close its  short  positions  both at New  Concepts  and at the  other  brokerage
account.

<PAGE>

 80. Oportunidad collected over $703,000, including a profit of nearly $154,000,
from the  Regulation S  transactions  in Delta stock in the winter and spring of
1996.  These  proceeds were wired to an account at the Bank of Montreal and used
to buy $800,000 of Delta Series C convertible securities as described below.

                           3.       May 1996 through December 1996
 81. In May 1996,  Delta,  at the suggestion of CRG, sold Fondo and  Oportunidad
$1.6 million of Series C convertible stock. Oportunidad and Fondo each bought 80
shares for $800,000,  purportedly  pursuant to Regulation S. The securities were
convertible into common stock at the lesser of $4.50 per share or 65 per cent of
the five-day average closing price for the five days prior to conversion.  Delta
common  stock was  trading at around $6 per share at the time.  The  convertible
stock  purchases  by Fondo  and  Oportunidad  were not  made  pursuant  to CRG's
profit-sharing arrangement with New Concepts.

 82. In July 1996, Oportunidad converted the Series C shares into 183,738 shares
of freely  trading Delta common stock and sold the entire  position for a profit
of nearly  $400,000.  Oportunidad  sold the  stock,  in part,  to Pow Wow and to
accounts at New Concepts and A & S to cover short positions Spratt had built.

 83. In August 1996,  Fondo  converted its entire Series C position into 212,863
shares of unrestricted Delta common stock and sold that position for a profit of
nearly  $450,000.  Spratt  bought  nearly  half of the  shares  to cover a short
position in Delta in an A & S account.

                           4.       CRG Promotion of Delta Stock

 84.  Throughout the period  October 1995 through at least December 1996,  while
CRG and its Costa Rican  nominees were selling their own Delta  securities,  CRG
publications  promoted  Delta  stock to the  public  as a wise  investment.  CRG
featured  Delta in various  issues of  MoneyWorld,  Growth  Industry  Report and
Confidential  Fax  Alert.  CRG hailed  Delta as "The  Stock to  Watch,"  "Mother
Nature's Gift to Investors" and named the company "In Contention for Oil Play of
the Decade." One of the publications asked if "1,000 Percent Gains Possible?" In
a "Rumor Mill" article for MoneyWorld,  Spratt predicted that Delta, then priced
at $6.86 per share, would "leap to over $15 a share."

 85. The statements in CRG's  publications  touting Delta were materially  false
and misleading  because CRG failed adequately to disclose that it was being paid
to promote  Delta  stock,  the amount of  compensation,  that it and entities it
controlled  were selling Delta stock while  promoting it as a good investment to
readers and that it was paying CRG employees  commissions to promote Delta stock
to brokers.

 86. By  virtue  of the  conduct  described  above:  (1)  defendants  CRG,  Gulf
Atlantic,  Veitia, Spratt, Skalko, Gomez, Fondo and Oportunidad violated Section
17(a) of the  Securities  Act,  Section 10(b) of the Exchange Act and Rule 10b-5
thereunder;  (2)  defendants  CRG,  Gulf  Atlantic,  Veitia,  Spratt  and Skalko
violated  Section  17(b) of the  Securities  Act; (3)  defendants  CRG,  Veitia,
Spratt,  Skalko,  Pow Wow,  Gomez,  Fondo,  Oportunidad,  Lidman,  Zousmer,  New
Concepts and CJL violated Section 5 of the Securities Act, and (4) Stratcomm and
Veitia are liable for violations by CRG as  controlling  persons of CRG pursuant
to Section 20(a) of the Exchange Act.

                  C.       Ammonia Hold

 87. CRG promoted  Ammonia  Hold from  February  1996 through at least  December
1996.  During that time,  CRG acquired and then sold over one million  shares of
Ammonia Hold  securities  in a series of  transactions  utilizing  its nominees,
Fondo and  Oportunidad,  unlawfully  to avoid  registration  requirements.  CRG,
Spratt,  Skalko,  Fondo,  and  Oportunidad  realized  profits  of more than $4.7
million trading Ammonia Hold securities.

                           1.       Stock Loans Repaid with Regulation S Stock
                                    a.  Olympus Investment Loan
 88. In January 1996,  Ammonia Hold, its then-president and Parnell met with CRG
and its  principals  to discuss  hiring  CRG. At about that time,  Spratt  began
shorting  Ammonia Hold at New  Concepts.  CRG's trading in Ammonia Hold stock at
New  Concepts  was not  pursuant  to the  profit-sharing  arrangement  with  New
Concepts.  On February 5, 1996, Ammonia Hold retained CRG to conduct promotional
activities  and agreed to pay CRG with  117,000  shares of  unrestricted  common
stock and 500,000  options for common  stock,  exercisable  in series of 100,000
shares at various prices.

<PAGE>

 89. Ammonia Hold,  which had no  unrestricted  stock,  had to borrow stock from
Olympus  Investment  Corp.  ("Olympus"),  an existing  shareholder,  to pay CRG.
Ammonia Hold and Parnell caused Olympus to deliver 117,000 shares of purportedly
unrestricted stock to CRG. CRG sold the borrowed stock for over $800,000.

 90.  Parnell then caused  Ammonia  Hold to issue  117,000  shares,  pursuant to
Regulation S, to Banque SCS Alliance,  S.A., a Swiss bank.  On  information  and
belief, these shares were used to repay Olympus for the borrowed shares.

                                    b.      Grace Holdings Loan

 91. Shortly after  retaining CRG,  Ammonia Hold asked CRG to exercise its first
two  series  of  options  for  $660,000.   Ammonia  Hold,  which  still  had  no
unrestricted  stock,  again borrowed stock to sell to CRG, planning to repay the
borrower  with newly  issued  Regulation  S stock  held by Fondo.  This time the
lender was Grace Holdings, Ltd., one of Banque SCS's holding companies.

 92. In early March 1996,  Ammonia  Hold issued Fondo  certificates  for 550,000
shares of restricted  Ammonia Hold stock pursuant to Regulation S. Fondo did not
pay for this  stock and did not own it;  Fondo  merely  held the  shares for the
benefit of Ammonia Hold. In order to lift the  restriction and acquire the stock
more  quickly,  Ammonia Hold and Parnell  effected a transfer of 100,000  shares
from Grace Holdings to Fondo,  representing  that it was Regulation S stock that
was now unrestricted.  A week later, Fondo sold 78,190 shares to Spratt to cover
CRG's short  position  in the New  Concepts  account.  Fondo paid  Ammonia  Hold
$300,000.  Shortly  thereafter,  Ammonia Hold replaced Grace  Holdings'  100,000
shares of stock with 100,000 of the 550,000 of stock Fondo was holding.

 93. In early  April,  Ammonia Hold caused  Grace  Holdings to transfer  another
100,000  shares of alleged  Regulation  S stock to Fondo,  for which  Fondo paid
Ammonia Hold $360,000. Later in April, Fondo sold 84,776 shares of Ammonia Hold,
through  Public  Securities  ("Public"),  to Spratt at New Concepts to cover the
short position he had rebuilt for CRG in the New Concepts account. In late June,
Ammonia  Hold  replaced  Grace  Holdings'  second  block of 100,000  shares with
another 100,000 shares held by Fondo.

 94.  Fondo  realized  profits of nearly  $600,000  through  its sale of the two
100,000-share  blocks of stock it purchased  from Ammonia  Hold.  CRG realized a
profit of over  $92,000  selling  the company  stock  short in the New  Concepts
account.  Spratt and Skalko also received  stock as part of a "finder's fee" and
realized gross profits of approximately $37,000 apiece.

                           2.       The Ammonia Hold Offering Purporting to
                                    Use Regulation D and Regulation S Exemptions

 95.  Between  July and  August  1996,  Ammonia  Hold made a  $1,545,000  public
offering  of  securities  to CRG in the names of Fondo and  Oportunidad  without
proper registration or a valid exemption but purporting to take advantage of two
exemptions to registration -- Regulation D and Regulation S.

 96.  Regulation D [17 C.F.R.  ss.230.501 et seq.] exempts from the registration
requirements of Section 5 of the Securities Act, among other things, sales by an
issuer of  securities  not  exceeding  $1 million.  [17 C.F.R.  ss.230.504].  In
general, all offers and sales of securities of the same class within a six month
period are  counted in  determining  if the $1  million  ceiling  for a Rule 504
Regulation D issue is exceeded. [17 C.F.R. ss. 230.502].
 97. In early July,  Gomez executed a subscription  agreement on behalf of Fondo
to purchase 488,666 shares of Ammonia Hold common stock for $500,000 pursuant to
Rule 504 of  Regulation  D. This price,  which  Parnell and Aronoff  negotiated,
represented an 85 percent discount to the market price. Fondo transferred some

<PAGE>

of the  stock to  Spratt,  who  covered a 25,000  share  short  position.  Fondo
liquidated  the rest of the  position by early August for over $3.2 million -- a
profit of at least $2.8 million.

 98. Later in July,  Ammonia Hold sold another $500,000 of common stock to Fondo
and  $545,000 to  Oportunidad.  Both  transactions  purported  to be pursuant to
Regulation S.

 99.  Because the three  sales to the Costa Rican  nominees of CRG were within a
few weeks of each  other,  because  all were part of a single plan of finance or
for the same  general  purpose,  and  because  all were for  common  stock,  the
offerings are properly  integrated under Regulation D, Rule 502(a). As a result,
in addition to not  qualifying for a Regulation S exemption due to CRG's control
of the stock sold to Fondo and Oportunidad, the $1.5 million offering by Ammonia
Hold also was without  proper  registration  because it exceeded  the $1 million
limit under the Rule 504 exemption.

                           3.       August Regulation S Sales

 100.  During the summer of 1996,  Ammonia  Hold's  president  purported to sell
Oportunidad  100,000  shares  of  his  personal  holdings  in  Ammonia  Hold  as
Regulation  S stock at $3.00 per  share.  At the time,  Ammonia  Hold  stock was
selling for about $7 per share.

 101. From August 5 to August 15, 1996,  at CRG's  direction,  Oportunidad  sold
100,000 shares of Ammonia Hold,  collecting proceeds of over $670,000. On August
15, the transfer agent canceled the Regulation S stock  certificate and issued a
certificate to Oportunidad for 100,000 purportedly unrestricted shares.

 102. On September 30, 1996, Fondo transferred $500,000 to Oportunidad's account
at the Bank of Montreal. The next day, Oportunidad paid Ammonia Hold's president
$300,000  for  the  100,000  shares  sold to  Oportunidad  the  previous  month.
Oportunidad realized $370,000 profit on the entire transaction.

                           4.       CRG Promotion of Ammonia Hold

 103. CRG  publications  promoted  Ammonia Hold stock to investors from February
1996 through at least December 1996, while CRG and its nominees were selling the
same issuer's  securities.  On February 14, 1996 -- just days after Ammonia Hold
hired CRG -- Spratt featured the company in his Rumor Mill publication,  calling
the stock his "PICK OF THE  YEAR!" and  "[his]  strongest  pick yet." He advised
subscribers  to place a buy order at a $10 limit  when the stock was  selling at
$6.38 and predicted the stock would  "skyrocket to between $14 - $16." (Emphasis
in original). These recommendations were repeated in the April and May issues of
MoneyWorld. In March and June 1996, CRG featured Parnell in MoneyWorld as one of
its "Brokers of the Month" and, also in June,  MoneyWorld  named Ammonia Hold as
"the Stock to Watch" with 1997-98 revenue projected to be "up 900%."

 104.  Even  when  Ammonia  Hold's  stock  price  declined,   CRG   publications
optimistically  promoted the investment.  Spratt,  in his MoneyWorld  columns in
July and August 1996, continued  characterizing Ammonia Hold as his "PICK OF THE
YEAR" without  disclosing  that CRG and entities  which it  controlled  had sold
hundreds of thousands of shares of Ammonia Hold stock and that these sales could
have been a factor in the decline of the company's share price.

 105. The statements in CRG's publications  touting Ammonia Hold were materially
false and misleading because CRG failed adequately to disclose that it was being
paid to promote  Ammonia  Hold stock,  the amount of  compensation,  that it and
entities it controlled  were selling  Ammonia Hold stock while promoting it as a
good  investment to readers and that it was paying CRG employees  commissions to
promote Ammonia Hold stock to brokers.

<PAGE>

 106.  By virtue of the  conduct  described  above:  (1)  defendants  CRG,  Gulf
Atlantic,  Veitia, Spratt, Skalko, Gomez, Fondo and Oportunidad violated Section
17(a) of the  Securities  Act,  Section 10(b) of the Exchange Act and Rule 10b-5
thereunder;  (2)  defendants  CRG,  Gulf  Atlantic,  Veitia,  Spratt  and Skalko
violated  Section  17(b) of the  Securities  Act; (3)  defendants  CRG,  Veitia,
Spratt,  Skalko,  Gomez, Fondo,  Oportunidad,  Ammonia Hold and Parnell violated
Section 5 of the  Securities  Act, and (4)  Stratcomm  and Veitia are liable for
violations by CRG as controlling persons of CRG pursuant to Section 20(a) of the
Exchange Act.

                  D.       Information Management Technologies Corporation
 107. Information Management  Technologies  Corporation ("IMTECH") is a Delaware
corporation with its principal offices located in New York City. IMTECH provides
information  and facilities  management  services to financial and other service
industries.  IMTECH's common stock is registered with the Commission pursuant to
Section  12(g) of he Exchange  Act and its stock  trades on the NASDAQ Small Cap
Market.

 108.  On  September  21,  1995,  IMTECH  retained  CRG for  171,000  shares  of
unrestricted stock, which IMTECH had to borrow from existing  shareholders.  CRG
ultimately  received nearly 108,000 of purportedly  unrestricted shares of stock
pursuant  to the  retention  agreement,  most of which CRG used to cover a short
position  created  in its own  accounts  and the  rest of  which  it sold on the
market.  CRG promoted IMTECH from December 1995 through June 1996, while CRG and
New Concepts realized nearly $900,000 on the sale of IMTECH securities.

 109. In early fall of 1995,  CRG  introduced  IMTECH to Fondo as an entity that
might be willing to invest in the  company.  On  September  26,  five days after
retaining  CRG  for  promotions,   IMTECH  agreed  to  sell  Fondo  a  debenture
convertible  into common stock at $.875 per share.  The debenture cost $250,000.
The sales  agreement  provided that when Fondo elected to convert the debenture,
IMTECH had the option of either  filing a  registration  statement  or providing
Fondo the stock pursuant to Regulation S.

 110. Spratt,  meanwhile, had begun shorting IMTECH common stock at New Concepts
pursuant to the profit sharing  arrangement.  By September 12 Spratt had shorted
10,345 shares, a position he maintained until mid-December.

 111. CRG and New Concepts,  not Fondo, paid for the IMTECH debenture and agreed
to split profits  evenly.  On October 5, 1995,  New Concepts  wired  $125,000 to
Fondo.  On October 10, CRG wired  Fondo  $125,000.  On October  31,  Fondo wired
IMTECH $250,000 for the debenture.

 112. On  December  6, 1995,  Aronoff  informed  IMTECH  that Fondo  intended to
convert the debenture into 285,750 shares of common stock pursuant to Regulation
S. The $.875 per share price was a 63 percent  discount  to the market  price of
$2.375.  In late  December,  the transfer  agent issued a certificate in Fondo's
name "c/o Corporate Relations Group."

 113. In  mid-December,  Spratt  added to the short  position  at New  Concepts,
reaching 285,750 shares short by January 17, 1996.

 114.  By  mid-February,  IMTECH and  Aronoff  had the  transfer  agent lift the
Regulation S  restrictive  legend.  On February 20, 1996,  Fondo sold nearly all
285,750  shares  through  Torrey Pines  Securities  to Spratt at New Concepts to
cover the short position.

 115. New Concepts calculated net trading profits from the IMTECH "Regulation S"
transaction to be approximately $430,000, which New Concepts split with CRG.

 116. CRG also introduced IMTECH to its other Costa Rican nominee,  Oportunidad.
On December 29, 1995,  Aronoff  executed an offshore  subscription  agreement on
behalf of  Oportunidad  to purchase  200,000  shares of IMTECH stock pursuant to
Regulation S for $250,000, roughly a 60 percent discount to the market price.

 117.  CRG and New  Concepts  purchased  the stock in  Oportunidad's  name.  New
Concepts financed $100,000 and CRG and two individuals  financed $150,000 of the
purchase price.

 118. On February 26, Aronoff and IMTECH caused the transfer agent to cancel the
restricted certificate in Oportunidad's name and issue a certificate for 200,000
purportedly unrestricted shares.

<PAGE>

 119.  By March 4, Spratt had  brought  the short  position in the New  Concepts
account to exactly 200,000  shares.  He maintained that position until April 11,
when  Oportunidad  sold its  entire  block of 200,000  shares to Spratt  through
Torrey Pines, completely covering the short position.

 120.  New  Concepts  calculated  the  profit on the  Oportunidad  Regulation  S
transaction to be over $446,000. CRG and New Concepts split those profits.
 121. CRG  publications  promoted  IMTECH  securities to investors from December
1995 through June 1996. The February 1996 edition of MoneyWorld  proclaimed that
IMTECH was "The Stock to Watch" and told  investors that the company was "poised
to join the ranks" of ADP,  Microsoft  and others in the  corporate  outsourcing
business.

 122. The statements in CRG's publications  touting IMTECH were materially false
and misleading  because CRG failed adequately to disclose that it was being paid
to promote  IMTECH stock,  the amount of  compensation,  that it and entities it
controlled  were selling IMTECH stock while promoting it as a good investment to
readers and that it was paying CRG employees commissions to promote IMTECH stock
to brokers.

 123.  By virtue of the  conduct  described  above:  (1)  defendants  CRG,  Gulf
Atlantic,  Veitia, Spratt, Skalko, Gomez, Fondo and Oportunidad violated Section
17(a) of the  Securities  Act,  Section 10(b) of the Exchange Act and Rule 10b-5
thereunder;  (2)  defendants  CRG,  Gulf  Atlantic,  Veitia,  Spratt  and Skalko
violated  Section  17(b) of the  Securities  Act; (3)  defendants  CRG,  Veitia,
Spratt, Skalko, Gomez, Fondo, Oportunidad, Lidman, Zousmer, New Concepts and CJL
violated  Section 5 of the  Securities  Act;  and (4)  Stratcomm  and Veitia are
liable for violations by CRG as  controlling  persons of CRG pursuant to Section
20(a) of the Exchange Act.

                  E.       Foreland Corporation

 124.  Foreland  Corporation  ("Foreland")  is a  Nevada  corporation  with  its
principal  offices in Colorado.  Foreland explores for and produces oil and gas.
Its stock is  registered  with the  Commission  pursuant to Section 12(g) of the
Exchange Act, and trades on the NASDAQ Small Cap Market.

 125. In April 1996,  Foreland retained CRG to perform  promotional  activities,
which it did from  approximately  June 1996 through at least  December 1996. CRG
agreed to be paid from proceeds of a forthcoming $1.7 million financing Foreland
planned.  During the period in which CRG was promoting Foreland,  CRG, Fondo and
Spratt realized a profit of over $1.5 million trading Foreland securities.

 126.  From April 30 to May 2, 1996,  CRG and five  business  associates  bought
Foreland's  entire  $1.7  million  offering  of  1996-2  Series  6%  Convertible
Preferred  Stock,  at $1,000 per share.  Investors could convert their preferred
stock to common stock at 75 percent of the closing price on the day the offering
closed,  or 65 percent  of the  five-day  moving  average as of the day prior to
conversion.  Terms of the  offering  required  Foreland  to file a  registration
statement  for the  underlying  stock  within 15  business  days.  However,  the
offering  also  provided  that should the  underlying  stock not be available as
unrestricted stock pursuant to a registration statement within 45 days, Foreland
would offer the preferred convertible shares to any non-U.S.  purchaser pursuant
to Regulation S.

 127. The Foreland  investors  organized by CRG were New Concepts,  which bought
850 shares,  pursuant to a  recommendation  by Lidman,  Fondo,  which bought 650
shares  with  Regulation  S resale  restrictions,  and four U.S.  residents  who
learned of the investment opportunity from either Spratt or Veitia, each of whom
bought 50 shares. The CRG/New Concepts profit sharing agreement was not invoked.

 128. In late June 1996, before Foreland's  registration  statement was declared
effective,  Fondo  converted  325 of  its  650  preferred  shares  into  151,735
unrestricted shares and a certificate was issued on or about July 12. Fondo sold
these shares over the next several days,  including  100,000 shares to Spratt at
New Concepts to cover an existing  short  position in Foreland  common stock and
16,000 shares to cover a short position by Pow Wow. <PAGE>

 129. On July 23, the  Commission  declared  Foreland's  registration  statement
effective.  Thereafter,  Fondo converted its remaining 325 shares of convertible
preferred  stock into another  151,735  shares of common stock.  It sold 147,735
shares  through Public to New Concepts,  which Spratt used to partially  cover a
short position.

 130. As a result of the  Regulation S sales and the  subsequent  conversion  of
preferred  to  common  stock,  Fondo  realized  a net  profit  of  approximately
$585,000.  CRG also realized  additional  profits on Spratt's  short position in
Foreland stock.

 131. CRG publications  promoted Foreland  securities from June through December
1996.  MoneyWorld's  July issue termed Foreland "a strong buy . . . as part of a
long-term,   aggressive  growth  portfolio."  (Emphasis  in  original).   Spratt
recommended  buying Foreland in his MoneyWorld column because "rumor has it that
the well they just hit will produce at a rate of over 1,000  barrels a day! This
now could push FORL [Foreland's stock symbol] to a value of $15 to $20 a share."

 132. The  statements in CRG's  publications  touting  Foreland were  materially
false and misleading because CRG failed adequately to disclose that it was being
paid to promote Foreland stock, the amount of compensation, that it and entities
it  controlled  were  selling  Foreland  stock  while  promoting  it  as a  good
investment  to  readers  and that it was  paying CRG  employees  commissions  to
promote Foreland stock to brokers.

 133. By virtue of the conduct  described  above:  (1) defendants  CRG,  Veitia,
Spratt,  Skalko,  Gomez and Fondo violated  Section 17(a) of the Securities Act,
Section 10(b) of the Exchange Act and Rule 10b-5 thereunder; (2) defendants CRG,
Veitia,  Spratt and Skalko  violated  Section 17(b) of the  Securities  Act; (3)
defendants CRG, Veitia,  Spratt,  Skalko,  Gomez, Fondo,  Lidman,  Zousmer,  New
Concepts and CJL violated  Section 5 of the  Securities  Act;, and (4) Stratcomm
and CRG are liable for  violations  by CRG as  controlling  person  pursuant  to
Section 20(a) of the Exchange Act.

         V.       Specific Securities Transactions In Which Defendants Violated
                  the
                  Antifraud and Touting Provisions of the Securities Laws
 134. CRG,  Gulf  Atlantic,  Veitia,  Spratt and Skalko  defrauded  investors in
stocks  of small  issuers  by  touting  those  stocks  in CRG and Gulf  Atlantic
publications  on a monthly basis in 1995 and 1996 while selling the stock on the
market.   The  statements  in  these  publications  were  materially  false  and
misleading  because the  defendants  failed to disclose  that they were  selling
stock they were recommending.  On information and belief,  defendants  continued
this fraudulent  scheme beyond 1996 with other securities issues to a date to be
determined.  Additional examples of fraudulent conduct based on this pattern are
described below.

                  A.       Atlas Pacific Ltd.
 135.  In July 1995,  Veitia and Spratt  executed on behalf of CRG a contract to
promote Atlas Pacific, Ltd. ("Atlas Pacific"),  an Australian  corporation whose
securities  were traded on the  Australian  Stock Exchange but who began trading
American  Depositary Receipts ("ADRs") in the United States OTC market beginning
that same month.  Upon information and belief,  CRG exercised two  250,000-share
blocks at a cost of more than $92,000.  CRG  established a  250,000-share  short
position  in its own account in early  August,  which it then  covered  with the
first block of options.  CRG sold more Atlas securities short throughout October
and September  1995,  which  position it  substantially  covered with the second
block of options. CRG sold a total of 500,000 shares of Atlas Pacific securities
from August through December earning net profits of nearly $290,000.

 136. Spratt  received  commissions  from CRG related to Atlas Pacific  totaling
$3,765. Skalko received commissions totaling $4,360. Veitia received commissions
from CRG and Stratcomm related to Atlas Pacific totaling $47,090.

<PAGE>

 137. CRG promoted  Atlas Pacific to the public through the summer of 1995 while
CRG was selling the company's stock. CRG's Core Broker Report informed investors
that "one of the most  thrilling  aspects of the world of investing is finding a
truly hot prospect -- a company that is so vital and exciting  that you know its
just can't miss. Such a company is Atlas Pacific  Limited,  which we've profiled
inside this issue." The August 1995 edition of MoneyWorld featured Atlas Pacific
on its cover with the  headline  "In Search of the  Ultimate  Hard Asset,  Atlas
Pacific  Limited:  The Stock to Watch." The article  inside,  labeled a "special
advertorial  feature," advised readers:  "If you can imagine the world with just
one publicly traded gold mine or only one publicly traded diamond producer, then
you  can  envision  the  awesome  potential  Atlas  Pacific  Limited  holds  for
investors..."

 138. The statements in CRG's publications touting Atlas Pacific were materially
false and misleading because CRG failed adequately to disclose that it was being
paid to promote Atlas Pacific stock,  the amount of  compensation,  that CRG was
selling Atlas Pacific stock while  promoting it as a good  investment to readers
and that it was paying CRG employees  commissions to promote Atlas Pacific stock
to brokers.

 139. By virtue of the conduct described above,  defendants CRG, Veitia,  Spratt
and Skalko  violated  Sections  17(a) and 17(b) of the Securities  Act,  Section
10(b) of the Exchange Act and Rule 10b-5  thereunder,  and defendants  Stratcomm
and  Veitia  are  liable for  violations  by CRG as  controlling  persons of CRG
pursuant to Section 20(a) of the Exchange Act.

                  B.       ECO2
 140. In April 1995,  Veitia and Rodriguez  executed a contract on behalf of CRG
to promote ECO2 Inc. ("ECO2"), a Delaware corporation with offices in Hawthorne,
Florida whose securities were registered the with Commission pursuant to Section
12(g) of the Exchange Act and were traded on the OTC Bulletin Board. ECO2 agreed
to  compensate  CRG with  300,000  shares of stock,  valued at $1 a share,  plus
options to acquire  400,000  additional  shares.  CRG transferred at least 7,500
shares of ECO2 stock to Rodriguez as a finder's fee.

 141. CRG received its initial  50,000 shares in late May, which it sold in June
for $30,067.  CRG then began  shorting  the stock,  partially  covering  when it
received steeply discounted stock from ECO2. CRG sold over 360,000 shares on the
open market in July for more than $1.3 million.  In August,  while  aggressively
promoting  ECO2 in its  publications,  CRG sold nearly 280,000 shares for nearly
$1.3 million.  Upon information and belief,  CRG paid only $750,000 for its ECO2
stock.  Spratt also sold ECO2 in his own account in August and  September  1995,
realizing a $2,700 profit.

 142. CRG began promotion of ECO2 in its August 1995 issue. "Discarded tires may
be one of the most ominous  environmental hazards of our time, but they are also
a tremendous  store of energy.  Big, big money is to be made by the company that
taps this  resource and offers a solution to the tire  overpopulation  problem,"
MoneyWorld  informed  readers in its August issue.  "Enter ECO2,  purveyors of a
cost-effective,  ecologically  safe  alternative  to  landfills." In the October
issue,  MoneyWorld christened ECO2 "The Stock to Watch",  informing readers that
sales were  projected to "race from  $164,000 to  $12,000,000  in two years -- a
7,200 percent increase" and advising in the same "Special  Advertorial  Feature"
on the company  that "It pays to be the first to  recognize  a new  marketplace,
just ask Ted Turner or Bill Gates." Similar  promotions by CRG continued through
at least November 1995.

 143. The statements in CRG's  publications  touting ECO2 were materially  false
and misleading  because CRG failed adequately to disclose that it was being paid
to promote  ECO2  stock,  the amount of  compensation,  that it and Spratt  were
selling ECO2 stock while  promoting it as a good  investment to readers and that
it was paying CRG employees commissions to promote ECO2 stock to brokers.

<PAGE>

 144. By virtue of the conduct described above,  defendants CRG, Veitia,  Spratt
and Skalko violated  Section 17(a) of the Securities  Act,  Section 10(b) of the
Exchange  Act and Rule 10b-5  thereunder;  defendants  CRG,  Veitia,  Spratt and
Skalko violated  Section 17(b) of the Securities  Act, and defendants  Stratcomm
and  Veitia  are  liable for  violations  by CRG as  controlling  persons of CRG
pursuant to Section 20(a) of the Exchange Act.

                  C.       Global Intellicom

 145. In August 1996,  CRG,  through  Veitia and Spratt,  contracted  to promote
Global Intellicom, Inc., a Nevada corporation with headquarters in New York City
whose  securities were registered with the Commission  pursuant to Section 12(g)
of the  Exchange  Act and were  traded on the NASDAQ  Small Cap  Market.  Global
Intellicom  paid CRG $550,000 in cash and granted CRG options for 500,000 shares
of common stock. On September 3, 1996, CRG paid Spratt  $37,442.91 as a "finders
fee" for the Global Intellicom contract.

 146. CRG began  shorting  Global  Intellicom in the A&S account in August 1996,
reaching  approximately  100,000  shares  short in late  September,  covering at
market prices later in the month for a $50,000 profit.

 147.  Upon  information  and  belief,  CRG,  through  its  nominees  Fondo  and
Oportunidad, purchased $825,000 worth of convertible preferred stock from Global
Intellicom in August 1996. In October,  Oportunidad  and Fondo, at the direction
of CRG, began shorting  Global  Intellicom,  when Global  Intellicom was trading
between $4 and $5. They covered the positions in November and December, when the
stock was $2.50 or less.  Oportunidad earned a net profit of over $250,000,  and
Fondo a net profit of $265,000.

 148. Although CRG, directly and through Oportunidad and Fondo, had been selling
Global  Intellicom  continuously  since August,  Veitia wrote in a  "Publisher's
Note" for the November  1996  edition of  MoneyWorld,  "If you're  looking for a
stock you can call home about,  Global  Intellicom . . . could be your  answer."
The  accompanying  article  on Global  Intellicom  informed  readers  that "What
Microsoft is to software,  and what IBM is to hardware,  Global Intellicom could
become to telecommuting services.  Global Intellicom has the potential to double
or triple it sales each year, reaching hundreds of millions in sales by the turn
of the century." CRG  published  the identical  article with this  statement and
others  glowing about Global  Intellicom's  near-term  prospects in the December
issue of MoneyWorld.

 149. The  statements  in CRG's  publications  touting  Global  Intellicom  were
materially false and misleading  because CRG failed  adequately to disclose that
it  was  being  paid  to  promote  Global   Intellicom   stock,  the  amount  of
compensation,  that it and entities it controlled were selling Global Intellicom
stock while  promoting it as a good investment to readers and that it was paying
CRG employees commissions to promote Global Intellicom stock to brokers.

 150. By virtue of the conduct described above,  defendants CRG, Veitia,  Spratt
and Skalko  violated  Sections  17(a) and 17(b) of the Securities  Act,  Section
10(b)  of  the  Exchange  Act  and  Rule  10b-5  thereunder,  defendants  Gomez,
Oportunidad  and Fondo  violated  Section 17(a) of the Securities  Act,  Section
10(b) of the Exchange Act and Rule 10b-5  thereunder,  and defendants  Stratcomm
and  Veitia  are  liable for  violations  by CRG as  controlling  persons of CRG
pursuant to Section 20(a) of the Exchange Act.

                  D.       Global Spill Management, Inc.
 151. Global Spill Management,  Inc.  ("Global Spill") was a Nevada  corporation
with principal  offices in  Pennsylvania.  The company was in the  environmental
cleanup industry.  Global Spill's securities were registered with the Commission
pursuant  to Section  12(g) of the  Exchange  Act and were  traded on the NASDAQ
Small Cap Market.  Global Spill  retained CRG in May 1994 for 147,349  shares of
common stock.

 152. From June 1994 through  September  1995, CRG promoted Global Spill through
its publications and broker network while it actively sold over 2 million shares
of Global Spill for its own account. CRG acquired some of the stock from Global

<PAGE>

Spill in return for the very  promotional  services  which  helped  CRG  realize
significant  profits  from sales of the stock.  CRG realized net profits of more
than $950,000  trading Global Spill common stock from July 1994 through at least
September 1995.

 153. In  December  1994,  CRG  delivered  30,000  shares to Spratt who sold the
shares for just over $50,000.  Moreover, on two occasions,  CRG delivered 10,000
shares to Skalko who sold them for  nearly  $19,000.  CRG also paid  commissions
related to Global Spill totaling more than $28,000 to Skalko,  $27,000 to Spratt
and $23,000 to Veitia.

 154. CRG  publications  and its BREs promoted Global Spill securities from July
1994  through  December  1995.  The  October  1994 issue of Growth  Stock  Alert
represented  Global  Spill's  "Growth  Outlook to be -----  High" and  projected
earnings  would  increase  from $8.8 million in 1993 to $25 million in 1995.  In
February 1995,  Growth Stock Alert again projected $25 million in 1995 revenues.
In April 1995, MoneyWorld observed: "Although the 'McDonald's' and 'Burger King'
of environmental  services have yet to emerge, the opportunity for this historic
quality of growth exists and GSMI [Global  Spill's stock symbol] is  positioning
itself to take full  advantage."  The  August  1995 issue of  MoneyWorld,  in an
article  written by Skalko,  featured Global Spill as "The Stock to Watch" under
an article titled "Searching for the next Waste Management, Inc."

 155. The statements in CRG's publications  touting Global Spill were materially
false and misleading because CRG failed adequately to disclose that it was being
paid to promote Global Spill stock, the amount of compensation, that CRG, Spratt
and  Skalko  were  selling  Global  Spill  stock  while  promoting  it as a good
investment  to  readers  and that it was  paying CRG  employees  commissions  to
promote Global Spill stock to brokers.

 156. By virtue of the conduct described above,  defendants CRG, Veitia,  Spratt
and Skalko  violated  Sections  17(a) and 17(b) of the Securities  Act,  Section
10(b) of the Exchange Act and Rule 10b-5  thereunder,  and defendants  Stratcomm
and  Veitia  are  liable for  violations  by CRG as  controlling  persons of CRG
pursuant to Section 20(a) of the Exchange Act.

                  E.       Golf Ventures

 157. In January 1996,  CRG  contracted to promote Golf  Ventures,  Inc.  ("Golf
Ventures,"  now Golf  Communities  of America),  then a Utah  corporation  whose
securities  were traded on the OTC  Bulletin  Board.  On January 23,  1996,  CRG
received 350,000 shares of stock as payment under the contract.

 158.  On or about  January 24,  1996,  Veitia  authorized  a transfer of 30,000
shares of Golf Venture stock from CRG's account to New Concepts to cover a short
position  CRG had built days  earlier.  On or about  January  26,  1996,  Veitia
authorized transfer of 33,500 Golf Venture shares from CRG's account to Spratt's
personal account,  which he quickly sold for nearly $50,000.  On March 19, 1996,
CRG paid Spratt $7,972.19,  which, according to the check, was Spratt's share of
"profit on Golf Ventures options."

 159.  From late January  through late March 1996,  CRG sold off its position in
Golf Ventures common stock for nearly $750,000. In addition, Spratt shorted Golf
Ventures in the New Concepts account from February through June 1996.

 160. From February through June 1996, CRG promoted Golf Ventures  securities in
its  publications.  On February 1, 1996, just as CRG began a huge selloff of the
stock from its own accounts,  its Rumor Mill fax  publication  told  subscribers
"the Rumor Mill recommends the immediate  purchase of Golf Ventures currently at
$5.00 a share  with a buy limit of $8.00.  ...  Rumor Mill  believes  that [Golf
Ventures]  will provide a 200% - 400% return to our  subscribers."  MoneyWorld's
April 1996 issue featured Golf Ventures in a headline as "An investor's  hole in
one,"  followed  by a "Special  Advertorial  Feature"  stating  "the  company is
considered  greatly  undervalued." The "Rumor Mill" column in MoneyWorld's April
issue advised: "Continue to buy [Golf Ventures] up to $10 and look for a move to
$14-$16 in the next 60 days."

<PAGE>

 161. The statements in CRG's publications touting Golf Ventures were materially
false and misleading because CRG failed adequately to disclose that it was being
paid to promote Golf Ventures  stock,  the amount of  compensation,  that it and
Spratt were selling Golf Ventures stock while  promoting it as a good investment
to readers  and that it was paying CRG  employees  commissions  to promote  Golf
Ventures stock to brokers.

 162. By virtue of the conduct described above,  defendants CRG, Veitia,  Spratt
and Skalko  violated  Sections  17(a) and 17(b) of the Securities  Act,  Section
10(b) of the Exchange Act and Rule 10b-5  thereunder,  and defendants  Stratcomm
and  Veitia  are  liable for  violations  by CRG as  controlling  persons of CRG
pursuant to Section 20(a) of the Exchange Act.

                  F.       Jreck Subs

 163. In March 1996,  CRG executed a contract to perform  public  relations  for
Jreck Subs, Inc.  ("Jreck"),  a Colorado company with headquarters in Watertown,
N.Y.,  whose  securities  were traded on the OTC  Bulletin  Board.  The contract
called for CRG to receive  660,000  restricted  Jreck  shares,  estimated in the
contract to be worth $200,000.  A few days later, CRG and Jreck executed another
agreement,  this one purporting to commit Fondo to subscribing to 350,000 shares
in Jreck's Regulation D initial public offering. In May, Gomez formally executed
a  subscription  agreement to acquire  350,000 shares in a Regulation D offering
for one cent per share -- a total of $3,500.

 164.  Fondo  received the offering stock on September 9, 1996, the first day of
trading in Jreck, and immediately began selling off the  350,000-share  position
for over two dollars per share. By the end of November,  Fondo had netted nearly
$740,000 selling Jreck Subs stock.

 165. In its own accounts,  CRG bought nearly 1.2 million  shares of Jreck stock
from  November  through  December  1996 at 60 cents per  share and sold  roughly
800,000 of those  shares at prices  between  $1.30 and $2.30 for a net profit of
more than $980,000.

 166.  While Fondo and CRG were  selling  Jreck  stock,  CRG  publications  were
promoting  the stock to investors,  comparing the company  potential to Wal-Mart
and McDonald's. An October 1996 "Advertorial" in MoneyWorld said ". . . Jreck is
one of the highest  grossing  (per unit)  submarine  chains in the country  (the
highest?) and soon to be the fastest-growing in the entire fast-food  industry."
(Emphasis in  original).  Both the November  and December  issues of  MoneyWorld
claimed that "in 1995, Jreck's last fiscal year, the company had system sales of
just over $12 million.  Fiscal '98, with over 300 units,  will generate sales of
about $120 million. MacDonald's (sic) never grew that fast." In his "Publisher's
Note" in the December issue of  MoneyWorld,  Veitia wrote that "in this issue we
present two 'stocks to watch' that each have a raw potential  reminiscent of the
early days of America's great franchises. The advertorial for Jreck Subs, Inc...
tells the story of a small chain of submarine  sandwich  shops that could become
the fastest growing company in the fast-food industry."

 167. The statements in CRG's  publications  touting Jreck were materially false
and misleading  because CRG failed adequately to disclose that it was being paid
to promote  Jreck  stock,  the amount of  compensation,  that it and entities it
controlled  were selling Jreck stock while  promoting it as a good investment to
readers and that it was paying CRG employees  commissions  to promote Jreck Subs
stock to brokers.

 168. By virtue of the conduct described above,  defendants CRG, Veitia,  Spratt
and Skalko  violated  Sections  17(a) and 17(b) of the Securities  Act,  Section
10(b) of the Exchange Act and Rule 10b-5 thereunder,  defendants Gomez and Fondo
violated  Section 17(a) of the Securities Act, Section 10(b) of the Exchange Act
and Rule 10b-5  thereunder,  and defendants  Stratcomm and Veitia are liable for
violations by CRG as controlling persons of CRG pursuant to Section 20(a) of the
Exchange Act.

 <PAGE>

                  G.       Sobik's Subs

 169. In February 1996, Veitia and Skalko executed an agreement on behalf of CRG
to  perform  public  relations  work for  Sobik's  Subs,  Inc.  ("Sobik's,"  now
Interfoods  of America,  Inc.),  a Nevada  corporation  headquartered  in Miami,
Florida whose securities were registered with the Commission pursuant to Section
12(g) of the  Exchange  Act and traded on the OTC  Bulletin  Board.  The initial
agreement  called for CRG to be paid with 116,700 shares of Sobik's stock.  This
was supplemented in late May with 100,000 additional shares.

 170. From approximately March 1, 1996 until July 1996, CRG sold all of the free
or discounted  stock it received plus additional  shares it bought on the market
at prices ranging from $6 to $2,  realizing over $1 million in trading  profits.
In  addition,  Sobik's  provided  Pow Wow  233,000  shares  of  free or  steeply
discounted  stock,  which  Pow  Wow  immediately   transferred  to  Oportunidad.
Oportunidad  sold all of the stock in a two-week  period in May 1996,  realizing
over $1.2 million in trading profits.

 171. CRG promoted Sobik's in its publications  from March through October 1996.
"With a proven concept,  strong demand, and a 25-year track record, Sobik's is a
'sub'-stantial investment opportunity," according to the Growth Stocks column in
the April 1996 issue of MoneyWorld. In a May 1996 "Special Advertorial Feature,"
MoneyWorld called Sobik's an "exciting opportunity for investors to share in the
immense  potential of what may soon be one of the country's  leading  deli-style
chains." In July,  MoneyWorld  claimed that Sobik's "is  realizing  swift growth
reminiscent  of the early days of  McDonald's."  It estimated  Sobik's  revenues
would  "surge  above $80  million" in 2000,  claiming  that "even by Wall Street
standards, which have seen some spectacular growth stocks, this is a significant
forecast."

 172. The statements in CRG's publications touting Sobik's were materially false
and misleading  because CRG failed adequately to disclose that it was being paid
to promote Sobik's stock,  the amount of  compensation,  that it and entities it
controlled were selling Sobik's stock while promoting it as a good investment to
readers  and that it was paying CRG  employees  commissions  to promote  Sobik's
stock to brokers.

 173. By virtue of the conduct described above,  defendants CRG, Veitia,  Spratt
and Skalko  violated  Sections  17(a) and 17(b) of the Securities  Act,  Section
10(b) of the  Exchange  Act and Rule  10b-5  thereunder,  defendants  Gomez  and
Oportunidad  violated  Section 17(a) of the Securities Act, Section 10(b) of the
Exchange Act and Rule 10b-5 thereunder,  and defendants Stratcomm and Veitia are
liable for violations by CRG as  controlling  persons of CRG pursuant to Section
20(a) of the Exchange Act.

                  H.       Vector Aeromotive

 174. In October 1995,  Veitia and Skalko executed an agreement on behalf of CRG
to perform public relations work for Vector Aeromotive Corporation ("Vector"), a
Nevada  corporation  based  in  Jacksonville,  Florida,  whose  securities  were
registered with the Commission pursuant to Section 12(g) of the Exchange Act and
were traded on the NASDAQ Small Cap Market.  The  contract  called for Vector to
compensate CRG with either  $175,000 or 350,000 shares of stock.  Vector in fact
paid CRG  $30,000  and gave  CRG  290,000  shares  of stock in March  and,  upon
information and belief, another 350,000 shares in April 1996. From March through
May  1996,  CRG sold all of its  Vector  stock for over  $410,000.  All of CRG's
Vector trading was in a new brokerage  account Veitia opened at Spencer  Edwards
in which Skalko had trading authority.

 175. CRG promoted  Vector from  December 1995 through July 1996. A long article
was  reprinted  in the  December  1995 and  January  and March 1996  editions of
MoneyWorld. The January issue was introduced by a "Publisher's Note" from Veitia
commenting that "the young pups we look at in this issue are all driven with the
relentless  passion to succeed.  They share a rare  entrepreneurial  spirit that
gives them a competitive edge in their markets.  . . Vector  Aeromotive . . . is

                                        1

<PAGE>

ready to take the fast  lane  with the debut of its  American-built  M12  sports
car." The  thrice-printed  article  contended  that "Vector is now positioned to
carve its niche in the lucrative  high-end auto market" and that "...  Vector is
certain  to draw the  attention  of the  press and Wall  Street,  and a spurt in
trading  activity  -- one that  could  lead to rapid  share  appreciation  -- is
possible."

 176. The statements in CRG's publications  touting Vector were materially false
and misleading  because CRG failed adequately to disclose that it was being paid
to promote Vector stock, the amount of compensation,  that it was selling Vector
stock while  promoting it as a good investment to readers and that it was paying
CRG employees commissions to promote Vector stock to brokers.

 177. By virtue of the conduct described above,  defendants CRG, Veitia,  Spratt
and Skalko  violated  Sections  17(a) and 17(b) of the Securities  Act,  Section
10(b) of the Exchange Act and Rule 10b-5  thereunder,  and defendants  Stratcomm
and  Veitia  are  liable for  violations  by CRG as  controlling  persons of CRG
pursuant to Section 20(a) of the Exchange Act.

                  I.       Viking Management Group

 178. On or about August 3, 1995,  Veitia and Spratt contracted on behalf of CRG
with Viking  Management  Group,  Inc.  ("Viking," later renamed Viking Resources
International,  Inc.),  a Delaware  corporation  with its  principal  offices in
Tampa, Florida, whose securities were registered with the Commission pursuant to
Section  12(b) of the  Exchange Act and traded on the OTC  Bulletin  Board.  The
contract  called  for CRG to provide  public  relations  services  in return for
133,344 shares of Viking stock plus options.

 179. CRG began shorting Viking stock in late July. From August through November
1995,  CRG  continued  selling  Viking stock at prices well over two dollars per
share,  supplementing  its  position  by  exercising  options  to buy stock from
Viking,  some of which at only 40 cents per  share.  By  year-end,  CRG had sold
nearly one million shares of Viking for profits of roughly $1.5 million.

 180. In August 1995,  CRG  transferred  to Spratt and Skalko 6,750 shares each,
and each realized nearly $28,000 selling the stock while CRG was promoting it to
investors. In September 1995, CRG transferred an additional 5,000 each to Spratt
and Skalko,  who each realized $12,300 selling the stock while CRG was promoting
it to investors.

 181.  CRG promoted  Viking in  MoneyWorld  Growth Stock Alert #95-1,  which was
inserted in the October 1995 issue of MoneyWorld.  "Created to capitalize on the
most  promising  sectors within the burgeoning  recycling  industry,  Viking has
established  a solid  foothold in  uniquely  profitable  market  niches that are
gaining prominence," CRG wrote. (Emphasis in original).  "Viking has established
impressive momentum that promises to continue. How this rapid growth will affect
share value cannot be predicted for certain. But clearly,  this is a significant
timing opportunity."  (Emphasis in original).  CRG devoted the November "Special
Advertorial  Feature" of  MoneyWorld  to Viking under the headline "The Stock to
Watch.  Garbage In - Profits Out. The Amazing  Dynamics of Recycling."  The text
declared  that "Viking gives  investors a direct line to some of the  industry's
most promising growth  potential" and that "Viking has widespread  potential for
growth." A chart  suggested  that Viking  profits would reach $6 million by 1998
despite a $60,000  loss in 1995.  "Just as it takes  substantial  planning for a
space shuttle launch, but once ignition is sparked the momentum is unparalleled,
so too has  Viking's  planning  stage led to a 1995  'corporate'  launch  that's
skyrocketing the company forward."

 182. The statements in CRG's publications  touting Viking were materially false
and misleading  because CRG failed adequately to disclose that it was being paid
to promote Viking stock, the amount of compensation, that CRG, Spratt and Skalko
were selling Viking stock while promoting it as a good investment to readers and
that it was paying CRG employees commissions to promote Viking stock to brokers.

                                        2

<PAGE>

 183. By virtue of the conduct described above,  defendants CRG, Veitia,  Spratt
and Skalko  violated  Sections  17(a) and 17(b) of the Securities  Act,  Section
10(b) of the Exchange Act and Rule 10b-5  thereunder,  and defendants  Stratcomm
and  Veitia  are  liable for  violations  by CRG as  controlling  persons of CRG
pursuant to Section 20(a) of the Exchange Act.

         VI.      Stratcomm Acted as an Unregistered Dealer and, with CRG,Caused
an Unregistered Distribution of Stratcomm Common Stock Which CRG Touted Without
Disclosing Its Relation to Stratcomm

 184. CRG and Stratcomm  engaged in a substantial  distribution  of unregistered
Stratcomm  common stock from the fall of 1994  through the end of 1995.  CRG and
Stratcomm,  through their employees,  including Spratt, Skalko and Rodriguez, at
the  direction  of  Veitia,  solicited  the  sale  of  Stratcomm  stock  to U.S.
residents,  who  sent  funds  directly  to  Stratcomm.  Stratcomm  and CRG  paid
commissions  to their  employees  for the sale of Stratcomm  stock.  None of the
employees were  registered  persons nor were they associated with any registered
broker or dealer.  CRG and Gulf  Atlantic  also  promoted  the sale of Stratcomm
stock in  their  publications,  often  without  disclosing  they  were  owned by
Stratcomm.

 185. From October 1994 through early 1996,  Stratcomm,  through its  employees,
sold  approximately  one  million  shares  of  Stratcomm  common  stock  to U.S.
investors,  collecting approximately $1 million in gross proceeds. Stratcomm did
not file a registration  statement with the Commission  concerning  these shares
and Stratcomm neither provided a private  placement  memorandum to investors nor
made any attempt to meet any exemption to registration permitted by the law.

 186. Sometimes Stratcomm did not have stock to deliver to investors. Therefore,
Veitia, on behalf of Stratcomm, negotiated the purchase of restricted stock from
existing  shareholders  and loaned over  500,000 of his own shares to deliver to
newer investors.  Aronoff caused the transfer agent to lift restrictive  legends
from these stocks so they could appear to be unrestricted.  Stratcomm  purchased
the majority of shares from  existing  shareholders  at  approximately  20 cents
(Cdn) per share but sold the majority of the same shares for one dollar (Cdn) or
more through the BREs.

 187.  Stratcomm and CRG paid at least  $140,000 in commissions to its employees
for selling Stratcomm stock.  Defendants Spratt, Skalko and Rodriguez were among
the  employees  to  whom  CRG  and  Stratcomm  paid   commissions  for  offering
unregistered  Stratcomm  stock  for  sale  to  investors,  although  none of the
defendants   were   registered   persons  or  associated   with  any  registered
broker-dealer.

 188. Chicken Kitchen was another part of Stratcomm's business in 1994 and 1995.
CRG promoted  Chicken  Kitchen from October 1994 through at least December 1995,
urging  readers to acquire  Stratcomm  stock  because  of  allegedly  attractive
investment  prospects for Chicken Kitchen.  CRG did so without  disclosing CRG's
relationship  either to Stratcomm or to Chicken  Kitchen.  Market Express Action
Alert #92, in October 1994,  advised  readers that "for a prospect that's really
cookin' check out the menu of investment opportunities provided by this purveyor
of fast  food  about to go  national  with a  rollout  of  corporate  owned  and
franchised outlets.  The next Boston Market? You be the judge." "Chicken Kitchen
is one growth  stock you can  really eat up,"  declared  Growth  Stock  Alert in
February 1995.  MoneyWorld for February 1995 advised that "at its current price,
Stratcomm Media may be an absolute steal." CRG printed a glowing article in both
the October and November 1995  MoneyWorld,  and largely repeated it a third time
in  December   1995.   The   December   article  also   declared   that  Chicken
Kitchen/Stratcomm "is poised to become a standout in the fast food crowd."

                                        3

<PAGE>

 189. By virtue of the conduct  described  above:  (1) defendants  CRG,  Veitia,
Spratt and  Skalko  violated  Sections  17(a) and 17(b) of the  Securities  Act,
Section  10(b) of the Exchange  Act and Rule 10b-5  thereunder;  (2)  defendants
Stratcomm,  Veitia,  Spratt,  Skalko  and  Rodriguez  violated  Section 5 of the
Securities  Act; (4) defendants  Stratcomm,  CRG,  Spratt,  Skalko and Rodriguez
violated  Section 15(a)(1) of the Exchange Act, and (5) Stratcomm and Veitia are
liable for violations by CRG as  controlling  persons of CRG pursuant to Section
20(a) of the Exchange Act.

         VII.     CRG Acted as an Unregistered Broker and Dealer
 190.  During the period from September 1994 through  December 1996 to a date to
be  determined,  defendant  CRG acted as a broker by engaging in the business of
touting its clients' securities to registered  representatives through its BREs.
CRG provided direct promotion to the  broker-dealer  community through its BREs,
who contacted registered representatives to induce them to solicit their clients
to buy stocks of companies  CRG was  promoting.  BREs commonly  promoted  stocks
while CRG was selling those same stocks.  CRG paid commissions to the BREs after
the BREs proved to CRG management,  notably  defendants Spratt and Skalko,  that
they caused buying activity.

 191.  During the period from September 1994 through  December 1996 to a date to
be  determined,  defendant  CRG acted as a dealer by engaging in the business of
buying and selling securities for its own account,  through its nominees,  Fondo
and Oportunidad.  As detailed in paragraphs 45 to 133, CRG purchased  securities
on at least one dozen  occasions  from at least five of its  issuer-clients  and
sold those securities in hundreds of transactions to liquidate those positions.

 192. By virtue of the conduct  described above,  defendant CRG violated Section
15(a)(1) of the  Exchange  Act,  and  Stratcomm  and Veitia are liable for these
violations by CRG as controlling persons of CRG pursuant to Section 20(a) of the
Exchange Act.

         VIII.    Ammonia Hold Fraudulently Reported
                  Stock Sales as Revenues

 193.  Defendant  Parnell caused defendant  Ammonia Hold  fraudulently to report
that  $160,000 of a total  $660,000 paid by defendant  Fondo for stock  borrowed
from Grace Holdings ( 91-94) constituted revenue from a licensing agreement with
Grace  Holdings.  The alleged  "revenue" was reported as such in Ammonia  Hold's
Form SB-2 registration  statement filed with the Commission,  in a press release
and on the company's website.

 194. The licensing agreement was a sham. Grace Holdings never paid Ammonia Hold
 for a licensing agreement. 195. The misrepresentation in the Commission filing,
 the press release and on the company website was
material. By improperly reporting an additional $160,000 in revenue for the year
ended June 30, 1996 (nearly 20% of reported revenue for the year),  Ammonia Hold
was able to understate its net loss for that year by nearly 15 percent.

 196. Parnell also caused Ammonia Hold to materially misrepresent CRG's purchase
of 200,000  shares of stock for  $660,000.  The  company  stated  that it issued
200,000 shares of restricted stock to Grace Holdings in exchange for a licensing
agreement and $500,000.  These statements were false.  They also were materially
misleading   because  they  allowed  Ammonia  Hold  to  disguise  its  sales  of
unregistered stock to CRG through Fondo.

 197. By virtue of the conduct  described  above,  defendants  Ammonia  Hold and
Parnell  violated  Section  17(a) of the  Securities  Act,  Section 10(b) of the
Exchange Act and Rule 10b-5 thereunder.

                                        4

<PAGE>

FIRST CLAIM
[Securities Fraud]

Violations by Defendants CRG, Stratcomm, Gulf Atlantic, Veitia, Spratt, Skalko,
Rodriguez, Fondo, Oportunidad and
Gomez of Section 17(a)
of the Securities Act, Section 10(b) of the Exchange Act
and Rule 10b-5 Thereunder

 198.  Paragraphs  one  through 197 are hereby  realleged  and  incorporated  by
 reference.  199.  Defendants  CRG,  Gulf  Atlantic,  Veitia,  Spratt and Skalko
 directly, and as to defendants Veitia and
Stratcomm  additionally  as  control  persons  of CRG  under  Section  20 of the
Exchange Act, from a period  beginning in at least September 1994 and continuing
through December 1996 to a date to be determined,  violated Section 17(a) of the
Securities Act,  Section 10(b) of the Exchange Act and Rule 10b-5  thereunder by
engaging in a fraudulent  scheme in the promotion,  offer,  purchase and sale of
the securities of Tracker,  Delta,  Ammonia Hold, IMTECH,  Foreland,  Stratcomm,
Global Spill.,  Atlas Pacific,  ECO2, Global  Intellicom,  Golf Ventures,  Jreck
Subs, Sobik's,  Vector,  Viking and those of other companies to be identified in
an accounting.

 200.  Defendants  Fondo,  Oportunidad and Gomez,  from a period beginning in at
least  September  1994  and  continuing  through  December  1996 to a date to be
determined, directly violated Section 17(a) of the Securities Act, Section 10(b)
of the Exchange Act and Rule 10b-5 thereunder by engaging in a fraudulent scheme
in the offer,  purchase and sale of the  securities of Tracker,  Delta,  Ammonia
Hold, IMTECH,  Foreland,  Global Intellicom,  Jreck,  Sobik's and those of other
companies to be identified in an accounting.

 201. For the period beginning in or about September 1994 and continuing through
December 1996 to a date to be determined, defendants CRG, Gulf Atlantic, Veitia,
Spratt, Skalko, Fondo, Oportunidad and Gomez, in connection with the purchase or
sale of  securities,  by the use of means  or  instrumentalities  of  interstate
commerce or of the mails, directly or indirectly,  (a) employed devices, schemes
or artifices to defraud; (b) made untrue statements of material facts or omitted
to state material facts  necessary in order to make the statements  made, in the
light of the  circumstances  under which they were made, not misleading;  or (c)
engaged in acts,  practices  or  courses of  business  which  operated  or would
operate  as a fraud or deceit  upon  other  persons,  including  purchasers  and
sellers of such securities.

 202. Defendant  Rodriguez violated Section 17(a) of the Securities Act, Section
10(b) of the Exchange Act and Rule 10b-5  thereunder by engaging in a fraudulent
scheme in which he bribed at least two brokers in connection  with the promotion
of Tracker  securities  with the intention that these bribes not be disclosed to
investors.

 203. Beginning in or about October 1994 and continuing through the end of 1994,
defendant Rodriguez,  in connection with the purchase or sale of securities,  by
the use of means or  instrumentalities  of interstate  commerce or of the mails,
directly or indirectly,  (a) employed devices,  schemes or artifices to defraud;
(b) made untrue  statements of material facts or omitted to state material facts
necessary  in  order  to  make  the  statements   made,  in  the  light  of  the
circumstances  under  which they were made,  not  misleading;  or (c) engaged in
acts,  practices  or courses of business  which  operated or would  operate as a
fraud or deceit upon other  persons,  including  purchasers  and sellers of such
securities.

 204. By reason of the foregoing, defendants CRG, Gulf Atlantic, Veitia, Spratt,
Skalko, Rodriguez,  Fondo, Oportunidad and Gomez directly violated Section 17(a)
of the  Securities  Act,  Section  10(b)  of the  Exchange  Act and  Rule  10b-5
thereunder.  Additionally,  defendants Veitia and Stratcomm are liable for CRG's
violations under Section 20 of the Exchange Act as controlling persons of CRG.

                                        5

<PAGE>

SECOND CLAIM
[Securities Fraud]

Violations by Defendants Parnell and Ammonia Hold of Section 17(a)
of the Securities Act, Section 10(b) of the Exchange Act
 and Rule 10b-5 Thereunder

 205.  Paragraphs  one  through 197 are hereby  realleged  and  incorporated  by
reference.
 206.  Defendants Parnell and Ammonia Hold violated the antifraud  provisions of
the securities  laws,  Section 17(a) of the Securities Act, Section 10(b) of the
Exchange Act and Rule 10b-5  thereunder,  by engaging in a fraudulent  scheme in
which they falsely reported capital  contributions from the sale of Ammonia Hold
stock as revenues and disguised the sale of unregistered  securities in a public
filing with the Commission, a press release and on Ammonia Hold's website.

 207. For the period  beginning in or about  February 1996 and  concluding in or
about December 1996, defendants Parnell and Ammonia Hold, in connection with the
purchase  or sale of  securities,  by the use of means or  instrumentalities  of
interstate  commerce  or of the mails,  directly  or  indirectly,  (a)  employed
devices, schemes or artifices to defraud; (b) made untrue statements of material
facts  or  omitted  to  state  material  facts  necessary  in  order to make the
statements made, in the light of the  circumstances  under which they were made,
not misleading;  or (c) engaged in acts,  practices or courses of business which
operated  or would  operate as a fraud or deceit upon other  persons,  including
purchasers and sellers of such securities.

 208. By reason of the foregoing,  defendants  Parnell and Ammonia Hold violated
directly  Section 17(a) of the Securities Act, Section 10(b) of the Exchange Act
and Rule 10b-5 thereunder.

THIRD CLAIM
[Touting]

Violations by Defendants CRG, Stratcomm, Gulf Atlantic, Veitia, Spratt and
Skalko of Section 17(b) of the Securities Act

 209.  Paragraphs  one  through 197 are hereby  realleged  and  incorporated  by
reference.
 210. For the period  beginning in or about September 1994 through December 1996
and  continuing  to a date to be  determined,  defendants  CRG,  Gulf  Atlantic,
Veitia,  Spratt  and  Skalko  directly,  and  defendants  Stratcomm  and  Veitia
additionally as controlling persons of CRG under Section 20 of the Exchange Act,
violated the anti-touting provision of the securities laws, Section 17(b) of the
Securities  Act,  by  promoting  in  CRG  and  Gulf  Atlantic  publications  the
securities of Tracker,  Delta,  Ammonia Hold,  IMTECH,  Foreland,  Global Spill,
Atlas Pacific, ECO2, Global Intellicom,  Golf Ventures,  Jreck, Sobik's, Vector,
Viking and those of other  companies to be identified in an accounting,  without
adequately  disclosing the receipt of and amount of consideration  received from
those issuers in return for said promotions.

 211. For the period beginning in or about September 1994 and continuing through
December 1996 to a date to be determined, defendants CRG, Gulf Atlantic, Veitia,
Spratt and Skalko used the means or instruments of interstate transportation, or
communication  in interstate  commerce,  or the mails,  to publish and circulate
communications which described securities for a consideration  received from the
issuers  without  fully  disclosing  the receipt of such  consideration  and the
amount thereof.

                                        6

<PAGE>

 212. By reason of the foregoing,  defendants CRG, Gulf Atlantic, Veitia, Spratt
and Skalko violated directly Section 17(b) of the Securities Act.  Additionally,
defendants Stratcomm and Veitia are liable for CRG's violations under Section 20
of the  Exchange  Act as  controlling  persons  of CRG.  FOURTH  CLAIM  [Sale of
Unregistered Securities]

Violations by Defendants CRG, Veitia, Spratt,
Skalko, Rodriguez, Fondo, Oportunidad, Gomez, Ammonia Hold, Parnell, Stratcomm,
Pow Wow, New Concepts, Zousmer,
CJL and Lidman of Section 5
of the Securities Act

                                        7

<PAGE>

 213.  Paragraphs  one  through 197 are hereby  realleged  and  incorporated  by
reference.
 214. Sections 5(a) and 5(c) of the Securities Act prohibit any person, directly
or indirectly,  from making use of any means or instrument of  transportation or
communication in interstate commerce or of the mails to offer to sell or to sell
a  security  unless  a  registration  statement  is filed  or in  effect,  or an
exemption  applies.  Beginning in or about September 1994 and continuing through
at least  December  1996 to a date to be  determined,  defendants  CRG,  Veitia,
Spratt,  Skalko,  Fondo,  Oportunidad,  Gomez and Pow Wow offered to sell and/or
sold securities of Tracker, Delta, Ammonia Hold, IMTECH, Foreland, Stratcomm and
other  securities still to be identified to investors in the United States when,
at all times,  said  securities were not registered with the Commission and such
offers to sell  and/or  the  sales  were not  eligible  for any  exemption  from
registration.

 215.  Beginning  in or about  September  1994 and  continuing  through at least
December 1996 to a date to be determined,  defendants New Concepts, Zousmer, CJL
and Lidman offered to sell and/or sold securities of Tracker, Delta, IMTECH, and
Foreland to investors in the United States when, at all times,  said  securities
were not registered with the Commission and such offers to sell and/or the sales
were not eligible for any exemption from registration.

 216.  Beginning  in or about  September  1994 and  continuing  through at least
December 1996,  defendant  Rodriguez  offered to sell and/or sold  securities of
Stratcomm to investors in the United States when, at all times,  said securities
were not registered with the Commission and such offers to sell and/or the sales
were not eligible for any exemption from registration.

 217. Beginning in or about February 1996 and continuing through at least August
1996, defendants Ammonia Hold and Parnell offered to sell and/or sold securities
of Ammonia  Hold to  investors in the United  States  when,  at all times,  said
securities  were not  registered  with the  Commission  and such  offers to sell
and/or the sales were not eligible for any exemption from registration.

 218.  By reason of the  foregoing,  defendants  CRG,  Veitia,  Spratt,  Skalko,
Rodriguez, Fondo, Oportunidad, Gomez, Ammonia Hold, Parnell, Stratcomm, Pow Wow,
New Concepts,  Zousmer,  CJL and Lidman violated directly Sections 5(a) and 5(c)
of the Securities Act. Additionally,  defendants Stratcomm and Veitia are liable
for CRG's violations under Section 20 of the Exchange Act as controlling persons
of CRG. FIFTH CLAIM [Sales by Unregistered Persons]

Violations by Defendants CRG, Stratcomm, Veitia, Spratt, Skalko and Rodriguez
of Section 15(a)(1) of the Exchange Act

 219.  Paragraphs  one  through 197 are hereby  realleged  and  incorporated  by
reference.
 220. Section 15(a)(1) of the Exchange Act prohibits any person from acting as a
broker or dealer by making use of the mails or an  instrumentality of interstate
commerce to solicit the purchase or sale of a security unless such person is

                                        8

<PAGE>

registered  in  accordance  with the statute.  From  approximately  October 1994
through  spring 1995,  defendants  Spratt,  Skalko and  Rodriguez,  who were not
registered  as brokers at the time,  solicited  investors  for the  purchase  of
Stratcomm  stock,  negotiated  with  investors  for such  sales  and  were  paid
commissions by CRG or Stratcomm based upon their sales success.

 221.  During the period from September 1994 through  December 1996 to a date to
be  determined,  defendant CRG violated  Section  15(a)(1) by acting as a broker
without proper  registration by engaging in the business of touting its clients'
securities to registered  representatives  through its BREs. At CRG's direction,
BREs  encouraged  registered  representatives  to sell such  securities to their
clients. Upon such sales, CRG paid commissions to the BREs.

 222.  During the period from September 1994 through  December 1996 to a date to
be  determined,  defendant CRG violated  Section  15(a)(1) by acting as a dealer
without  proper  registration  by engaging in the business of buying and selling
securities for its own account, through its nominees, Fondo and Oportunidad.

 223.  During the  period  from  October  1994  through  early  1996,  defendant
Stratcomm  violated  Section  15(a)(1)  by  acting  as a dealer  without  proper
registration  when it sold for a profit  approximately  one  million  shares  of
common stock and bought stock from other  investors in order to make delivery to
new investors.

 224. By reason of the foregoing,  defendants CRG, Spratt, Skalko, Rodriguez and
Stratcomm  violated  Section  15(a)(1)  of the  Exchange  Act by  effecting  the
purchase or sale of securities  without meeting the  broker-dealer  registration
requirements of the Exchange Act. Additionally,  defendants Stratcomm and Veitia
are  liable  for  CRG's  violations  under  Section  20 of the  Exchange  Act as
controlling persons of CRG. PRAYER FOR RELIEF
         WHEREFORE, the Commission respectfully requests that this Court:
I.
         Make  findings  of fact and  conclusions  of law  that  the  defendants
violated the provisions of the federal securities laws as alleged above.

II.

         Enter Orders

         A.       Restraining and enjoining Stratcomm, CRG, Gulf Atlantic,
Veitia, Spratt, Skalko, Rodriguez, Fondo, Oportunidad, Gomez, Ammonia Hold and
Parnell from violating Section 17(a) of the Securities Act, Section 10(b) of the
Exchange Act and Rule 10b-5 thereunder;
         B.       Restraining and enjoining CRG, Gulf Atlantic, Veitia, Spratt
and Skalko from violating Section 17(b) of the Securities Act;
         C.  Restraining  and enjoining CRG, Pow Wow,  Veitia,  Spratt,  Skalko,
Rodriguez,  Fondo,  Oportunidad,  Gomez, Ammonia Hold, Parnell,  Stratcomm,  New
Concepts,  Zousmer,  CJL and Lidman from violating  Sections 5(a) and (c) of the
Securities Act.

         D.  Restraining  and  enjoining  CRG,  Stratcomm,  Spratt,  Skalko  and
Rodriguez from violating Section 15(a)(1) of the Exchange Act; III.
         Enter an order  requiring  defendants,  and each of them, to pay for an
accounting  to determine  the full amount of the monies  received as a result of
their conduct as alleged herein, including for sales of corporate securities not
identified herein by name, through the present,  said accounting to be performed
by persons or entities not unacceptable to the Commission; IV.

         Enter an Order  directing each defendant to disgorge their profits from
the illegal conduct alleged herein,  plus interest.  Said profits shall include,
inter alia,  profits from all trading alleged herein,  including that of issuers
not specifically identified through the present whose securities defendants sold
while  promoting  the  securities  in CRG  publications  or which was not either
subject to a registration  statement on file with the Commission or not lawfully
exempt  from  registration,  all  compensation  received by  defendants  Veitia,
Spratt,  Skalko and Rodriguez for their BRE related  conduct,  all  compensation
received  by  defendants  Veitia,  Spratt  and Skalko as  finder's  fees for the
issuers alleged in the Complaint,  and all  compensation  received by defendants
CRG, Gulf Atlantic, Veitia, Spratt and Skalko from the sale of publications they
controlled,  edited or wrote without adequate disclosure that promotions therein
were paid for by the companies promoted, or the amount of compensation,  or that
the defendants  were selling  securities  they  recommended  for purchase in the
publications. V.

         Enter an Order  imposing  civil  penalties on each  defendant for their
unlawful  acts  pursuant to Section 21  (d)(3)(B)(iii)  of the  Exchange Act [15
U.S.C. ss. 78u(d)(3)(B)(iii)].
VI.

         Retain jurisdiction of this action in accordance with the principles of
equity and the Federal Rules of Civil  Procedure in order to implement and carry
out the terms of all orders and decrees that may be entered, or to entertain any
suitable  application or motion for additional relief within the jurisdiction of
the Court.

                                        9

<PAGE>

VII.

         Grant such other and additional  relief as this Court may deem just and
         proper.

                                Respectfully submitted,

                                ------------------------------------
                                Thomas C. Newkirk

                                James A. Kidney (Trial Counsel)
                                Jerry A. Isenberg

                              Christopher R. Conte

                                Jeffrey P. Weiss

                                Attorneys for Plaintiff
                                U.S. Securities and Exchange Commission
                                Mail Stop 8-8
                                450 Fifth Street, N.W.
                                Washington, D.C. 20549-0808
                                (202) 942-4797  (Kidney)
                                (202) 942-9581 (Kidney Fax)
Date:  September 27, 1999                   kidneyj@sec.gov

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

                                       10

<PAGE>

                       UNITED STATES DISTRICT COURT
                        MIDDLE DISTRICT OF FLORIDA

                             ORLANDO DIVISION

UNITED STATES SECURITIES AND        )     CASE NO.:  99-1222-CV-22-A
  EXCHANGE COMMISSION,              )
                                    )
      Plaintiff,                    )
                                    )     Dispositive Motion

vs.                                 )
                                    )
ROBERTO E. VEITIA, STRATCOMM        )
MEDIA LTD., et al.                  )
                                    )
      Defendants.                   )

                DEFENDANTS' ROBERTO E. VEITIA AND STRATCOMM

              MEDIA, LTD.'S MOTION AND MEMORANDUM TO DISMISS

     The Defendants,  Roberto E. Veitia,  (hereinafter,  "Veitia") and Stratcomm
Media Ltd., (hereinafter, "Stratcomm") (or collectively, "Defendants"), pursuant
to Rule 9(b) and 12(b) of the Federal Rules of Civil Procedure, hereby file this
Motion and Memorandum to Dismiss.
      The SEC has alleged that Veitia  violated the fraud and touting  provision
in of the securities  acts in relation to sixteen public  companies.  It is also
alleged  that Veitia sold  unregistered  securities  and failed to register as a
broker dealer. Additionally, both Veitia and Stratcomm are alleged to be control
persons of Corporate  Relations Group,  Inc.  (hereinafter  "CRG") and therefore
liable under Section 20 of the Exchange  Act.  Stratcomm is also alleged to have
sold its own shares without registration.

      Central to the SEC's claims is the contention  that Stratcomm as a control
person and Veitia, both individually, and in his position of control, omitted to
state material information

                                        1

<PAGE>

in the offer and sale of securities and failed to disclose  information required
by  Section  17(b).  The  omissions  alleged  are that  Veitia and CRG failed to
adequately disclose they were being paid to promote certain issuers,  the amount
of the  compensation  they  received,  that they sold stock in the issuers while
promoting the issuers and that their  employees were paid to promote the issuers
to  stockbrokers.  In one  instance  the SEC claims  that  Veitia also failed to
disclose cash payments made to stockbrokers.

      The SEC further  complains that these  disclosures were inadequate as they
were not contained in the publications which promoted the issuer clients.

      Also, the SEC has alleged that Veitia and CRG sold unregistered securities
and  therefore,  acts as a broker  dealer in  certain  transactions  which  were
originally  issued under Regulation S exemption,  as well as other  transactions
involving the sale of Stratcomm's stock.

      Further,  the SEC contends that the broker dealer provisions were violated
since unregistered CRG employees contacted  stockbrokers and promoted CRG client
companies to these brokers to effect the sale of securities.

      As a  consequence  of these alleged  violations  the SEC seeks a number of
remedies.  These  include  the  issuance  of an  injunction  and fines which are
statutory  remedies.  Furthermore the SEC seeks  non-statutory  relief including
disgorgement of all profits and compensation and an accounting.

      The Complaint as to Veitia and Stratcomm is inadequate in relation to Rule
9(b).  The  SEC has  improperly  lumped  Co-Defendants  CRG  and  Gulf  Atlantic
Publishing,  Inc.  (hereinafter  "GAP") together in the Complaint,  referring to
these defendants as "collectively

                                        2

<PAGE>

CRG." Also, in numerous  allegations of fraud the SEC has failed to identify the
action of either  defendant in making a statement  which  contained an omission.
Rather,  the SEC has described CRG as having engaged in "promotion"  and has not
identified any statement  which was made on which to support a securities  fraud
claim.  Additionally,  CRG is alleged to have sold  securities  outside the time
period of either  promotional  efforts  occurring  or  publication  of articles.
However,  the SEC in its prayer for relief seeks the disgorgement of all profits
and compensation derived from all CRG's client companies.

      The Complaint also utilizes other short hand  techniques  which render the
Complaint legally deficient.  The SEC has chosen to preface certain  allegations
with the phrases,  ". . .by virtue of the conduct  described  above. . ." or "by
reason or the foregoing" without any other limiting language.  The employment of
these phrases in this more than 200 paragraph complaint  introduces  significant
ambiguity into the allegations of fraud.

      The SEC has  failed  to state a claim  for  relief  for  securities  fraud
against  Veitia,  individually.  The SEC has not  identified  which  actions  or
omissions  that Veitia made would subject him to liability  under the securities
laws.

      The conduct of CRG,  Stratcomm,  and Veitia,  is  protected  speech by the
First  Amendment.  The  application  of these  fraud  provisions  against  these
Defendants who publish generalized investment information together with features
which were clearly marked  "Advertorials"  and contained other  disclaimers that
the Defendants  were paid for having  published the  advertorials is contrary to
the First Amendment.

      Additionally, other information contained in filings with the SEC
indicates that much

                                        3

<PAGE>

of the information  which the SEC claims was omitted in the  publications was in
fact  provided  to the  public.  Therefore,  the SEC has only  alleged  that the
omissions of which it complains were omitted from certain  publications not that
the information was undisclosed.

      Similarly,  the SEC contends that the touting  provision Section 17(b) was
violated.  A review of Section 17(b) in light of the First  Amendment  indicates
that no claim for relief  under this  section can be  sustained  on these facts.
Additionally  17(b)  merely  requires  disclosure  it does not mandate the time,
place or manner of the disclosure as alleged in the Complaint.

      The claim of touting and scalping  cannot exist when such claims are based
upon publication of advertisements which are revealed to be paid advertisements.
The entire basis for the SEC's  fraud,  touting,  and scalping  fails due to the
fact that we are here dealing with disclosed advertising.

      Furthermore, the SEC has not stated as claim for relief against Veitia and
Stratcomm  in relation  to the sale of  unregistered  securities  and failing to
register as a broker dealer.  Substantial confusion regarding the application of
Regulation S during the years at issue in the Complaint  indicates  that a claim
based on Regulation S transactions would be in violation of due process.

      Also,  the  SEC  has  not  stated  a claim  for  relief  for  the  sale of
unregistered securities issued by Stratcomm.

      As much of the  relief  which  the SEC  requests  from  this  Court is not
authorized by statute such relief must be denied.

                                        4

<PAGE>

      The  Defendants,  Veitia and Stratcomm,  hereby  incorporate and adopt the
motion to dismiss and supporting memorandum filed by the CRG and GAP, as well as
the other Defendants.

      In light of the foregoing the Defendants, ROBERTO E. VEITIA and STRATCOMM
MEDIA, LTD. request that this Court dismiss the Complaint for the reasons
provided above and as more fully described below.

                                MEMORANDUM OF LAW

      I.    First Amendment and Section 17(b)

            A.    Section 17(b) of the Securities Act Violates
                  the First Amendment of the United States Constitution

            The SEC in its Third Claim  alleges  that CRG and other  Defendants,
including  Veitia,  Stratcomm,  and Mr.  Spratt,  violated  Section 17(b) of the
Securities Act of 1933 (the  "Securities  Act") because they did not disclose in
MoneyWorld and its related  publications  the fact that they were being paid by,
and the amount of  compensation  they received from,  various public  companies.
Section 17(b)'s  requirements do not satisfy First Amendment standards set forth
by the Supreme Court for  regulation of  commercial  speech  because the statute
does not directly and materially  advance the  government's  stated interest and
its  requirements  are more  extensive  than  necessary to achieve the statutory
purpose.

            Section 17(b) compels a person to disclose not only the fact that he
or she has been paid to publish an article or  advertisement  that  describes  a
security, but also the amount of such payment. Section 17(b) provides that:

            It shall be unlawful for any person, by the use of any means or

                                        5

<PAGE>

            instruments  of   transportation   or  communication  in  interstate
            commerce or by the use of the mails, to publish,  give publicity to,
            or  circulate  any  notice,  circular,   advertisement,   newspaper,
            article, letter,  investment service, or communication which, though
            not purporting to offer a security for sale, describes such security
            for  a  consideration  received  or  to  be  received,  directly  or
            indirectly,  from an issuer,  underwriter,  or dealer, without fully
            disclosing  the  receipt,  whether  past  or  prospective,  of  such
            consideration and the amount thereof.

15 U.S.C.ss.77(b)  (1977).  Section 17(b)'s compulsions plainly impact the First
Amendment guarantee of freedom of speech. "Mandating speech that a speaker would
not otherwise make necessarily  alters the content of the speech," and therefore
must be considered a  content-based  regulation of commercial  speech.  Riley v.
National Fed'n of the Blind of North Carolina, Inc., 487 U.S. 781, 795 (1988).
     In determining  whether  Section 17(b) violates the First  Amendment,  this
Court must first  determine  the  appropriate  judicial  standard  of review for
governmental regulation compelling the content of commercial speech. The Supreme
Court first recognized the constitutional value of commercial speech in Virginia
State Board of Pharmacy vs. Virginia Citizen's Consumer Council,  Inc., 425 U.S.
748 (1976).  Since  then,  the  Supreme  Court,  the Courts of Appeal in several
circuits,  and district  courts  throughout  the  country,  have  clarified  and
enhanced the substantial  burden of proof that the government must satisfy if it
chooses to impose  content-based  regulations on commercial speech. See e.g., 44
Liquormart,  Inc,  v. Rhode  Island,  517 U.S. 44 (1996);  Central  Hudson Gas &
Electric  Corp. v. Public  Service  Commission of New York, 447 U.S. 557 (1980);
Nordyke V. Santa Clara Cty., 110 F.3d 707, 713 (9th Cir. 1997).

                                        6

<PAGE>

            The Supreme Court's decisions concerning commercial speech are based
on the test adopted in Central  Hudson Gas & Electric  Corp.  v. Public  Service
Commission  of New York,  447 U.S. 557 (1980) - a test that, as some Justices of
the Supreme Court observed, was inadequate from the beginning because it assumed
that commercial speech should receive less than full First Amendment protection.
See 44 Liquor Mart, Inc, v. Rhode Island, 517 U.S. 44 (1996). This Court now has
before it a case where the  government  is attempting to regulate the content of
commercial speech in magazines directed to the investing public.

                       (1) This Court Should Adopt Strict

                      Scrutiny As The Appropriate Standard

                    For Judicial Review Of Commercial Speech

         We respectfully submit that this Court should determine that commercial
speech enjoys the same full First Amendment protections as noncommercial speech,
and strike down Section 17(b) of the Securities Act as unconstitutional.

                        (a) Content-Based Regulations are

                                 Equally Unacceptable for Commercial

                            and Noncommercial Speech

     Content-based  regulations  include any government  directive that mandates
speech that a speaker  otherwise  would not make. See Riley v. National Fed'n of
the Blind of North  Carolina,  Inc.,  487 U.S. 781, 795 (1988)  (requiring  that
professional  fund  raisers  disclose  percentage  of  charitable  contributions
collected  actually turned over to charity violates the First Amendment);  Miami
Herald  Publishing  Co.  v.  Tornillo,  418 U.S.  241,  256  (1974)  (compelling
newspapers to print an editorial reply violates First Amendment).  Content-based
regulations are inherently suspect under the First Amendment both in the context
of

                                        7

<PAGE>

noncommercial and commercial speech.1
         The possibility that  constitutional  distinctions  might exist between
commercial and  noncommercial  speech,  and that the Constitution  might require
less protection for commercial  speech,  was first suggested by Justice Blackmun
in Virginia  State Board,  425 U.S. at 771 n.24.  These  so-called  "commonsense
distinctions" led to the Supreme Court's Central Hudson  multi-factor  test, and
to the conclusion that full First Amendment  protection would not be afforded to
commercial speech. See Central Hudson Gas, 447 U.S. at 562-63.

         Regardless of what "common  sense" once seemed to suggest  twenty years
ago, recent decisions of the Supreme Court  demonstrate that these  distinctions
between  categories  of  speech  can no longer  support  lesser  protection  for
commercial speech.2 In modern society,  advertising is of substantial importance
to the livelihood of consumers and businesses  alike.  Advertising  about public
companies  and  their  stock  informs  the  American  public  about   investment
opportunities.  Advertising  for  computers  and  related  products  informs the
American  public about ways to receive  unprecedented  access to information and
how to form  electronic  communities.  Advertising  for digital  cameras informs
families of new ways to

--------
1 "The very purpose of the First Amendment is to foreclose public authority from
assuming a guardianship of the public mind through regulating the press, speech,
and  religion."  Thomas v.  Collins,  323 U.S.  516,  545 (1945)  (Jackson,  J.,
concurring).  "To this end, the government, even with the purest of motives, may
not  substitute  its  judgment as to how best to speak for that of speakers  and
listeners:  free and robust debate cannot thrive if directed by the government."
Riley,  487 U.S. at 790.  The Supreme  Court's  antipathy  toward  content-based
regulations in commercial speech context is reflected in its "general rule" that
"the  speaker  and the  audience,  not the  government,  assess the value of the
information presented." Edenfield v. Fane, 507 U.S. 761, 767 (1993).

2 As Justice Stevens,  joined by Justices Kennedy and Ginsburg,  recently stated
in 44 Liquormart, "neither the 'greater objectivity' nor the 'greater hardiness'
of truthful,  nonmisleading  commercial speech justifies  reviewing its complete
suppression  with added  deference." 517 U.S. at 502. Justice Thomas reached the
same conclusion. Id. at 523 n.4.
                                        8

<PAGE>

preserve their memories of important events. These messages,  while labeled mere
"commercial"  speech,  certainly are no less important to the public, and cannot
be less worthy of First Amendment protection,  than the rantings of neo-Nazis or
expletives about the draft  emblazoned on Leonard Cohen's jacket,  each of which
was found to constitute speech protected under the First Amendment. See National
Socialist Party v. Village of Skokie,  432 U.S. 43 (1977);  Cohen v. California,
403 U.S. 15 (1971).
     Adoption of strict scrutiny as the test for regulation of commercial speech
already has been  endorsed by four members of the Supreme  Court 179  Justices
Stevens, Kennedy, Thomas and Ginsburg. 44 Liquormart, 517 U.S. at 501 (plurality
opinion); id. at 526 (Thomas, J., concurring). Indeed, under the Supreme Court's
more recent  decisions,  the Central  Hudson test itself has evolved into a near
equivalent of strict scrutiny.3 For this reason,  the SEC's apparent reliance on
SEC v. Wall Street  Publishing,  Inc., 851 F.2d 365 (D.C. Cir. 1988), and on the
recent unpublished district court decision in SEC v. Huttoe, No. 96-2543 (D.D.C.
1998), is plainly  incorrect.4  Those decisions  completely fail to take account
two decades of  commercial  speech cases which have  refined the Central  Hudson
test, and firmly tightened the scrutiny on any restrictions  against  commercial
speech.
--------------
3 In Greater New Orleans  Broadcasting  Association,  Inc. v. United States, the
most recent Supreme Court case involving commercial speech, the Court explicitly
stated  that it was not  adopting  strict  scrutiny,  although  it left open the
possibility  of considering  it in an  appropriate  case. 119 S. Ct. 1923,  1929
(1999).

4 The facts in both cases are clearly distinguishable from this case because the
publishers  of the  articles in question  failed to disclose  the fact that they
were being paid to publish the articles. In Wall Street Publishing, the articles
were not labeled advertisements,  851 F.2d at 372; and in Huttoe, the court held
that  the  statement  "Personnel  associated  with  SGA  may own  shares  in the
companies  mentioned  herein  or  may  act  as  consultants  thereto,"  did  not
constitute  disclosure of  compensation.  Here, Money World magazine labeled the
articles "advertorials."

                                        9

<PAGE>

                        (b) The Historical Circumstances
                            Surrounding the adoption of the Bill of
                            Rights Confirm that Commercial Speech
                            Merits Full First Amendment Protection

         The historical evidence as to the original intent of the framers of the
Constitution   supports  equal  First  Amendment  treatment  of  commercial  and
noncommercial   speech.   During  the  period  leading  to  the   Constitutional
Convention,  Americans  were deeply  concerned  about the  relationship  between
government  and  commerce.  The  Federalist  papers,   published  following  the
Constitutional  Convention,  made clear that commercial concerns were central to
the Framers.  As Alexander Hamilton wrote in No. 12, "The prosperity of commerce
is now perceived and  acknowledged by all  enlightened  statesmen to be the most
useful  as well as the  most  productive  source  of  national  wealth,  and has
accordingly  become a primary object of their  political  cares." The Federalist
No. 12, at 91 (Alexander  Hamilton)  (Clinton  Rossiter ed.,  1961). In order to
remedy  the   commercial   crisis  that  had  arisen   under  the   Articles  of
Confederation,  the drafters of the  Constitution  provided for a strong central
government  that would have the express power to regulate  interstate  commerce.
See  Catherine  Drinker  Bowen,  Miracle  at  Philadelphia:  The  Story  of  the
Constitutional Convention May to September 1787 9-10 (1966).

         However,  the creation of a strong central government also worried many
Americans who feared that a new federal  government  would like England  trample
upon their basic freedoms.  To allay those fears, the Bill of Rights was drafted
and ratified by the States.  The Reader's  Companion to American  History  97-99
(Eric  Foner & John A.  Garraty  eds.,  1991);  Herbert  J.  Storing,  What  the
Anti-Federalists Were For 64-70 (Murray Dry ed., 1981).

                                    10

<PAGE>

First among the amendments to the  Constitution was the provision that "Congress
shall make no law . . . abridging  the freedom of speech,  or of the press . . .
 ." U.S. Const. amend. I.
         At the time of the  ratification  of the Bill of Rights,  the  American
people thus were concerned  with  advancing the free flow of commerce,  and they
relied  heavily on  advertising  as a means of  communicating  about  commercial
matters.  At the same time the new Americans  plainly were interested in placing
limits on the powers given to the national  government by the new  Constitution.
Because,  as Hamilton wrote, a desire for peaceful  prosperity based on commerce
was a prime force leading to the creation of the Constitution, the conclusion is
inescapable that early Americans  believed that their  advertising was as worthy
of protection  under the First  Amendment as was their speech on other social or
political issues of the day.

         In sum,  both the  historical  evidence  of  original  intent,  and the
Supreme Court's repeated  condemnation of content-based  regulation,  compel the
adoption of strict  scrutiny as the test for protecting  commercial  speech from
paternalistic censorship.  This Court therefore should recognize that commercial
speech is to be fully protected by the First Amendment.

                        (2) This Court Should Strike Down
                            Section 17(b) Under the Strict Scrutiny Test

         In order to defend Section 17(b) from  constitutional  attack under the
strict scrutiny standard, the SEC must demonstrate: (i) that it has a compelling
interest in requiring  that anyone who  publishes  an article  that  describes a
security must disclose both the fact that they have been paid to publish and the
amount thereof;  and (ii) that these mandated  disclosures are narrowly tailored
to serve the government's compelling interest. Riley v.

                                    11

<PAGE>

National  Federation  of the Blind of North  Carolina,  Inc.,  487 U.S. 781, 786
(1988).  While the SEC may argue that the  governmental  interests  asserted  to
justify  Section  17(b) are  compelling,  the SEC cannot  possibly  maintain its
burden of  establishing  that Section  17(b)'s  requirement  that the  publisher
disclose both the fact and the amount of  compensation  is narrowly  tailored to
pass First Amendment muster.

                           (a)   The Legislative History of Section 17(b)
                                 Reveals That Congress Was Concerned

                                 About Objective Reporting and Securities Fraud

Like the 1933 Act's other provisions, Section 17(b) was designed to require full
and fair  disclosure of the character of securities sold in commerce and through
the mails.  See Securities  Act of 1933, 15  U.S.C.ss.77a  et. seq.  (1997).
Congress'  main  concern in drafting the bill that became  Section  17(b) was to
prohibit  advertisements  that were  masquerading as "objective  reporting." The
House Committee Reports noted that Section 17(b) was  "particularly  designed to
meet the evils of the  'tipster  sheet' as well as  articles  in  newspapers  or
periodicals  that  purport to give an  unbiased  opinion  but which  opinions in
reality are bought and paid for." See H.R. REP. NO. 85, at 24 (1933),  reprinted
in FEDERAL SECURITIES LAWS: 1 LEGISLATIVE HISTORY 1933-1982, at 161 (1983).
         The  legislative  history of Section  17(b) does not indicate  that the
drafters of the legislation  were concerned about  advertising  that was plainly
identified as such, or about revealing how much a publisher of such  advertising
was paid. Rather, the drafters of the bill expressed concern that anyone reading
a  publication  that  described a security  should know  whether the article was
"bought and paid for" in order to curtail securities fraud. H.R. REP.

                                    12

<PAGE>

No. 85 at 6. As discussed  below,  while the  government's  interest in enacting
Section 17(b) may be substantial, its requirement that persons disclose the fact
and amount of  consideration  neither  necessary  nor  narrowly  tailored to the
Congressional purpose.
                           (b)   Section 17(b)'s Requirement That Publishers

                                 Disclose The Fact And Amount Of

                                 Compensation Cannot Withstand Strict Scrutiny

     Section  17(b)'s  requirement  that anyone who  publishes  an article  that
describes a security  must disclose the fact that they have been paid to publish
the article and the amount of  consideration  cannot  withstand  strict scrutiny
because the statute is not narrowly tailored.  While preventing securities fraud
is a compelling  government interest,  see SEC v. Capital Gains Research Bureau,
Inc., 375 U.S. 180,  186-87 (1963);  Blount v. SEC, 61 F.3d 938, 944 (D.C.  Cir.
1995),  the question here is whether Section 17(b) is narrowly  tailored to meet
the government's interest.
         First,   the  fact  that  a  company   paid  to  have  an   article  or
advertisement,   which  "describes  a  security,"  in  a  publication  does  not
necessarily  mean that fraudulent  conduct is occurring or that someone is being
deceived.  Every day,  corporations  and individuals pay to have  advertisements
placed in newspapers,  magazines and other periodicals across the country.  Many
advertisements  contained in these periodicals "describe a security," but do not
mention  the  fact  or  amount  that  the  publisher  was  paid to  publish  the
advertisement.  Most  editions  of the Wall  Street  Journal  or  Business  Week
magazine  contain  such  examples.  To suggest,  without  more,  that there is a
correlation  between  advertisements  which  "describe a security," and fraud is
simply unsupportable. As the Supreme Court stated in Riley, "[i]t is

                                    13

<PAGE>

well settled that a speaker's rights are not lost merely because compensation is
received;  a speaker  is no less a speaker  because he or she is paid to speak."
487 U.S. at 801.  "Broad  prophylactic  rules in the area of free expression are
suspect.  Precision of regulation  must be the  touchstone in an area so closely
touching  our most  precious  freedoms."  NAACP v.  Button.,  371 U.S.  415, 438
(1963).
         Moreover,  where the publication is plainly labeled as an advertisement
such as  here,  disclosing  the  specific  amount  of  compensation  paid to the
publisher  does not directly  advance the  government's  interest in  preventing
securities  fraud.  While the SEC may argue that the amount of  compensation  is
material to the reader  because the SEC believes it discloses  the extent of the
publisher's  bias,  several other reasons  unrelated to the  subjectivity of the
publication could account for higher or lower compensation.  These include:  (i)
the amount of advertising pages purchased; (ii) the size of the paid circulation
or geographic reach of the magazine;  (iii) prevailing  advertising rates in the
industry;  (iv) overhead and costs of the  publication;  and (v) other  business
arrangements between the advertiser and the publisher.

         The burden lies with the SEC to demonstrate that forcing  publishers to
disclose  the fact and the amount paid for  advertising  is the least  intrusive
means in preventing  "masquerading" and securities fraud. Where the articles are
already  labeled  "Advertorials,"  forcing  publishers to disclose the amount of
consideration  they charge for the  advertisements  has no direct correlation to
preventing  securities  fraud.  Whether  CRG was paid $100 or  $100,000,  or 100
shares or 10,000 shares of stock, a MoneyWorld reader already knows

                                    14

<PAGE>

without  this  information  that he or she is reading an article paid for by the
company.  Simply put, Section 17(b)'s  requirements  constitute a more extensive
regulation  than  is  necessary  to  serve  Congressional   intent  or  any  SEC
enforcement  interest.  Hence, under First Amendment strict scrutiny  standards,
Section 17(b) cannot stand.

                      (3) Section 17(b) is Unconstitutional

                          Under the Central Hudson Test

         Even  if  Section  17(b)  is not  subjected  to  strict  scrutiny,  the
government  cannot meet the test set forth in Central  Hudson.  Under that test,
the SEC must show  that:  (i) if the  communication  is neither  misleading  nor
related to unlawful  activity;  (ii) the government has a substantial  interest;
(iii) the  restriction  advances the asserted  interest in a direct and material
way; and (iv) the  restriction  is not more extensive  than  necessary.  Central
Hudson, 447 U.S. at 564. For the reasons set forth above, the SEC cannot contend
that paid advertising as such is unlawful or misleading;  particularly where, as
here, the publication is clearly labeled as an advertisement.5

         While  admittedly  there  is  a  compelling  governmental  interest  in
combating securities fraud, once the fact of consideration is disclosed, the SEC
cannot  successfully  argue that it has a substantial or compelling  interest in
mandating the disclosure of the amount of consideration.  Moreover,  even if the
SEC could  satisfy the second prong of the Central  Hudson test,  Section  17(b)
clearly founders on the third and fourth prongs.

--------
5 There is no allegation in this case that any of the  advertisements  published
in Money World contained false or misleading statements.  See City of Cincinnati
v.  Discovery  Notework,  Inc.,  507 U.S.  410,  416  (1993)  (the  unlawful  or
misleading conduct must relate to the content of the speech).  The SEC's "fraud"
case in this regard is based solely on defendants'  claimed  failure to disclose
(i)  the  receipt  of   compensation   from  the  companies  who  paid  to  have
advertisements place in Money World, and (ii) their trading in the securities.

                                    15

<PAGE>

         The third  prong of the  Central  Hudson  test  addresses  whether  the
compelled  speech  directly and  materially  advances the asserted  governmental
interest.  "This burden is not  satisfied  by mere  speculation  or  conjecture;
rather,  a  governmental  body seeking to sustain a  restriction  on  commercial
speech  must  demonstrate  that  the  harms  it  recites  are  real and that its
restrictions  will in fact  alleviate  them to a material  degree."  Greater New
Orleans,  119 S. Ct. at 1932,  quoting  Edenfield v. Fane, 507 U.S. 761, 770-771
(1993).  For the  reasons  set out above,  where the fact of  consideration  has
already been  disclosed,  the  requirement  that the publisher also disclose the
amount of consideration does not materially or directly advance any governmental
interest. In light of the several factors impacting advertising rates, the SEC's
claim that  disclosure of the amount of  consideration  materially  advances the
ability  of  investors  to  measure  editorial  bias is  based  on  nothing  but
speculation  and  surmise.  Furthermore,  editorial  bias  does not  exist  with
advertisements.

         Finally,  the SEC cannot satisfy the fourth prong of the Central Hudson
test because the SEC cannot show that the  restriction is no more extensive than
necessary to serve the government's interest. Greater New Orleans, 119 S. Ct. at
1932.  Although the  possibility of fraud and deception exist in any publication
that describes a security,  the government's  interest in preventing  securities
fraud is separately  addressed and protected by other  provisions of the federal
securities  laws.  Section  10(b) and Rule 10b-5 of the Exchange Act and Section
17(a) of the  Securities  Act,  also known as the antifraud  statutes,  prohibit
misrepresentations,  omissions of material fact, schemes or artifices to defraud
and acts,  practices or courses of business  which operate as a fraud or deceit.
Indeed, the SEC has

                                    16

<PAGE>

relied upon these antifraud provisions in this case. See Complaint at pp. 62-66.
Because these antifraud  statutes already address and protect the essence of the
government's  purpose in  promulgating  Section 17(b) (i.e.,  to combat  fraud),
additional mandates that impinge upon the fundamental right of freedom of speech
must be no more extensive than necessary.  Accordingly,  because another statute
already  addresses  the  government's  interest,  17(b) should be struck down as
unconstitutional.

         The fact that the SEC has never  charged major  publishers  such as the
Wall  Street  Journal or Business  Week for failure to disclose  the receipt and
amount of compensation  for  advertisements  that "describe a security," is also
evidence that 17(b) provides  ineffective or remote support for the government's
purpose of combating fraud. The aspect of the statute  challenged here is simply
unnecessary.

         Because the  articles in CRG's  publications  were  plainly  labeled as
"bought and paid for," the additional  requirement  that CRG disclose the amount
of  consideration  it  received  does not  directly  or  materially  advance the
government's  interests.  Moreover,  because other federal  statutes  adequately
address and protect the  government's  concern of combating  securities fraud by
less restrictive means,  Section 17(b)'s regulation of commercial speech is more
extensive than necessary  under both the strict  scrutiny and the Central Hudson
test.  Thus,  Section 17(b) violates the First  Amendment and should be declared
unconstitutional by this Court.

                     (4)   Freedom of the Press

         There can be no doubt that the publications here at issue are within
the First

                                    17

<PAGE>

Amendment's  protection  afforded to "the  press." The Supreme  Court  stated in
Lowell v. City of Griffin  Ga.,  303 U.S.  444,  452  (1938),  "The press in its
historic  connotation  comprehends  every sort of  publication  which  affords a
vehicle of information and opinion." The  publications at issue here are no less
subject to constitutional protection under the First Amendment than Standard and
Poors.  That publication was recognized as being within the meaning of the press
in the case of In Re Scott Paper Company Securities  Litigation,  145 F.R.D. 366
(E.D. Pa. 1992)(First Amendment protection applies to disseminators of corporate
financial information).

     The Supreme Court has  recognized  that the First  Amendment is designed to
prevent previous restraints on publications principally although not exclusively
through previous  restraints or censorship.  Grosjean v. American Press Co., 297
U.S. 233, 249 (1936).
         While it is  conceded  that there may be some  reasonable  controls  on
freedom of the press such controls  cross the line when the press is required to
publish the exact terms,  amount,  and method of compensation for advertisements
which are revealed as such.

         The effect of such prior restraint on the press is far reaching. First,
it will reveal  particular  details of the financial aspects of advertisement to
competing  members  of the  press.  This may  have an  adverse  impact  upon the
economic viability of the press.

         Second,  the  requirements of disclosure will impact the content of the
publication.  Space in the  publication  will be required to set forth the SEC's
mandated disclosure.

         The publications will therefore have less space to publish information
 or will  have

                                    18

<PAGE>

increased costs to the requirements of additional space to set forth the details
of remuneration for each advertisement.

         Such infringement on the press serves no legitimate purpose. The public
only need know that  information is an advertisement to accomplish the intent of
Congress in enacting Section 17(b).

         II.  Failure to Satisfy the Pleading Requirements of Rule 9(b)
              ---------------------------------------------------------
         Federal Rules of Civil  Procedure 9(b) provides that, "In all averments
of fraud or mistake,  the circumstances  constituting  fraud or mistake shall be
stated with particularity.  Malice, intent,  knowledge,  and other conditions of
mind of a person may be averred generally."

         The  Complaint  fails to  satisfy  the  requirement  of Rule 9(b) as to
Defendants Veitia and Stratcomm.

         The SEC contends that  Stratcomm and Veitia are control  persons of Co-
Defendants  CRG and GAP.  However,  the SEC has only  sought to hold  Veitia and
Stratcomm liable as control persons for the actions of CRG (Cmplt. P. 199).

         The SEC has chosen to combine CRG and GAP in the  Complaint and grouped
these Defendants as "collectively  CRG" (Cmplt. P. P. 4 & 10). This grouping has
rendered this Complaint legally deficient.

         The use of such  labeling has  resulted in  Stratcomm  and Veitia being
unable to  determine  whether the SEC seeks to sanction  them for the actions of
CRG or GAP,  or both  companies  together.  The lumping of these  defendants  is
contrary to the specificity

                                    19

<PAGE>

requirements or Rule 9(b).
     In a securities action,  mere conclusory  allegations of deception or fraud
are insufficient to satisfy Rule 9(b). Elster v. Alexander,  75 F.R.D. 458 (D.C.
Ga.  1977);  Segal v.  Gordon,  467 F.2d 602 (2d  Cir.  1972);  In re:  Checkers
Securities Litigation, 858 F.Supp. 1168 (M.D. Fla. 1994). Rule 9(b) requires, at
a minimum  that a  plaintiff  allege  the time,  place and  content of the false
representations  or omissions,  as well as the identity of the person making the
misrepresentation or omission. Keith v. Stoelting, Inc., 915 F.2d 996, 1000 (5th
Cir.  1990)(citing 5 Charles A. Wright & Arthur R. Miller,  Federal Practice and
Proceduress.1297  at 403). When multiple  defendants are charged with securities
fraud,  the  particularity  requirements  for pleading fraud  requires  specific
allegations  of each  defendant's  participation  in the  fraud.  DiVittorio  v.
Eqidyne Extractive Industries, Inc., 822 F.2d 1242, 1247 (2nd Cir. 1987); Furman
v. Sherwood,  833 F.Supp. 408 (S.D.N.Y.  1993). Also, common allegations used to
imply that each defendant was  responsible  for statements and actions of others
in a securities fraud action cannot satisfy the requirements of Rule 9(b). David
F. Apple, M.D.  Professional  Corp. Pension Plan v. Prudential Bache Securities,
Inc., 820 F.Supp. 984 (W.D.N.C. 1992), aff'd, 933 F.2d 228 (4th Cir. 1993). Each
Defendant  is  entitled  to be apprized  by  particularized  pleadings  of facts
surrounding the alleged fraud. Center Cadillac,  Inc. v. Bank Leumi Trust Co. of
N.Y., 808 F.Supp. 213 (S.D.N.Y. 1992).

         A.  Improper Labeling of Defendants

         A review of the complaint  reveals that the SEC's  allegations  fail to
place the Defendants  Stratcomm and Veitia on notice as to what specific acts or
practices of each

                                    20

<PAGE>

Defendant  the SEC  seeks to  sanction.  As the SEC has  chosen to  combine  CRG
together  with GAP,  each  allegation in the Complaint as to CRG is therefore an
allegations which pertains equally to GAP.

         The SEC has alleged that GAP is a subsidiary of  Defendant,  Stratcomm.
Furthermore,  the SEC  contends  that  from late  1995 GAP  replaced  CRG as the
primary entity which was  responsible for publishing  promotional  magazines and
newsletters. (Cmplt.P. 12)

         The  Complaint's  deficiency is clearly  illustrated in the allegations
regarding the promotion of Tracker, Delta Petroleum, Ammonia Hold and Imtech. In
each  section of the  complaint  devoted to  describing  the  promotion of these
entities  the   allegation   provides  that  CRG  promoted  the   aforementioned
corporations  in various  publications  (Cmplt.  P. P. 60, 84, 103,  121,  134).
However,  the SEC has provided that both CRG and GAP have violated 17(a),  10(b)
and Rule 10b-5 as to each of these  companies  without  alleging  a single  fact
which is specific to GAP (Cmplt. P. P. 63, 86, 106, 123, 134). Therefore, Veitia
and  Stratcomm  are not on notice as to which entity  committed any action which
might subject them to liability.

         The SEC's  lumping of these two  Defendants  as  "collectively  CRG" is
particularly  egregious since one of the main  violations  alleged by the SEC is
fraud in the promotion of  securities.  In part the SEC has claimed that CRG and
other  defendants  committed  fraud by failing to make  certain  disclosures  in
promotional materials.  Therefore,  the identity of the party that is making the
promotion is central to  determining  what  obligation  if any that party had in
light of the securities laws.

                                    21

<PAGE>

         The Complaint must allege specifics of fraud as required by Rule 9(b)
as to each Defendant.  Schultz v. Rhode Island Hosp. Trust Nat. Bank, 94 F.3d
721, 731 (1st Cir. 1996).
         B.  Failure to Plead With Specificity As to Veitia

         The SEC seeks to hold Veitia, individually,  liable for almost each and
every securities  violation  alleged in the Complaint.  The allegations  however
fail to provide what acts or practices  Veitia  engaged in which  subject him to
liability.

     The SEC alleges that Veitia was "the mastermind",  or made "suggestions" or
"orchestrated"  certain actions (Cmplt.P. 33, 47, 56). These types of conclusory
allegations  are  precisely  the types of  allegations  which Rule 9(b) seeks to
remedy.  Additionally,  Veitia  is  not  mentioned  in  any  substantive  way in
allegations  involving  Ammonia Hold,  Imtech,  Global Spill,  Jreck Subs, Sobik
Subs, and Viking Management,  as well as the allegations  directed at Stratcomm.
Therefore, the only allegations concerning Veitia regarding any of these issuers
are  those  allegations  that he was a  "mastermind."  Such  allegations  cannot
sustain a claim for relief for fraud. See, S.E.C. v. U.S.  Environmental,  Inc.,
897 F.Supp.  117, 119 (S.D.  N.Y.  1995)(Claim  of primary  liability  cannot be
sustained on mere allegations that a person engaged in a plan or scheme.)
         Furthermore,  the SEC has not provided  Veitia  notice as to which acts
would  subject him to liability in for those issuers in which the SEC alleges he
was involved.  The SEC claims that Veitia  executed a stock  purchase  agreement
with Delta  Petroleum  (Cmplt.  P. 67).  Also  alleged is that Veitia  bought 50
shares of Foreland stock (Cmplt. P. 127). Additionally, the SEC has alleged that
Veitia executed certain contracts with issuer clients

                                    22

<PAGE>

(Cmplt.P.P. 67, 135, 140, 174).  None of this behavior establishes that Veitia,
individually, has violated the securities laws.
         The allegations  provide that omissions were made in CRG  publications.
The allegations do not provide that Veitia himself made omissions.

         To satisfy  Rule 9(b) Veitia is entitled to be informed of the time and
place each statement was made which contained an omission,  what statements were
made, the manner in which they were made and what the  defendants  received from
the fraud  alleged.  Brooks v. Blue Cross & Blue Shield of Fla,  Inc.,  116 F.3d
1364,  1370 (11th Cir. 1997) On these  allegations the SEC has failed to satisfy
this pleading requirement.

         C.  Failure to Specify Control Person Liability

         The  allegations  as to  Stratcomm's  actions cannot sustain a cause of
action for control person  liability.  There are no allegations  which establish
that Stratcomm engaged in any way in any fraudulent activity.

     To sustain a cause of action under  Section 20(a) it must be shown that the
controlling person was involved in the fraudulent scheme. Rochez Brothers,  Inc.
v.  Rhoades,  527 F.2d 880,  884 (3rd Cir.  1975).  In Rochez the court  stated,
"[t]he  legislative  history of Section 20(a) illustrates that Congress intended
liability to be based on something  besides control.  That something is culpable
participation. Id. at 884-885.
         Here,  the SEC has not even alleged one action on the part of Stratcomm
to indicate how they participated in any of the 15 securities  transactions with
CRG's  issuer  clients.  Having  failed to do so the SEC has not  satisfied  the
pleading requirements of Rule

                                    23

<PAGE>

9(b).

         D.  Failure to Specify Communication Made to Support Allegations of
         Fraud

         As  discussed  above,  the SEC has claimed  that  Veitia and  Stratcomm
violated the securities laws in their position as control  persons.  The SEC has
failed to establish with specificity the acts of CRG which might subject them to
liability.

         The  SEC  has  failed  to  allege  with  particularity  when  CRG  made
communications  which contained  omissions of material  information  which would
subject them to liability for fraud.  The facts as to what  statements were made
by CRG  together  with when the  statements  were made are critical to the SEC's
claim of fraud.

         The SEC has indicated in certain  instances in the  complaint  that CRG
began promoting client companies during specified periods.  However there are no
facts alleged which set forth the promotional efforts in detail.  Likewise,  the
times and content of the representations are not alleged.  The general nature of
the allegations are the same for each company  identified in the Complaint.  The
allegations as to Tracker and ECO2 are examples of the improper  pleading by the
SEC.

         As to Tracker,  the SEC has alleged that CRG began promoting Tracker in
the  Summer  of 1994  (Cmplt.  P.  46).  The SEC does  not  provide  what  those
promotional  efforts  included  except to  identify  the  January,  October  and
November, 1995 editions of MoneyWorld in which Tracker was featured.

         Similarly, the allegations as to ECO2 are equally obtuse. Here, the SEC
alleges  that CRG being  promoted  ECO2 in August,  October  and  November  1995
(Cmplt. P. 142).

                                    24

<PAGE>

Additionally,  CRG is alleged to have started selling its shares of ECO2 in June
of 1995,  which is well before the promotion began (Cmplt.  P. 140). The SEC has
failed  to  identify  any  communication  made in  connection  with  the sale of
securities in June and July for which the SEC seeks to sanction them.

         Part of the relief the SEC seeks is the disgorgement of all profits and
compensation  CRG and GAP,  as well as the other  Defendants  received  from the
issuers alleged in the Complaint (See,  Complaint,  "Prayer for Relief IV"). The
SEC, by having failed to identify any communication  made by any Defendant while
sales of  securities  were made by CRG,  has  failed  to  satisfy  the  pleading
requirements of Rule 9(b).

         The  failure  to  specify  the acts of  promotion,  as well as when the
promotions  occurred  and the times of the sales,  is a fatal  violation of Rule
9(b).

         E.  The Complaint is Patently Vague

         The SEC has chosen to preface certain  allegations with the phrases, ".
 . .by virtue of the conduct describe above. . ." or "by reason of the foregoing"
without  any  other  limiting  language.  The use of  these  limitless  terms is
contrary to the specificity requirements of Rule 9(b).

         An  example  of the harm  caused by vague  allegations  can be found in
paragraph  63 of the  Complaint.  That  paragraph  claims a violation of Section
17(a);  Section 10(b); Rule 10b-5;  Section 17(b); and Section 5, by referencing
the first 62  paragraphs.  There is no  indication  as to the specific  acts for
which the Defendants  are being held  accountable  since the  allegations in the
proceeding 62 paragraphs describe in general terms a number of events.

                                    25

<PAGE>

These events include  allegations as to Regulation S, Rule 144, and the issuance
of S-8 stock, as well as to conclusory  statements of fraud. Similar allegations
can be found as to each of CRG's client companies.

         F.  Failure to State A Claim Upon Which Relief Can Be Granted
         Veitia and Stratcomm hereby incorporate the arguments and legal
theories set forth in CRG's and GAP's memorandum in support of the motion to
dismiss.
         The underlying support for the motion to dismiss as set forth in CRG's
and GAP's memorandum  is equally  applicable  to  Stratcomm  and Veitia.  The
promotional programs  conducted with disclosure  that said programs are paid
advertisements preclude  liability on the part of all  Defendants.  The
remaining  arguments in support of CRG and GAP's motion to dismiss are likewise
applicable to Stratcomm and Veitia.

         III.  Failure to State a Cause of Action in Relation to Section VI of
         the Complaint

         The SEC has alleged in Section VI of the Complaint that Stratcomm acted
as  an   unregistered   broker  dealer  with  CRG  and  caused  an  unregistered
distribution  of  Stratcomm  common  stock,  which  CRG and GAP  touted  without
disclosing its relation to Stratcomm.  It further alleged that these  activities
subject  CRG,  Veitia  and other  Defendants  to  liability  under the fraud and
touting provisions of the securities laws. Additionally,  Stratcomm,  Veitia and
CRG are alleged to have  violated  Section 5 of the  Securities  Act and Section
15(a)(1)  of the  Exchange  Act.  Also,  Stratcomm  and Veitia are claimed to be
liable under Section 20(a) of the Exchange Act as control persons. The Complaint
fails to state a claim for relief as to this  issue,  for the  reasons set forth
below, as well as those put forth in CRG's

                                    26

<PAGE>

and GAP's motion to dismiss.
         First,  the SEC has failed to state a claim for relief for violation of
the fraud  provisions of the securities  laws. The basis of the SEC's claim that
these  provisions were violated were that CRG and GAP did not disclose that they
were owned by Stratcomm, or related to another entity, Chicken Kitchen.

     The fact that CRG and GAP omitted to disclose in its publications that they
are owned by Stratcomm and were affiliated with Chicken Kitchen cannot support a
violation of the fraud  provisions of the securities  laws as this  relationship
was  disclosed  in numerous  public  filings.  Investors  are  imputed  with the
knowledge of the total mix of information available. Picard Chemical Inc. Profit
Sharing Plan v. Perrigo Company, 940 F.Supp. 1101, 1121-1123 (W.D. MI. 1996)(The
market  may  be  assumed  to be  aware  of  publically  available  information.)
Therefore this alleged  omission in the publications  themselves  cannot support
the  SEC's  claim  for  relief.  Notably,  the SEC  fails to  allege  that  such
information was not in the public domain.
         Second,  the SEC has failed to indicate how the touting provision found
in  Section  17(b)  has  been  violated.  The  SEC  has  not  alleged  that  the
publications  failed to disclose the fact that payment was made or the amount of
such payment  (Cmplt.  P. P. 184-189).  Without either of these two  rudimentary
elements, a claim for relief for Section 17(b) cannot stand.

         Third,   the  SEC's   allegation   as  to  this  alleged   unregistered
distribution  contains  contradictory  facts and  therefore,  does not place the
Defendants on notice as to what actions the SEC  complains.  The SEC has alleged
that the shares sold were unregistered (Cmplt. P.

                                    27

<PAGE>

184).  Additionally,  the SEC has  alleged  that if  Stratcomm  did not have any
shares to sell,  Stratcomm borrowed  restricted shares and replaced those shares
with Veitia's shares (Cmplt.  P. 186).  Therefore,  it appears at a minimum that
some of the shares sold were subject to a  registration  statement and therefore
were not unregistered.

         Since  the SEC  has  apparently  alleged  inconsistent  positions,  the
Defendants are not on notice as to what actions the SEC seeks to remedy. This is
in violation of Rule 8(a) which requires "a short plain  statement  showing that
the pleader is entitled to relief." The SEC has not alleged that  Stratcomm sold
shares which Stratcomm itself owned.  Rather, the allegations  indicate that the
shares of  Stratcomm  stock  which were sold were those of  Stratcomm  investor.
Therefore  Stratcomm,  Veitia and the other  defendants  are not alleged to have
conducted a distribution of shares which

         Similarly,  as the  pleadings are  inconsistent  the  applicability  of
Section 15(a)(1) of the Exchange Act cannot be determined.

         Therefore,  the SEC has  failed  to  state a  claim  for  relief  for a
violation of either the antifraud or touting  provisions of the  securities  act
and has pled  inconsistent  facts  regarding  the alleged  sale of  unregistered
securities.

                                Conclusion

         For the reasons set forth above, the Complaint should be dismissed.

                                    28

<PAGE>

                             Respectfully submitted,

                        LAW OFFICES OF HORWITZ & FUSSELL,

                           a Professional Association

                     By:   __________________________________
                           MARK L. HORWITZ, ESQUIRE
                             Florida Bar No. 147442

                           17 East Pine Street

                             Orlando, Florida 32801

                           (407) 843-7733
                             Fax No.: (407) 849-1321

                           Attorneys for Defendants, Roberto Veitia and
                            Stratcomm Media, Ltd.

                          CERTIFICATE OF SERVICE

         I HEREBY CERTIFY that a true and correct copy of the foregoing has been
furnished  via U.S.  Mail to the persons on the attached  Service List this 13th
day of December, 1999.

                           MARK L. HORWITZ, ESQUIRE

                                    29

<PAGE>

                                         UNITED STATES DISTRICT COURT
                                          MIDDLE DISTRICT OF FLORIDA
                                               ORLANDO DIVISION

UNITED STATES SECURITIES AND                )        CASE NO.:  99-1222-CV-22-A
  EXCHANGE COMMISSION,                      )
                                            )
         Plaintiff,                         )
                                            )
vs.                                         )        Dispositive Motion
                                            )
CORPORATE RELATIONS GROUP,                  )
INC., GULF ATLANTIC PUBLISHING,             )
INC., et al.,                               )
                                            )
         Defendants.                        )

                  DEFENDANTS, CORPORATE RELATIONS GROUP, INC. AND GULF
                   GULF ATLANTIC PUBLISHING, INC.'S MOTION TO DISMISS

         The Defendants, Corporate Relations Group, Inc. (hereinafter "CRG") and
Gulf  Atlantic  Publishing,  Inc.,  (hereinafter  "GAP"),  by and through  their
undersigned  counsel,  move this Court to dismiss the  complaint  for failure to
state a claim upon which  relief can be granted  and for  failure to plead fraud
with  particularity.  This motion is filed pursuant to Rule 12(b)(6) and 9(b) of
the Federal Rules of Civil Procedure.

                                           Nature of Allegations and
                                          Summary of Basis for Motion

         The Securities and Exchange Commission,  (hereinafter,  "SEC"), filed a
76-page  complaint  against 16 corporations and individuals  seeking a permanent
injunction, disgorgement and fines. The allegations date back to September, 1994
and detail activities

                                                      1

<PAGE>

through  December,  1996.  Additionally,  the 16 Defendants  are alleged to have
committed securities violations involving 15 public companies.

         The SEC alleges that CRG and GAP violated  Sections 5, 17(a) & 17(b) of
the  Securities  Act of 1933  ("Securities  Act") [15 U.S.C.  ss. 77q(a) & (b)];
Section 10(b) of the Securities Exchange Act of 1934 ("Exchange Act") [15 U.S.C.
ss.78j(b)]  and  Rule  10b-5   promulgated   thereunder  17  C.F.R.  ss.  10b-5.
Additionally,  CRG is alleged to have violated  Section 15(a)(1) of the Exchange
Act [15 U.S.C. ss.78o(a)(1)].

         The  SEC  has  not   alleged   that   either   CRG  or  GAP   made  any
misrepresentation  of material fact.  Rather,  the SEC contends that CRG and GAP
(and  Defendants  Veitia,  Skalko,  Spratt and  Stratcomm)  failed to adequately
disclose:  that  payment  was  made to  promote  companies;  the  amount  of the
compensation received;  that stock was sold in the companies while the companies
were being  promoted;  and, that CRG employees were paid to promote its customer
companies  to  stockbrokers.  In one  instance the SEC claims that CRG failed to
disclose that cash payments were made to stockbrokers.

         Similarly, the SEC seeks to sanction CRG, GAP, and the other Defendants
under the  disclosure  provision in Section  17(b).  The SEC  contends  that the
disclosures  in CRG and GAP  publications  did not satisfy the  requirements  of
Section 17(b).

         The SEC has also alleged that CRG, GAP, and the other  Defendants  sold
unregistered  securities  and  therefore  acted as a broker  dealer  in  certain
transactions which were originally

                                                      2

<PAGE>

issued  under  the  Regulations  S  exemption,  as  well as  other  transactions
involving the sale of Defendant, Stratcomm's stock.

         The SEC also  contends  that CRG was  required  to register as a broker
dealer because its employees contacted  stockbrokers to communicate  information
(which is not claimed to be false) about CRG client companies.

         As a consequence of these alleged violations, the SEC seeks a number of
remedies.  These  include  the  issuance  of an  injunction  and fines which are
statutory remedies.  Furthermore,  the SEC seeks non-statutory  relief including
disgorgement of profits and compensation, and an accounting.

         The SEC has  improperly  lumped CRG and GAP  together in the  Complaint
referring  to  these  Defendants  as  "collectively   CRG."  Also,  in  numerous
allegations  of fraud,  the SEC has  failed  to  identify  the  action of either
Defendant in making a statement which contained an omission. Rather, the SEC has
described  CRG as having  engaged  in  "promotion"  and has not  identified  any
statement which would support a securities fraud claim.  Such vague  allegations
do not comply with Rule 9(b) of the Federal Rules of Civil Procedure.

         The SEC also alleges that CRG sold  securities  while  promoting  those
companies.  The  allegations  are not specific as to the timing of the sales and
promotions.  The SEC  therefore  claims it is  fraudulent  for CRG to sell stock
legally obtained for promotional services before or after the promotion. The SEC
seeks disgorgement of all profits and compensation  without regard to the timing
of CRG's sale of stock  legally  obtained  as  compensation  for  services.  The
Complaint  therefore seeks disgorgement of profits even if CRG sold stock before
it began placing promotional material in its publications which was disclosed as
paid advertising. It is submitted that the First Amendment guarantee of freedom

                                                      3

<PAGE>

of speech  and the press  prohibit  this  action by the SEC in  punishing  CRG's
actions.  In  addition,  as a matter  of law,  the  publication  of  promotional
material disclosed as a paid advertisement can never be considered conduct which
would give rise to claims of touting or scalping.

         The SEC has no legitimate  interest in a publisher's  purchase and sale
of stock in a corporation  that advertises in the publisher's  material when the
public is advised that the information  disseminated is advertisement and not an
independent evaluation of the client company.

         The Complaint also utilizes other shorthand techniques which render the
Complaint in violation of Rule 9(b) specificity requirements.  The SEC has
chosen to preface certain allegations with the phrases, ". . .by virtue of the
conduct describe above. . ." or "by reason of the foregoing," without any other
limiting language.  The employment of these phrases in this more than
200-paragraph complaint introduces significant ambiguity into allegations of
fraud.
         The SEC has  failed to state a claim for relief  for  securities  fraud
against CRG and GAP. The conduct which the SEC alleges these Defendants  engaged
is  protected  speech by the First  Amendment.  The  application  of these fraud
provisions  against  these  Defendants  who  published  generalized   investment
information, together with features which were clearly marked "ADVERTORIALS" and
contained  other  disclaimers  which revealed that the Defendants  were paid for
having published the advertorials, is contrary to the First Amendment.

                                                      4

<PAGE>

         Additionally,  viewing the facts in the Complaint as true,  the alleged
omissions could not be actionable  under the securities laws, as the SEC has not
sufficiently  alleged  that the  statements  were  made in  connection  with the
purchase and sale of a security.

         The SEC's claim that CRG and GAP violated the  disclaimer  provision in
Section 17(b) is without  merit. A review of Section 17(b) in light of the First
Amendment,  indicates  that no  claim  for  relief  under  this  section  can be
sustained on these facts.  Additionally,  17(b) merely requires  disclosure;  it
does not mandate the time, place or manner of the disclosure.  The SEC complaint
is  therefore  defective  as to  Section  17(b)  allegations  for  there  are no
allegations  that the  disclosures  were not made in other  ways such as through
press releases and SEC filings.

         The  SEC's  claim  for  relief  against  CRG and  GAP  for the  sale of
unregistered  securities  and failing to register as a broker dealer should also
be dismissed.  Substantial  confusion  regarding the application of Reg S during
the years at issue in the complaint  indicates  that a claim for relief based on
Reg  S  transactions  would  be  in  violation  of  constitutional  due  process
requirements.

         Furthermore,  the SEC has not stated a claim for relief for the sale of
unregistered securities issued by Stratcomm as this distribution was permissible
under the securities laws as sales made by the issuer through employees.

         As much of the  relief  which the SEC  requests  from this Court is not
authorized by statute,  (i.e.,  disgorgement of profits and  compensation and an
accounting),  such  relief must be denied as failing to state a claim upon which
relief can be granted.

                                                      5

<PAGE>

         The Defendants  hereby  incorporate and adopt the motion and memorandum
to dismiss filed on behalf of the other Defendants in this cause.

         In light of the foregoing the Defendants, CORPORATE RELATIONS GROUP,
INC. and GULF ATLANTIC PUBLISHING, INC. request that this Court dismiss the
Complaint.
                                            Respectfully submitted,

                                            LAW OFFICES OF HORWITZ & FUSSELL,
                                            a Professional Association

                                    By:     __________________________________
                                            MARK L. HORWITZ, ESQUIRE
                                            Florida Bar No. 147442
                                            17 East Pine Street
                                            Orlando, Florida 32801
                                            (407) 843-7733
                                            Fax No.:  (407) 849-1321
                                            Attorneys for Defendants, Corporate
                                             Relations Group, Inc. and Gulf
                                             Atlantic Publishing, Inc.

                                            CERTIFICATE OF SERVICE

         I HEREBY CERTIFY that a true and correct copy of the foregoing has been
furnished  via U.S.  Mail to the persons on the attached  Service List this 13th
day of December, 1999.

                                            MARK L. HORWITZ, ESQUIRE

                                                      6

<PAGE>

                                         UNITED STATES DISTRICT COURT
                                          MIDDLE DISTRICT OF FLORIDA
                                               ORLANDO DIVISION

UNITED STATES SECURITIES AND                 )        CASE NO.:  99-1222-CV-22-A
  EXCHANGE COMMISSION,                       )
                                             )
         Plaintiff,                          )
                                             )
vs.                                          )
                                             )
CORPORATE RELATIONS GROUP,                   )
INC., GULF ATLANTIC PUBLISHING,              )
INC., et al.,                                )
                                             )
         Defendants.                         )

                              MEMORANDUM OF LAW IN SUPPORT OF
                        DEFENDANTS, CORPORATE RELATIONS GROUP, INC.
                   AND GULF ATLANTIC PUBLISHING, INC.'S MOTION TO DISMISS

     The Defendants,  Corporate  Relations Group, Inc.  (hereinafter  "CRG") and
Gulf  Atlantic  Publishing,  Inc.,  (hereinafter  "GAP"),  by and through  their
undersigned  counsel,  hereby  file this  Memorandum  of Law in Support of their
Motion to Dismiss.
                                                   Rule 9(b)
         Federal Rules of Civil  Procedure 9(b) provides that, "In all averments
of fraud or mistake,  the circumstances  constituting  fraud or mistake shall be
stated with particularity.  Malice, intent,  knowledge,  and other conditions of
mind of a person may be averred generally."

         The Complaint  fails to satisfy the  requirement  of Rule 9(b). The SEC
has  failed to set  forth the  allegations  as to the  conduct  of each of these
Defendants, but rather has combined CRG and GAP, and grouped these Defendants as
"collectively CRG" (Cmplt. P. P. 4 & 10).

                                                      1

<PAGE>

     In a securities action,  mere conclusory  allegations of deception or fraud
are insufficient to satisfy Rule 9(b). Elster v. Alexander,  75 F.R.D. 458 (D.C.
Ga.  1977);  Segal v.  Gordon,  467 F.2d 602 (2d  Cir.  1972);  In re:  Checkers
Securities Litigation, 858 F.Supp. 1168 (M.D. Fla. 1994). Rule 9(b) requires, at
a minimum,  that a plaintiff  allege the time,  place,  and content of the false
representations  or omissions,  as well as the identity of the person making the
misrepresentation or omission. Keith v. Stoelting, Inc., 915 F.2d 996, 1000 (5th
Cir.  1990).  When multiple  defendants are charged with securities  fraud,  the
particularity  requirements for pleading fraud requires specific  allegations of
each defendant's  participation in the fraud.  DiVittorio v. Eqidyne  Extractive
Industries,  Inc., 822 F.2d 1242, 1247 (2d Cir. 1987);  Furman v. Sherwood,  833
F.Supp.  408 (S.D.N.Y.  1993).  Also, common allegations used to imply that each
defendant was  responsible  for statements and actions of others in a securities
fraud action cannot satisfy the requirements of Rule 9(b). David F. Apple,  M.D.
Professional  Corp.  Pension Plan v.  Prudential  Bache  Securities,  Inc.,  820
F.Supp. 984 (W.D.N.C. 1992), aff'd, 933 F.2d 228 (4th Cir. 1993). Each defendant
is entitled to be apprized by particularized  pleadings of facts surrounding the
alleged  fraud.  Center  Cadillac,  Inc.  v. Bank Leumi  Trust Co. of N.Y.,  808
F.Supp.  213 (S.D.N.Y.  1992).  The SEC must also comply with the  particularity
requirement of Rule 9(b). See, S.E.C. v. U.S.  Environmental,  897 F.Supp.  117,
121 (S.D.N.Y. 1995); S.E.C. v. Cable/Tel Corp, 90 F.R.D. 662 (S.D.N.Y. 1981).

         A.       Improper Labeling of Defendants

                  The complaint fails to give notice as to what specific acts or
practices of each Defendant the SEC seeks to sanction by lumping both Defendants
together.

                                                      2

<PAGE>

                  The SEC has alleged that GAP is a subsidiary of Defendant,
Stratcomm Furthermore, the SEC contends that from late 1995 GAP replaced CRG as
the primary entity which was responsible for publishing promotional magazines
and newsletters.  (Cmplt.P. 12)
                  The  SEC's  decision  to lump  these two  defendants  together
results in the Complaint being legally deficient. This deficiency is illustrated
in the allegations regarding the promotion of Tracker, Delta Petroleum,  Ammonia
Hold and  Imtech.  As to  these  companies,  the  allegations  provide  that CRG
promoted the aforementioned  corporations in various  publications (Cmplt. P. P.
60, 84, 103, 121,  134). The SEC has alleged that both CRG and GAP have violated
17(a),  10(b) and Rule 10b-5 as to each of these  companies  without  alleging a
single fact which is specific to GAP (Cmplt. P. P. 63, 86, 106, 123, 134).

                  The SEC's  lumping of these two  Defendants  as  "collectively
CRG" is particularly  egregious since one of the main violations  alleged by the
SEC is fraud in the  promotion of  securities.  The SEC has claimed that CRG and
other  Defendants  committed  fraud by failing to make  certain  disclosures  in
promotional materials.  (Cmplt. P. P. 28, 29, 32, 35) Therefore, the identity of
the  party  that  is  making  the  promotion  is  central  to  determining  what
obligation, if any, that party had in light of the securities laws.

                  The Complaint must allege specifics of fraud as required by
Rule 9(b) for each defendant.  Schultz v. Rhode Island Hosp. Trust Nat. Bank,
94 F.3d 721, 731 (1st Cir. 1996)
         B.Failure to Specify Communication Made to Support Allegations of Fraud
                  The SEC has failed to allege with particularity when CRG made
communications which contained omissions of material information.  The facts as
to what

                                                      3

<PAGE>

statements were made by CRG together with when the statements were made are
critical to the SEC's claim.1
                  The SEC has  indicated  in  certain  instances  that CRG began
promoting client companies during specified periods. However, there are no facts
alleged which set forth the "promotional efforts" in detail. Likewise, the times
and content of the  representations  are not alleged.  The general nature of the
allegations  are the same for each  company  identified  in the  complaint.  The
allegations as to Tracker and ECO2 are examples.

                  As to Tracker,  the SEC has alleged  that CRG began  promoting
Tracker in the  Summer of 1994  (Cmplt.  P. 46).  The SEC does not  specify  the
promotional efforts except to identify the January,  October, and November, 1995
editions of MoneyWorld in which Tracker was featured.

                  Similarly,  the  allegations  as to ECO2 are  equally  obtuse.
Here,  the SEC alleges that CRG promoted  ECO2 in August,  October and November,
1995 (Cmplt. P. 142).  Additionally,  CRG is alleged to have started selling its
shares of ECO2 in June of 1995 which is well before the promotion  began (Cmplt.
P. 140).  The SEC has failed to identify any  communication  made in  connection
with the sale of securities in June and July for which the SEC seeks sanctions.

                  Part of the  relief the SEC seeks is the  disgorgement  of all
profits and compensation  (See,  Complaint,  "Prayer for Relief IV"). The SEC by
having failed to

--------
         1

  As the SEC has lumped GAP into CRG, the following analysis referring to CRG is
deemed to pertain equally to GAP.

                                                      4

<PAGE>

identify any communication  made by any Defendant while sales of securities were
made by CRG, has failed to satisfy the pleading requirements of Rule 9(b).

                  The failure to specify the acts of promotion,  as well as when
the  promotions  occurred,  and the  times  of sales  of  securities  is a fatal
violation of Rule 9(b).

         C.       The Complaint is Patently Vague

                  The SEC has chosen to  preface  certain  allegations  with the
phrases,  ". . .by virtue of the conduct  describe  above. . ." or "by reason of
the foregoing" without any other limiting  language.  The use of these limitless
terms is contrary to the specificity requirements of Rule 9(b).

                  An  example  of the harm  caused by vague  allegations  can be
found in paragraph 63 of the  Complaint.  That  paragraph  claims a violation of
Section 17(a);  Section  10(b);  Rule 10b-5;  Section  17(b);  and Section 5, by
referencing  the first 62 paragraphs.  There is no indication as to the specific
acts for which CRG and GAP are being held  accountable  since the allegations in
the  proceeding  62  paragraphs  describe  in general  terms a number of events.
Similar allegations can be found as to each of CRG's client companies.

                                                Rule 12(b)(6)
         Reg S  violations.  In Part IV of the  Complaint it is alleged that CRG
violated the  registration  provisions  of Section 5 in relation to Regulation S
transactions  involving five  corporations:  Tracker,  Delta Petroleum,  Ammonia
Hold, Information Management Technologies,  and Foreland Corporation. CRG is not
alleged to have been  involved with the offer or sale of the  transactions.  The
SEC has failed to state a claim for relief for any

                                                      5

<PAGE>

securities violation as to the following five transactions:
         1.       DELTA PETROLEUM.  CRG is only alleged to have given a
"suggestion" that Delta sell Regulation S stock to Fondo and Oportunidad in
paragraphs 81-83.  CRG is not alleged to have offered, sold or otherwise
profited from this transaction.
         2.       AMMONIA HOLD.  CRG is not alleged to have committed an
improper act which would subject them to liability in paragraphs 88-90 in
relation to Ammonia Hold's
transfer of borrowed unrestricted stock to CRG.
         3. AMMONIA  HOLD.  CRG is not alleged to have  participated  in any way
with either the  Regulation D or  Regulation S offering as alleged in paragraphs
95-99.  CRG is not  alleged  to have  ever  purchased  or sold  the  shares,  or
participated in any way in the transactions provided in paragraph 95-99. The SEC
has merely  alleged that the offering of the  securities  was made to CRG in the
names of Fondo and Oportunidad,  but no other facts have been alleged to support
liability as to CRG.  Rather,  the allegations  detail Fondo's  interaction with
Ammonia Hold as an  independent  entity.  Without any  allegation  that CRG ever
controlled these shares,  owned the shares,  offered or sold the shares, or even
profited in the transaction,  these  allegations do not state a claim for relief
under the securities laws.

         4. AMMONIA HOLD. Likewise, the allegations in paragraphs 100-102 do not
state a claim for relief as CRG is not alleged to have owned the shares, offered
or sold the shares, or even profited in the transaction described and therefore,
this  transaction does not state a claim for relief under the securities laws as
to CRG.

         5.       FORELAND.  The stock transactions described in paragraphs
124-130 do not

                                                       6

<PAGE>

indicate  that CRG owned or controlled  or traded any  Regulation S shares.  The
allegations merely provide that CRG participated in the $1.7 million offering of
Foreland shares.  There is no indication that CRG owned,  controlled or profited
from any of the  Regulation  S shares.  Additionally,  the SEC alleged  that the
CRG/New Concepts Profit Sharing  Agreement was not invoked and that Fondo itself
profited from the transaction  (Cmplt.  P. P. 127, 130). Nor has the SEC alleged
that the $1.7 million offer of securities was improper.

         The Regulation S transactions in which CRG is mentioned are detailed in
the Complaint at the following  paragraphs:  1) Tracker,  P. P. 47-55;  2) Delta
Petroleum,  P. P. 67-76;  77-80;  3) Ammonia Hold, P. P. 91-94;  4)  Information
Management Technologies, P. P. 109-120.

         Intimately involved in the Regulation S allegations are two Costa Rican
entities,  Fondo and  Oportunidad.  Neither of these  companies own any stock in
CRG, which is 100% owned by Co-Defendant Stratcomm.  Nor do Fondo or Oportunidad
own any shares of Stratcomm.  In each  Regulation S  transaction  alleged in the
Complaint,  the  purchaser of the  Regulation S stock was Fondo or  Oportunidad.
Additionally,  each alleged  transfer to CRG  occurred  after the 40 day holding
period expired. As Fondo and Oportunidad were foreign entities and they held the
stock for more  then 40 days,  CRG's  sales of stock  would be  entitled  to the
exemption provided by Section 4(1).

     The SEC is aware of the confusion that  surrounded the issuance of stock in
Regulation S transactions for most of the 1990's. One SEC Commissioner expressed
his concern over enforcement actions involving Regulation S transactions. In the
Matter of GFL Ultra Fund Ltd., Release No. 3-7423,  (June 18, 1997) Fed. Sec. L.
Rep. (CCH) 64 SEC- Docket 1958-8,  Commissioner Wallman, in dissent,  noted that
under  Regulation S there existed  confusion as to when securities could be sold
back into the United  States and under  what  conditions.  Id. at *4. He further
stated:

<PAGE>

                           Some member of the bar interpreted the 40-day or one-
                  year  restricted  periods  to be the  equivalent  of a holding
                  period  analogous  to the  Rule  144  safe  harbor  under  the
                  Securities Act.

                  [Under  144  if  all   provisions  of  the  safe  harbor  are
                  satisfied, including the holding period, then a person selling
                  the  shares is not  deemed  to be an  underwriter  within  the
                  meaning of Section  2(11)] These legal  practitioners  advised
                  their  clients that the  expiration of the  restricted  period
                  provided a safe  harbor  for U.S.  resales  by  purchasers  of
                  Regulation S  securities,  and that no further  analysis as to
                  whether the seller  could be deemed a  "statutory  underwriter
                  within the meaning of section 2(11) of the  Securities Act was
                  necessary.

                           As to hedging,  since  Regulation S itself was silent
                  on the subject, some members of the bar, including counsel for
                  Ultra,  looked to Rule 144  interpretations  for  guidance  on
                  whether hedging could take place within the restricted period.

                  [. . .]

                           Despite  the  confusion  and  uncertainty,  it wasn't
                  until 1994 that the Commission and its staff began  informally
                  making statements about problems in the Regulation S area. The
                  Commission failed to make any formal pronouncements  regarding
                  Regulation  S until  the  issuance  of  Problematic  Practices
                  release  in June  1995.  Finally,  in  February  of this year,
                  [1997],  the  Commission  proposed  changes to Regulation S in
                  order to stop abusive practices.

                  [. . .]

                           In  the  February  [1997]  release,   the  Commission
                  clearly stated that the restricted  period under  Regulation S
                  was never  intended to be analogous to a holding  period under
                  Rule  144,  that it did not  provide  a safe  harbor  for U.S.
                  resales by purchasers, and that resales into the United States
                  without

                                                      7

<PAGE>

                  registration  must be evaluated into the United States without
                  registration must be evaluated under a "statutory underwriter"
                  analysis regardless of the issuer's compliance with Regulation
                  S.

                  [. . .]

                           With regard to hedging, in the Problematic  Practices
                  release,  the Commission  raised concerns about hedging in the
                  U.S.  markets by purchasers of Regulation S securities  during
                  the restricted  period.  In both the February  release and its
                  companion Rule 144 release,  the Commission continued to raise
                  questions  and concerns  regarding  hedging by  purchasers  of
                  unregistered    securities   -   including   the   Section   5
                  ramifications  of hedging.  While  continuing to seek comment,
                  the  Commission  has not yet  made any  definitive  statements
                  regarding  what  forms of hedging  are or are not  permissible
                  with regard to unregistered securities.

Id. at *4-5.
         A statute or  regulation is void for vagueness if it does not provide a
person  with fair  notice  of  conduct  that is  prohibited  under the  statute.
Papachristou v. City of Jacksonville,  405 U.S. 156, 162 (1971). That portion of
the Complaint based upon a violation of Regulation S and registration provisions
of Section 5 is  unconstitutional  as a  violation  of due process and should be
dismissed.

         In the alternative, the SEC has alleged contradictory theories of CRG's
involvement  with the  Regulation S  transactions.  The SEC has alleged that CRG
controlled Fondo and Oportunidad,  but at the same time the SEC has alleged acts
which  establish  that Fondo and  Oportunidad  were  autonomous  entities.  Such
autonomy is evident as both Fondo and  Oportunidad are alleged to have conducted
their own securities  transactions  separate and distinct from  transactions  in
which CRG participated. Such independent actions can be seen

                                                      8

<PAGE>

in Fondo's  relationship with Ammonia Hold in which Fondo reaped nearly $600,000
in profits (Cmplt. P. P. 93-94).  Therefore,  the sale by CRG of shares received
from Fondo and Oportunidad would be exempt from registration under Section 4(1).

         Tracker  S-8  Stock.  The SEC has  alleged in  paragraphs  56-59 of the
Complaint that CRG was involved in an S-8  transaction  with Tracker stock.  The
SEC has alleged that CRG and Veitia  "orchestrated"  an  investment  opportunity
(Cmplt. P. 56).  However,  the SEC has not alleged any acts in the offer or sale
of the S-8 stock for which CRG would be liable under the securities act.

         As the SEC has not  alleged any action on the part of CRG in selling or
offering to sell the S-8 stock the SEC cannot support a claim for relief for any
violation of the securities laws based on this transaction.

         Failure to State a Claim for Relief for Violations of Touting
         Provisions

     The SEC has alleged that CRG in the  promotion of each of the 15 publically
traded  companies  violated 17(b) of the Securities  Act, which is also known as
the touting provision. To support this allegation the SEC has alleged that CRG's
publications contained inadequate disclosures. The SEC has chosen to provide the
Court  with only  fragmented  portions  of the  disclosures  contained  in CRG's
publications.  (See,  Cmplt.P.  39) Each  article in question  was labeled as an
advertorial.  In addition,  there were  disclaimers  which revealed that CRG was
retained as  investor  relations  counsel  for the  company.  In  addition,  the
copyright  information  discloses that the  advertorials  are copyrighted by the
company that is the subject matter of the ad. Other disclosures reveal that

                                                      9

<PAGE>

CRG and its  officers  may from time to time have a position in the  investments
referred  to in  this  advertising  supported  publication.  (See,  publications
attached to Defendant Spratt's Motion to Dismiss).

         Section  17(b) does not  require the  disclosure  be  contained  in the
particular notice,  circular,  article, etc. Likewise, there is no specification
in Section 17(b) of how the party is to make the  disclosure  required.  The SEC
has alleged that these disclaimers,  "were inadequate under the anti-touting law
because  they  failed  adequately  to  disclose  both the  receipt and amount of
compensation paid CRG by its issuer-clients."  Therefore,  the SEC's position is
that CRG by  failing to  disclose  the amount of  compensation  received  by the
issuer/client in the publication itself is a violation of 17(b).

     The securities laws are replete with notice and disclosure rules. Investors
are deemed to be on notice of information  filed with the SEC. Picard  Chemical,
Inc.  Profit Sharing Plan v. Perrigo  Company,  940 F.Supp.  1101, 1123 (W.D. MI
1996). Additionally,  information disseminated through the media either in press
releases or in newspaper  articles also affords a further avenue for disclosure.
Id. at 1121-1123.  The SEC has not, nor can it allege,  a lack of notice through
SEC filings and press releases.
         Because  17(b) does not contain  requirements  as to a time,  place and
manner of how a party is to make the  disclosures  required by the  statute,  it
remains the decision of each party to make such  decisions for  themselves.  The
First Amendment clearly establishes that it is ". . .presumed that speakers, not
the  government,  know best  both what they want to say and how to say it.  See,
Riley v. National Federation of the Blind of North Carolina, Inc., 487 U.S.

                                                      10

<PAGE>

781, 791 (1988); see also, Thomas v. Collins, 323 U.S. 516, 545, 65 S.Ct. 315,
89 L.Ed. 430 (1945)." Texas State Troopers Association v. Morales, 10 F.Supp.
2d 628, 632 (N.D. Tex.1998)
         Thus,  the  SEC's  assertion  that  the  amount  of  compensation  must
accompany the publication is without statutory  support.  It is the SEC's burden
to  establish  otherwise  or to allege no notice  through  other  means  such as
filings or press releases.  Therefore,  the SEC's claim for relief for violation
of the touting provision is legally deficient,  fails to state a claim, and must
be dismissed.

                              Other First Amendment Challenges to Section 17(b)
         Section 17(b) is  unconstitutional  for it is in violation of the First
Amendment's  protection  of freedom of speech and the press.  The  argument  set
forth in the motion and  memorandum to dismiss filed by Veitia and Stratcomm are
incorporated herein by reference.

                                Failure to State a Claim for Securities Fraud
         The SEC has  alleged  that CRG,  GAP and the  related  Defendants  have
committed  fraud in the offer and sale of securities by having  omitted  certain
information in their publications.

     To prove  liability  under  Section  10(b) the SEC is required to show that
there has been an omission of material fact made with scienter.  SEC v. Fehn, 97
F.3d 1276,  1289 (9th Cir.  1996).  The standard for finding that an omission is
material is whether there is a substantial likelihood that a reasonable investor
would  consider  the omitted  facts  important  in making his or her  investment
decision. TSC Industries, Inc. v. Northway, Inc., 426 U.S. 438, 446
                                                      11

<PAGE>

(1976).

     Scienter is a necessary element under Section 10(b). Aaron v. SEC, 446 U.S.
680, 689-691 (1980). To establish scienter,  the SEC must plead facts which show
knowing  misconduct or severe  recklessness.  S.E.C. v. Warner,  674 F.Supp. 836
(S.D.Fla.  1987) (Denying injunctive relief as alleged misstatement was cured by
SEC filing.)
     Additionally,  a party  may not be  sanctioned  under the  securities  laws
unless that party has a duty to disclose  information.  S.E.C.  v. Rodgers,  790
F.2d 1450 (9th Cir.  1986).  Such a duty may arise in the  person  uses  insider
information  or if  they  are  in a  fiduciary  relationship  or  involved  in a
fraudulent scheme. Id.
         Here,  the  SEC  has  not  alleged  that  either  CRG or GAP  made  any
misrepresentation  of a material fact. Rather, the SEC contends that CRG and GAP
failed to adequately  disclose that it was being paid by its client companies to
promote certain issuers, the amount of the compensation  received,  that they as
well as other entities they allegedly controlled sold stock in the issuers while
promoting the issuers,  and that CRG  employees  were paid to promote its client
companies to  stockbrokers.  In one instance,  the SEC claims that CRG failed to
disclose that cash payments were made to stockbrokers.

     The leading case on the issue of whether an omission of a material fact can
be fraudulent is Chiarella v. United States,  445 U.S. 222 (1980).  The issue in
Chiarella was whether an employee of a publishing company who traded on material
non-public information could be prosecuted for fraud. Id. at 226. The court held
that absent a duty to speak a person could not be prosecuted  for fraud.  Id. at
235. The court reasoned that the law
                                                      12

<PAGE>

does not  require a person to speak  absent a duty.  Id.  at 227.  The  reason a
person having a duty to speak must divulge non-public  information is that there
is an element of reliance which has attached to their actions. Id. With reliance
comes the corresponding duty. Id.
         Viewing  the facts as  alleged as true,  it is clear that CRG,  GAP and
related Defendants are not alleged to have made misstatements of fact. The clear
and fair import of the  publications  revealed that the  information  was a paid
advertisement.  The Defendants  acknowledge that the details of the compensation
was not  disclosed.  Such  was not  required  for  there  was no duty  for  such
disclosure, nor was the omission material, as a matter of law.

         None of the  omissions  could be material  when viewed by a  reasonable
investor.  A reasonable  investor would view the  disclaimers  together with the
label, "advertorial" as necessarily indicating that the information provided was
a paid  advertisement.  Therefore,  no reasonable  investor would find that CRG,
GAP, or the related  Defendants,  failed to  adequately  disclose that they were
being paid to promote the fifteen companies listed in the complaint.

         Furthermore,  the amount that CRG or GAP was paid for the advertisement
would also not be material to a reasonable  investor  since the specific  dollar
amount paid might be higher or lower from  advertiser  to  advertiser  since the
number of promotions  and length of the article in each  publication  might vary
from issuer to issuer.  See, e.g., Riley v. National  Federation of the Blind of
North  Carolina,  487 U.S. 781, 798 (1988).  Also, the SEC has only alleged that
the amount of compensation was not in the publications.  The SEC has not alleged
that the amount of compensation was not disclosed by other means.

                                                      13

<PAGE>

         Third,  the fact that CRG or GAP and other  individuals  or entities it
controlled  were selling  stock of the issuers while they were  promoting  those
issuers cannot be material to a reasonable  investor.  First many of the issuers
disclosed  in SEC filings  that CRG was paid in stock.  (See,  Motion to Dismiss
filed by Co-Defendant,  James Spratt). Courts have held that as a matter of law,
"where  information  is contained in a documents  filed with the SEC, the market
has knowledge of such matters.  Picard  Chemical Inc.  Profit Sharing v. Perrigo
Company,  940 F.Supp.  1101, 1123 (W.D. MI. 1996).  Therefore,  the total mix of
information to a reasonable  investor  informed them that the featured  articles
were paid advertisements and that CRG had been paid in shares of the issuer.

         The allegation that CRG paid its broker relations executives to promote
these  companies to stock brokers cannot be found to be material to a reasonable
investor.  Such  communications  between CRG  employees  and  stockbrokers  were
pursuant to contracts  CRG entered into with  issuers.  Some of these  contracts
have  been  filed  with the SEC and  therefore  the  market  is  deemed  to have
knowledge of such  communications.  Picard,  940 at 1123. Also, CRG in promoting
itself to the public had  naturally  highlighted  as one of its services that it
had developed a broker network. A reasonable  investor would understand that CRG
would pay its employees  and that they would promote  companies to stock brokers
in part through its own employees.  Furthermore,  the  dissemination of truthful
information  to the market is an  activity  which CRG had no duty to disclose in
its publications concerning items designated as paid advertisements.

         As to the allegation that CRG paid brokers in relation to Tracker,
while this allegation

                                                      14

<PAGE>

is  vehemently  denied,  it is  accepted as true for  purposes  of this  motion,
disclosure of such payment would not be the responsibility of CRG. Rather,  each
stockbroker  who received  such  payment  would have to disclose the same to its
clients.  There is clearly a  fiduciary  duty  between the broker and his or her
customer. If an obligation exists to disclose compensation, the duty is upon the
broker,  not CRG. The  complaint  fails to allege any duty on the part of CRG to
disclose information on the broker's compensation.

         The total mix of  information  available  here results in the omissions
being not  material as a matter of law. The  disclaimers  as well as the labels,
Advertorials,  and information  filed with the SEC served to inform readers that
the MoneyWorld and Rumor Mill publications were paid advertisements.

         One of the major cases  discussing fraud in the promotion of securities
is the Supreme Court's decision in SEC v. Capital Gains Research  Bureau,  Inc.,
375 U.S.  180  (1963).  The case arose  under the  Investment  Advisors  Act and
involved  "scalping".  Scalping is a practice  whereby a person purchases shares
just before  recommending  that  security  and then selling the shares to reap a
short term profit following the recommendation.

         The defendant in Capital Gains published two investment newsletters and
on six occasions  committed acts of scalping.  The published articles by Capital
Gains were not  disclosed as  advertisements.  In finding that the defendant had
violated  the  Investment  Advisors  Act the Court found that a duty to disclose
arose out of a fiduciary-type relationship between an investment advisor and his
client. Such a fiduciary relationship would necessitate any conflict of interest
be disclosed.

                                                      15

<PAGE>

     Other cases involving  articles  touting a company  followed in the wake of
Capital  Gains.  Two of these,  SEC v. Blavin,  706 F.2d 706 (6th Cir. 1983) and
Zweig v. The  Hearst  Co.,  594 F.2d 1261  (9th Cir.  1983)  also  involved  the
Investment  Advisor Act. In both of these cases the courts  noted the  fiduciary
relationship  imposed on the defendants due to the application of the Investment
Advisors Act. These cases did not involve  publications  setting forth disclosed
advertisements.
     The broader  application of the above three cases to situations  other than
scalping is limited.  The Supreme  Court in Lowe v. S.E.C.,  472 U.S. 181 (1985)
held that bona fide  publications of regular and general  circulation are exempt
from the Investor Advisors Act.  Therefore,  there is no fiduciary  relationship
between a publisher and its readers.
         In Lowe the petitioner was the president and principal of a corporation
that was a registered  under the Investor  Advisors Act. The SEC revoked  Lowe's
registration since Lowe had previously been convicted of various offenses.

         Lowe  then  began  publishing  an  investment   newsletter   containing
investment  advice. The SEC brought an action to enjoin Lowe's publishing of the
newsletter since he was unregistered.

         The issue  before  the  court  was  whether  Lowe's  publication  of an
investment  newsletter  satisfied an exclusion  to the  Investment  Advisors Act
which exempted "bona fide publications"  from the acts  requirements.  The court
found that the newsletter did qualify under the exemption.

         In arriving at its conclusion the court noted that the newsletter was
published

                                                      16

<PAGE>

regularly albeit with some irregularities. Also, the content of the petitioner's
newsletters was completely disinterested. Additionally, the court found that the
mere fact that the publication  gave advice about a particular  security did not
personalize the character of the information provided.

     The Lowe  decision  affected the case  involving  another  publisher,  Wall
Street  Publishing  Institute.  The  defendant,  Wall  Street  Publishing,   was
originally  found to have  violated  the  Investment  Advisors  Act,  as well as
Section 10(b) of the Exchange Act and 17(b) of the  Securities  Act.  S.E.C.  v.
Wall Street Publishing Institute, 591 F.Supp. 1070 (D.D.C. 1984).

     The basis for the Section 10(b)  violation was the finding that Wall Street
Publishing had made misstatements of fact in its publication.  Id. at 1088. Wall
Street  Publishing  stated in its  newsletter  that, ". . .feature  articles are
based on thorough  research and first-hand  interviews  with company  officials,
economists,  security analysts, tax accountants and other experts." Id. at 1076.
The publisher  admitted that he did not conduct  interviews or research and that
the articles in the publication were supplied by the featured companies or their
public relations agents. Id.

         The Wall Street  Publishing case was remanded by the appellate court to
the district court as the Lowe case had been decided during the appeals process.

     The issue  before the  district  court on remand was  whether  Wall  Street
Publishing could still be sanctioned under Section 10(b) and or Section 17(b) in
light of Lowe. S.E.C. v. Wall Street Publishing Institute,  664 F.Supp. 554, 555
(D.D.C. 1986), rev'd on other
                                                      17

<PAGE>

grounds,  S.E.C. v. Wall Street  Publishing  Institute,  851 F.2d 365 (D.C. Cir.
1988).  The district court noted that the Section 10(b) violation was based upon
the conclusion  that the  misstatements  of Wall Street  Publishing  "touched" a
securities  transaction  since a  reasonable  investor  would rely on them.  Id.
However,  after  the  Lowe  decision  this  conclusion  could  not be  made  and
therefore, the Section 10(b) violation could not stand.

         Here, CRG and GAP have published the MoneyWorld monthly magazine.  This
publication  contains  numerous  disclosures  which identified the promotions in
question as advertisements.  As a more thorough analysis of the publications has
been written in Co-  Defendant,  James Spratt's  Motion to Dismiss,  CRG and GAP
hereby  incorporate by reference the analysis of these  publications as found in
that motion.

     The term  "advertorial"  clearly  connotes  the fact that the  publisher is
receiving  compensation for running the item. Ortho Pharm.  Corp. v. Cosprophar,
Inc., 32 F.3d 690, 693 (2d Cir.  1994)(defined  advertorials  as "newspaper  and
magazine advertisements that are formatted in the same style as new articles and
are placed adjacent to news items"); Wilcox v. Vail Valley Found., No. 91-C-551,
1993 U.S. Dist. Lexis 19360, at *2 n.2 (D.Col. Oct. 6, 1993).  Advertorials have
been  described as  "Editorial  Space for Sale" as the  newspaper  equivalent of
television's infomercial. Rancho Publs. v. Superior Court of Orange Co., 68 Cal.
App. 4th 1538, 81 Cal. Rptr. 2d 274 (1999) (citations omitted).

     By  identifying  an article as an  advertorial,  courts have noted that the
article  necessarily  carries with it a pejorative badge.  S.E.C. v. Wall Street
Publishing Institute,  851 F.2d 365, 375 (D.C. Cir. 1988)("Indeed,  such a label
converts the article in the reader's mind
                                                      18

<PAGE>

into an advertisement and surely would sharply diminish the magazine's
attractiveness and circulation.")
         Here, the MoneyWorld  magazines contain  approximately as many pages of
news items and  information in relation to the financial  markets as it contains
advertorial features.  From a review of the November, 1996 edition of MoneyWorld
the magazine  contained general  information  regarding:  the effect of a second
presidential  term on the stock market;  U.S.  investment in Latin America;  the
grain supply; the oil and airline industries;  unclaimed money; precious metals;
bankruptcy;  China's control of Hong Kong;  market cycles;  mutual funds;  S&P's
prediction of top  performing  stocks;  Clinton/Dole's  potential  effect on the
market; and the dynamics of stock splits.

         The inclusion of articles which are clearly  denoted as  "advertorials"
provides a reasonable investor that the information  provided has been paid for.
This disclosure satisfies the Defendants' legal duty of disclosure.

         The Defendants  contend that  "scalping" as a matter of law,  cannot be
based upon a publication of articles which are  advertisements and designated as
such.

         The  Complaint  fails to state a claim for fraud  under the  securities
laws relied upon by the SEC.

                         Simultaneous   Violations   of  Antifraud  and  Touting
         Provisions  The SEC in the fifth  section of the  Complaint has alleged
         that CRG violated the

Sections  17(a) & (b) of the Exchange  Act,  Section 10(b) and Rule 10b-5 of the
Securities Act.

                                                      19

<PAGE>

         The SEC  contends  that CRG's  promotional  activities  involving  nine
companies  violated the antifraud and touting provisions of the securities laws.
These nine companies are: Atlas Pacific,  ECO2, Global Intellicom,  Global Spill
Management,  Golf Ventures,  Jreck Subs,  Sobik's Subs, Vector  Aeromotive,  and
Viking Management Group.

         While there are some distinctions regarding the allegations as to CRG's
actions as to each of these  companies,  the  substance of the  allegations  are
identical.  The SEC contends that CRG defrauded investors by failing to disclose
at least four items in its  publications:  1) that CRG was being paid to promote
each entity;  2) that CRG did not disclose  the amount of the  compensation;  3)
that CRG was selling stock while promoting it as a good investment; and, 4) that
CRG was paying its  employees  commissions  to promote  each  entity's  stock to
brokers (Cmplt. P. P. 138, 143, 149, 155, 161, 167, 172, 176, 182).

         The only variation from these four alleged disclosure  violations is in
relation  to the third  omission.  The third  omission  which  relates to Global
Intellicom,  Jreck  Subs and  Sobik's  Subs,  also  provides  that CRG failed to
disclose  that  "entities  it  controlled"  were  also  selling  stock  of these
companies  (Cmplt.  P. P. 149, 167 and 172).  Additionally,  as to ECO2,  Global
Spill,  Golf Ventures and Viking  Management,  the allegations  provide that CRG
failed to disclose that Defendants  Spratt and/or Skalko were also selling stock
of these companies (Cmplt. P. P. 143, 155, 161 and 182).

         None of these alleged  disclosure  violations is legally  sufficient to
state a claim for relief for violations of the antifraud and touting  provisions
of the securities laws and therefore each claim should be dismissed.

                                                      20

<PAGE>

         First,  the  SEC  has  claimed  that  CRG  has  violated  two  distinct
provisions of the securities  laws, the antifraud and touting  provisions in its
promotion of these companies. Viewing the facts alleged in the Complaint as true
regarding these nine companies the SEC cannot claim  simultaneous  violations of
the antifraud and touting provision.

         The antifraud and touting  provisions are  complimentary  provisions of
the securities laws.2 While there is an overlap in these  provisions,  not every
violation  of the touting  provision  will  support a claim for relief under the
antifraud provisions and vice versa.

         The SEC claims that as to each of the nine entities which CRG promoted,
four omissions were made in various  publications.  The SEC does not allege that
CRG or the other  Defendants  engaged in any other  behavior to subject  them to
liability under Section 17(a)(1) or (3) or under Rule 10b-5. Therefore, to state
a claim for relief under Section  17(a)(2),  the SEC is required to allege facts
which establish that CRG, in the "offer or sale of any security"  obtained money
or property by means of an omission of a material  fact made in the light of the
circumstances under which it was made, not misleading.

         However,  since the SEC has also alleged that the statements  contained
in the various CRG publications are subject to the requirement of Section 17(b),
then the statements  contained in these publications do not rise to the level of
an "offer" of securities or "in  connection  with the sale of  securities."  The
plain language of Section 17(b) only  encompasses,  ". .  .communications  which
though not purporting to offer a security for sale,

--------
         2

         CRG contends that the facts as alleged in the Complaint  cannot support
a  simultaneous  violation  of  the  antifraud  and  touting  provisions  of the
securities  laws not that  there can never be a  simultaneous  violation  of the
antifraud and touting provisions of the securities laws.

                                                      21

<PAGE>

describes such security for a consideration. . ."
         The Supreme Court in Lowe v. S.E.C.,  Supra,  discussed the distinction
between   personal  advice  given  to  investors  by  investment   advisors  and
information  set  forth in  publications.  That  underlying  difference  is also
present  here so as to  distinguish  information  set forth in a disclosed  paid
advertisement and offer or sale of security.

     The  SEC  has  claimed   violations  of  both  the  antifraud  and  touting
provisions.  These  claims  based  on  allegations  of mere  omissions  to state
material  information,  necessarily  requires an  examination  of the statements
which were made in the  publication.  To invoke  the  antifraud  provisions  the
statements  in the  publication  must be made  either in the "offer or sale of a
security" as required by Section  17(a) or "in  connection  with the purchase or
sale of a security" as required by Section 10(b) or Rule 10b-5.  Either of these
criteria  run  counter to the  limiting  language  of Section  17(b)  which only
reaches  those  communication  which,  ". . .though  not  purporting  to offer a
security  for sale  describes  such  security.  . ." It is the  position  of the
Defendants  that the touting and scalping cannot be present in the facts of this
case where a  publication  promotes a company  through  advertisements  that are
disclosed to the public.

                             Alleged violation of Section 15 of the Exchange Act
         The  SEC  alleges  that  CRG  violated   both  the  broker  and  dealer
         registration

requirements found in Section 15 of the Exchange Act [15 U.S.C.A.ss.78o(a)(1)
which provides:
                  It shall be unlawful for any broker or dealer. . .(other than
                  such a broker or dealer whose business is exclusively
                  intrastate and

                                                      22

<PAGE>

                  who does not make use of any facility of a national securities
                  exchange) to make use of the mails or any means of  interstate
                  commerce  to  effect  any  transactions  in,  or to  induce or
                  attempt to induce the purchase or sale of, any security (other
                  than an exempted  security...) unless such broker or dealer is
                  registered in accordance with subsection (b) of this section.

         A "broker" is defined under Section 3(a)(4) of the Exchange Act as "any
person engaged in the business of effecting  transactions  in securities for the
account of others, but does not include a bank." 15 U.S.C.A. ss. 78c(a)(4). This
definition  typically  centers upon the meaning of "engaged in the business" and
"effecting transactions in securities."

     Factors  which have been  considered in  determining  whether a person is a
"broker"  include  whether the person:  (1)  actively  solicits  investors;  (2)
advises  investors as to the merits of an  investment;  (3) acts with a "certain
regularity"  of   participation   in  securities   transactions;   (4)  receives
commissions  or  transaction-related  remuneration;  (5) is an  employee  of the
issuer; (6) is selling, or previously sold the securities of other issuers;  (7)
is  involved in  negotiations  between the issuer and the  investors;  and,  (8)
maintains  custody  or  possession  of funds  or  securities  at any  state of a
securities transaction. In re: Kemprowski and Cambridge Consulting Co., Exchange
Act Rel. No. 35058, [1994-95 Transfer Binder] Fed. Sec. L. Rep. (CCHP. 85,469 at
86,049 (Dec. 8, 1994);  see also S.E.C. v. Hansen,  [1984 Transfer  Binder] Fed.
Sec. L. Rep. (CCHP. 91,426 (S.D.N.Y.  1984) (citing N. Wolfson, R. Phillips & T.
Russo, Regulation of Brokers,  Dealers and Securities Markets, CFR 1.06 (1st ed.
1977) atss.1-12).

         Here,  the SEC has failed to allege any facts which would indicate that
CRG acted as a broker.

                                                      23

<PAGE>

         First,  CRG  did  not  actively  solicit  investors  to  engage  in any
securities  transaction.  The SEC has alleged that Broker  Relations  Executives
(hereinafter  referred to as "BREs"),  contacted registered  representatives and
touted CRG client companies.  This allegation does not establish in any way that
CRG solicited any investor.  Furthermore, the Complaint does not allege that CRG
or BREs had any communication regarding any security with any investor.  Rather,
the  allegations  provide  that  registered  representatives  communicated  with
investors themselves.

     Second,  CRG did not advise  investors as to the merits of any  investment.
The SEC has not alleged  otherwise  in its  complaint.  The SEC has only alleged
that BREs  communicated  to  registered  representatives  to promote  CRG client
companies  (Cmplt.P.  190). The facts as alleged do not indicate that CRG was in
any way involved in any negotiations or  communications  with an investor as may
be dispositive of this issue. See, Fulham & Co., SEC No-Action Letter, available
at 1972 WL 9129  (S.E.C.)  (Dec.  29,  1972)  Davenport  Management,  Inc.,  SEC
No-Action Letter, available at 1993 WL 120436 (S.E.C.) (Apr. 13, 1993).

         Third,  CRG  did  not  act  with  regularity  in the  participation  of
securities  transactions as required to register as a broker dealer.  The SEC in
alleging  a  violation  of  Section 15 has  failed to  indicate  any  securities
transaction  which CRG  effected or  participated  in. The SEC alleges  that CRG
communicated  to  registered  representatives  through  BREs and  touted  client
companies (Cmplt. P. 190). This allegation does not indicate that any securities
transaction was in any way effected by CRG.

                                                      24

<PAGE>

         Fourth,  BREs were not compensated out of the pool of funds provided by
an investor or issuer who were a party to a  securities  transaction.  While the
SEC has alleged that BREs received compensation by demonstrating that a purchase
occurred there is no allegation that BREs received compensation from those funds
provided by an investor.

         Fifth, BREs as employees of CRG are not employees of the issuers of the
securities involved.

         Sixth,  the BREs are not  alleged  to have sold the  securities  of any
issuer.  The BREs are not alleged to have sold any  security to anyone.  The SEC
merely   alleges   that  BREs  touted  CRG  client   companies   to   registered
representatives.

         Seventh, BREs are not alleged to have engaged in any communication with
any  investor.  The act or  communicating  to a broker about a company's  merits
cannot  be  stretched  by the SEC so as to be  deemed  a  communication  with an
investor.

         Eighth,  neither  CRG nor the BREs are  alleged to have had  custody or
possession of either the funds  invested or the  securities  involved.  The fact
that CRG was completely out of the loop regarding whatever securities  purchases
occurred  between  registered  representatives  contacted by BREs and individual
investors,  clearly indicates that CRG was not effecting securities transactions
as provided by Section 15.

         The lack of any  allegation  that a BRE had contact  with any  investor
indicates  that CRG is not in violation of the broker  provisions of Section 15.
To be in  violation  of this section a broker is defined as a person who effects
the  securities  transactions  in the account of another.  The SEC by failing to
allege any communication between CRG or CRG's BREs

                                                      25

<PAGE>

and an investor,  has failed to establish how CRG effected  transactions  in the
account of another.  As the SEC has not  alleged any of the  criteria by which a
party may be sanctioned under Section 15 this claim is ripe for dismissal.

         In essence,  the SEC contends that one may not call a broker and tell a
broker true facts concerning a company.  The SEC apparently feels that a company
cannot  itself tell  brokers true facts about itself and it cannot hire a public
relations  company to do the same.  The SEC's  theory does not state a claim for
relief under any fair reading of the law.

         The SEC has also failed to allege sufficient facts to state a claim for
relief based upon the allegations  that CRG failed to register as a dealer under
Section 15.

         A dealer is defined in Section 3(a)(5) of the Exchange Act as:
                  any person engaged in the business of buying and selling
                  securities for his own account, through a broker or otherwise,
                  ..but does not include..any person insofar as he buys or sells
                  securities for his own account, either individually or in some
                  fiduciary capacity, but not as a part of a regular business.
         A party is not engaged in the business of buying and selling securities
if he does not: (1) act as an  underwriter  or participate in a selling group in
any distribution of securities;  (2) carry a dealer inventory in securities; (3)
quote a market in any security;  (4) advertise or otherwise  hold himself out to
the public as a dealer, or a willing to buy or sell any security on a continuous
basis; (5) render any investment advice; (6) extend or arrange for the extension
of credit on securities; or, (7) lend any securities. See, Davenport Management,
Inc., SEC No-Action Letter, available at 1993 WL 120436 (April 13, 1993).

         Of the above seven criteria the SEC has only alleged that CRG engaged
in activities

                                                      26

<PAGE>

as an underwriter  based on the Regulations S transactions  with Tracker,  Delta
Petroleum,  Ammonia Hold, Information  Management  Technologies and Foreland. As
these  transactions  were  conducted in compliance  with  Regulation S as it was
interpreted at the time, such compliance  would indicate that CRG did not engage
in underwriting  activities and therefore,  did not have to register as a broker
dealer under Section 15 of the Securities  Act.  Furthermore,  to base liability
under this section would be in violation of constitutional due process.

                                     No Basis to Support Certain Remedies

         The SEC is not  empowered  to  seek  most of the  relief  which  it has
request.  Therefore,  this Court should  dismiss  those  remedies  which are not
authorized by law.

     The SEC is authorized to seek  injunctive  relief pursuant to Section 20(b)
of the  Securities Act [15  U.S.C.ss.77t(b)]  and Sections 21(d) of the Exchange
Act [15 U.S.C.  ss.ss.78u(d)].  Additionally,  the SEC is authorized to seek the
imposition  of  fines  pursuant  to  Section  21(d)  of  the  Exchange  Act  [15
U.S.C.ss.78u(d)(3).
         In this  case  the SEC  requests  relief  far  beyond  these  remedies.
Specifically, the SEC requests that this Court enter an Order which requires the
defendants:  (1) to pay for an  accounting;  (2) to disgorge  their profits from
trading as alleged in the complaint or may be discovered in the accounting;  (3)
Veitia, Spratt and Skalko to disgorge all compensation received as finder's fees
for the issuers alleged in the Complaint; (4) CRG, Gulf Atlantic, Veitia, Spratt
and Skalko to disgorge all  compensation  received from the sale of publications
they  controlled,  edited,  wrote without  adequate  disclosure  that promotions
therein were paid

                                                      27

<PAGE>

for by the  companies  promoted,  or the  amount  of  compensation,  or that the
defendants  were  selling  securities  they  recommended  for  purchase  in  the
publication; and (5) such other relief as this Court deems just and proper.

         Some courts have granted the SEC the ancillary relief which has been
requested.  See, SEC v. Texas Gulf Sulphur Co., 446 F.2d 1301 (2d Cir. 1971);
SEC v. Manor Nursing Center, Inc., 458 F.2d 1082 (2d Cir. 1972).
         However, these decisions were decide before the decision in Central
Bank v. First Interstate Bank, 511 U.S. 164 (1994).  In Central Bank, the
Supreme Court stated, "[a]dherence to the text in defining the conduct covered
byss.10(b) is consistent with our decisions interpreting other provisions of the
securities Acts."  Id. at 176.
         Therefore,  given the Central Bank holding that strict adherence to the
plain language of the securities laws controls the substantive  causes of action
that a litigant can bring, such reasoning would apply to the remedies  available
under the same laws.  Since the SEC has failed to establish  that it is entitled
to relief beyond the entry of an injunction and fines these  remedies  should be
dismissed.

                                                  Conclusion

         The  Complaint  should be  dismissed  for it fails to allege fraud with
specificity  as required by Rule 9(b);  fails to state a claim upon which relief
can be granted; and is in violation of the First Amendment provisions of freedom
of speech and the press.  In addition,  the  complaint  violates the due process
clause of the Fifth Amendment by attempting to apply laws and regulations  which
were not clear during the time at issue in this Complaint.

                                                      28

<PAGE>

                                            Respectfully submitted,

                                            LAW OFFICES OF HORWITZ & FUSSELL,
                                            a Professional Association

                                    By:     __________________________________
                                            MARK L. HORWITZ, ESQUIRE
                                            Florida Bar No. 147442
                                            17 East Pine Street
                                            Orlando, Florida 32801
                                            (407) 843-7733
                                            Fax No.:  (407) 849-1321
                                            Attorneys for Defendants, Corporate
                                            Relations Group, Inc. and Gulf
                                            Atlantic Publishing, Inc.

                                            CERTIFICATE OF SERVICE

         I HEREBY CERTIFY that a true and correct copy of the foregoing has been
furnished  via U.S.  Mail to the persons on the attached  Service List this 13th
day of December, 1999.

                                            MARK L. HORWITZ, ESQUIRE

                                                      29

<PAGE>

                        UNITED STATES DISTRICT COURT
                     FOR THE MIDDLE DISTRICT OF FLORIDA
                           (Orlando Division)

UNITED STATES SECURITIES AND      )
EXCHANGE COMMISSION,              )
                                  )
           Plaintiff,             )          CASE NO.: 99-1222-CV-22-A
                                  )          Hon. Anne C. Conway,
                                  )           Judge
      v.                          )          Hon. Karla R. Spaulding,
                                  )           Magistrate Judge
                                  )
                                  )
CORPORATE RELATIONS GROUP, INC.,  )
ET AL.,                           )
                                  )
                                  )
            Defendants.           )
                                  )

            PLAINTIFF' S MEMORANDUM IN OPPOSITION
            TO CONSTITUTIONAL AND OTHER ARGUMENTS RAISED IN MOTIONS TO
            DISMISS BY DEFENDANTS VEITIA, CRG, STRATCOMM, AND GULF ATLANTIC

                                         James A. Kidney (Trial Counsel)
                                         Jeffrey P. Weiss
                                         William McGovern

                                         Attorneys for Plaintiff
                                         U.S. Securities and Exchange Commission
                                         Mail Stop 8-8
                                         450 Fifth Street, N.W.
                                         Washington, D.C. 20549-0808
                                         (202) 942-4797 (Kidney)
                                         (202) 942-9581 (Kidney Fax)
Date: January 28, 2000                   kidneyj@sec.gov

<PAGE>

                          TABLE OF CONTENTS

SUMMARY OF ARGUMENT                                                         2

STATEMENT OF FACTS                                                          3

I.         SECTION 17(B) DOES NOT VIOLATE THE FIRST AMENDMENT               5

    A.  Strict Scrutiny Tests are Not Applicable to
        Satutes Compelling Disclosure in Commercial Spee   ch               5
    B.  Commercial Speech Disclosure Requirements Such as Section
        17 (b) Are Subject to a "Rational Basis" Test                       8
    C.  Compelled Disclosure of Compensation Does Not Violate the
        First Amendment                                                     10
    D.  Defendants' Conduct Demonstrates Why the Disclosure Provisions
        of Section 17(b) Are Rational                                       13

II.     VIOLATIONS OF SECTION 5 OF THE SECURITIES ACT ARE PROPERLY
        PLED AND REGULATION S SUFFERS NO INFIRMITY                          15

    A.  The Complaint States a Claim for Relief for Violations of Section 5 15
           1. CRG                                                           16
           2. Skalko and Pow Wow                                            18
    B.     Regulation S is Not Void for Vagueness                           18

III.    THE COMPLAINT PROPERLY ALLEGES STRATCOMM IS LIABLE
        FOR FRAUD AS A CONTROL PERSON OF CRG                                21

IV.     THE COMPLAINT PROPERLY ALLEGES VIOLATIONS OF SECTION 15
        OF THE EXCHANGE ACT                                                 22

    A.  The Complaint Adequately Alleges Defendants CRG, Spratt and
        Skalko Acted as Unregistered Brokers                                24
    B.  The Complaint Adequately Alleges Defendants CRG and Stratcomm
        Acted as Unregistered Dealers,                                      28

CONCLUSION                                                                  29

<PAGE>

                          TABLE OF AUTHORITIES

Federal Cases
Bates v. State Bar of Arizona, 433 U.S. 350 (1977).........................6,10
Brown v. Enstar Group, Inc., 84 F.3d 393 (11th Cir. 1996)....................22
Brown v. Mendel, 864 F. Supp. 113 8 (M.D. Ala. 1994).........................22
Central Hudson Gas & Electric Corp. v. Public Service Commission
of New York, 447 U.S. 557 (1980)..............................................8
Dayton Area Visually Impaired Persons, Inc. v. Fischer, 70 F.3d 1474
(6th Cir. 1995)...............................................................7
Dun & Bradstreet, Inc. v. Greenmoss Builders, 472 U.S. 749 (1985).........11,12
Fischler v. Amsouth  Bancorporation, 971 F. Supp. 533 (M.D. Fla. 1997).......22
G.A. Thompson & Co. v. Partridge, 636 F.2d 945 (5th Cir. 1981)...............22
Glickman v. Wileman Brothers & Elliott, Inc., 521 U.S. 457 (1997)..........9,11
Greater New Orleans Broadcasting Association, Inc. v.
United States, 527 U.S. 173 (1999)............................................5
Howry v. Nisus, Inc., 910 F. Supp. 576 (M.D. Fla. 1995)...................15,17
In re R M J 455 U.S. 191 (1982)............................................9,15
44 Liquormart, Inc. v. Rhode Island, 517 U.S. 484 (1996)....................6,7
Mass. Financial Services, Inc. v. SIPC, 411 F. Supp. 411 (D. Mass),
aff'd,  545 F. 2d 754 (1st Cir. 1976), cert. denied, 43 1 U. S. 904 (1977)...23
Ohralik v. Ohio State Bar Assn., 43 6 U.S. 447 (1978)........................11
Peel v. Attorney Registration and Disciplinary Commission
of Illinois, 496 U.S. 91 (1990)...............................................6
Pharo v. Smith, 621 F.2d 656 (5th Cir. 1980).................................22
Pinter v. Dahl, 486 U.S. 622 (1988).......................................16,18
Riley v. National Federation of the Blind of North Carolina, Inc.,
487 U.S. 781 (1988).........................................................5,7
Rochez Brothers, Inc. v. Rhoades, 527 F.2d 880 (3rd Cir. 1975)...............22
Scheuer v. Rhodes, 416 U. S. 23 2 (1974).....................................15
Scope Pictures of Missouri, Inc. v. City of Kansas City, 140 F. 3d 1201
(8th Cir. 1998)...............................................................7
SEC v. Continental Tobacco Co., 463 F.2d 137 (5th Cir. 1972).................16
SEC v. Environmental Holdings, Inc., Litigation Release No. 14683
(Oct. 6, 1995), 1996 WL 590813 (N.D. Tex. 1996)..............................20
SEC v. Friendly Power Co., LLC, 49 F.Supp.2d 1363 (S.D. Fla. 1999)........15,16
SEC v. Hansen, [1984 Transfer Binder] Fed. Sec. L. Rep.
(CCH)P. 91,426 (S.D.N.Y. 1984)............................................23,24
SEC v. Huttoe, Civ. Action No. 96-2543 (D.D.C Sept. 14, 1998)..............5,12
SEC v. Holschuh, 694 F.2d 130 (7th Cir. 1982)................................16
SEC v. Kenton Capital, Ltd., 1998 WL 1121117 (D.D.C. 1998)...................23
SEC v. Margolin Fed. Sec. L. Rep. (CCH)P. 97,024 (S.D.N.Y. 1992).............24
SEC v. Murphy, 626 F.2d 633 (9th Cir. 1980)...............................16,18
SEC v. National Executive Planners, Ltd., 503 F.Supp.
1066 (M.D. N.C. 1980)........................................................23
SEC v. Randy, 38 F. Supp. 2d 657 (N.D. Ill. 1999)......................23,24,29
SEC v. Rehtorik, Litigation Release No. 13975 (Feb. 23, 1994),
1994 WL 62344 (N.D. Tex. 1994)...............................................20

<PAGE>

SEC v. Softpoint, Litigation Release No. 14480 (April 27, 1995),
1995 WL 254717 (S.D.N.Y. 1995)...............................................20
SEC v. Wall Street Publishing, Inc., 851 F.2d 365 (D.C. Cir. 1988).5,8,10,11,12
SEC v. Westdon Holding & Investment, Inc., Litigation Release No. 13088
(Nov. 14,1991), 1991 WL 288360 (S.D.N.Y. 1991)...............................20
Stokes v. Lokken, 644 F 2d 779 (8th Cir 1981)................................15
U.S.v. Amick 439 F.2d 351 (7th Cir. 1971), cert. denied, 403 U.S. 918 (1971).12
Virginia State Pharmacy Board v. Virginia Citizens Consumer Council, Inc.,
425 U.S. 748 (1976)........................................................9,11
Washington Legal Foundation v. Friedman, 13 F. Supp.2d 51 (D.D.C. 1998).......6
Zauderer v. Office of Disciplinary Counsel, 471 U.S. 626 (1985)........7,8,9,10

State Cases
Gonzalez v. State Bar of Texas, 904 S.W. 2d 823 (Ct. App. Tex. 1995).........10
Hechler v. Christian Action Network, 491 S.E. 2d 618 (S. Ct. W. Va. 1997).....7
Kleese v. Pennsylvania State Board of Funeral Directors, 738 A. 2d 523
(Pa. 1999).................................................................9,10

SEC Administrative Actions
Davenport Management, Inc., SEC No-Action Letter, 1993 WL 12043 6............24
Financial Charters & Acquisitions, Inc., SEC No-Action Letter, 1984 WL 45923.24
Fulham & Co., SEC No-Action Letter, 1972 WL 9129.............................24
IMF Services, Inc., SEC No-Action Letter, 1971 WL 9607.......................26
In the Matter of the Application of Gordon Wesley Sodorff, Jr.,
Exchange Act Rel. No. 31134 (September 2, 1992),1992 WL 224082............23,28
In the Matter of Candie's, Inc., Litigation Release No. 33 -7263
(Feb. 21, 1996), 201996 WL 75741.............................................20
In the Matter of Joseph Kemprowski & The Cambridge Consulting Co., 58
 SEC Docket 448, Exchange Act Rel. No. 34-35058 (Dec. 8, 1994)...............26
Joseph K. Bannon, CPA, SEC No-Action Letter, 1988 WL 235393..................24
Michael D. Barrett, SEC No-Action Letter, 1972 WL 8544.......................26
Securities Act Release No. 33-7192...........................................21
Security Mutual Life Insurance Company of Lincoln, Nebraska,
 SEC No-Action Letter, 1993 WL 455423........................................24
U.S. v. Sung & Feher, Litigation Release No. 14500 (May 25, 1995)............20

Federal Statutes

15 U.S.C.ss.77q(a)......................................2,3,4,5,6,8,10,12,13,14
15 U.S.C.ss.78t(a)...........................................................21
15 U.S.C.ss.78o.........................................................4,22,24
15 U.S.C.ss.78c(a)(4).....................................................23,27
15 U.S.C.ss.78c(a)(5).....................................................23,25
15 U.S.C.ss.77e.............................................................4,5

Federal Regulations
17 C.F.R.ss.240.3a4-1........................................................27
17 C.F.R.ss.230.901 (Regulation S).............................4,17.18,19,20,21

<PAGE>

17 C.F.R.ss.230.903(a).......................................................19
17 C.F.R.ss.230.904(a)....................................................21,23

Other Authorities
Fed. R. Civ. Proc. 9(b).......................................................2
Fed. R. Civ. Proc. 12(b)(6)...................................................2
N. Wolfson, R. Phillips & T. Russo, Regulation of Brokers, Dealers and
 Securities Markets, (1st Edition, 1977)............................24,26,27,28
L. Loss and I Seligman, Securities Regulation Vol. VI
(3rd Edition, 1990).......................................................28,29

                         UNITED STATES DISTRICT COURT
                      FOR THE MIDDLE DISTRICT OF FLORIDA
                              (Orlando Division)

-----------------------------------------)
UNITED STATES SECURITIES AND             )
 EXCHANGE COMMISSION,                    )
                                         )
                                         )
Plaintiff,                               )   C.A. No. 99-1222-CV-22-A
                                         )   Hon. Anne C. Conway,
                                         )    Judge
V.                                       )   Hon. Karla R. Spaulding,
                                         )    Magistrate Judge
                                         )
                                         )
CORPORATE RELATIONS GROUP, INC., ET AL., )
ET AL.,                                  )
                                         )
                                         )
             Defendants                  )
                                         )
-----------------------------------------)

                   PLAINTIFF' S MEMORANDUM IN OPPOSITION
         TO CONSTITUTIONAL AND OTHER ARGUMENTS RAISED IN MOTIONS TO
       DISMISS BY DEFENDANTS VEITIA, CRG, STRATCOMM, AND GULF ATLANTIC

         Plaintiff,  the Securities and Exchange  Commission ("the Commission"),

submits this memorandum in opposition to certain  arguments  raised in memoranda

in  support  of  motions  to  dismiss  filed by  defendants  Roberto  E.  Veitia

("Veitia"),  Corporate  Relations  Group,  Inc.  ("CRG'),  Stratcomm  Media Ltd.

("Stratcomm")  and Gulf Atlantic  Publishing,  Inc. ("Gulf  Atlantic"),  some of

which  are   adopted   by  the  other   movants.   These   issues  are  (a)  the

constitutionality  of  Section  17(b) of the  Securities  Act (the  anti-touting

provision);  (b) whether the Complaint properly alleges a violation of Section 5

of the Securities Act  (registration  of securities);  (c) whether the Complaint

properly pleads that Stratcomm is liable as a control person under Section 20(a)

of the Exchange Act, and (d) whether the Complaint  properly alleges  violations

of Section 15 of the Exchange Act (broker dealer registration).

                                                                               1

<PAGE>

         A second  plaintiffs  memorandum,  entitled  opposition  to the motions

to dismiss by defendants  Spratt,  Skalko and Pow Wow, addresses  arguments by

defendants Veitia, CRG, Stratcomm,  Gulf Atlantic,  James W. Spratt III

("Spratt"),  James A- Skalko ("Skalko") and Pow  Wow,  Inc.  ("Pow  Wow")

(collectively,  "the  CRG  defendants")  that (a) the  Complaint  fails  to meet

the  particularity requirements of Fed. R. Civ. P. 9(b), and that (b) the

Complaint  fails to state a cause of action for touting and fraud under Fed. R.

Civ. P.  12(b)(6).  That  memorandum  also contains the most  extensive  summary

of the  allegations  of the Complaint  against the CRG defendants and is adopted

by reference in this memorandum.

         Finally,  a third plaintiff's  memorandum,  entitled  opposition to the

motions  to  dismiss  by  Jose  Antonio   Gomez  Cortes   ("Gomez"),   Fondo  de

Adquisiciones  E  Inversiones   Internacionales  XL,  S.A.  ("Fondo")  and  C.A.

Oportunidad,  S.A.  ("Oportunidad")   (collectively,   "the  Gomez  defendants")

addresses the arguments raised in motions to dismiss by those defendants.

         Just as each of the movants  purports to  incorporate  the arguments in

memoranda of the other  defendants,  so the plaintiff relies on all three of its

memoranda in opposing the motions to dismiss by all movants. 1

                          SUMMARY OF ARGUMENT
         The  constitutionality  of Section 17(b),  the  anti-touting  provision

which the  defendants  attack,  has been sustained at least twice in the last 12

years.  The chief  argument the defendants  muster  against these  well-reasoned

decisions is to admit that as recently as last year the Supreme  Court  affirmed

that commercial speech does not enjoy strict scrutiny protection, and then to

                                                                               2

--------
1        We note that all six defense  memoranda in support of motions to
dismiss  totaled 144 pages.  The  Commission is responding in 90.

<PAGE>

contend that, nevertheless,  this Court should ignore the Supreme Court majority

and apply a strict scrutiny test to the defendants' conduct.

         As  an  alternative,   the  defendants  invoke  authorities  addressing

prohibitions on commercial speech and ignore the authorities  applying the First

Amendment to disclosure  statutes such as Section 17(b).  The courts,  including

the Supreme  Court,  have long  recognized  that First  Amendment  concerns  are

substantially  ameliorated  when a statute requires that the public receive more

information, as opposed to statutes which aim to lessen information provided the

public.  When the proper test is applied,  Section 17(b), a disclosure  statute,

clearly passes constitutional muster.

         Regulation S is clear on its face, especially as applied to the conduct

alleged in this case, and its application,  including in a criminal case in this

district,  has been sustained.  The Complaint also properly pleads all necessary

elements of broker-dealer and control person violations.

                            STATEMENT OF FACTS

         The  Commission  has  alleged  in  a  well-pleaded  and   comprehensive

Complaint that the CRG defendants  directed and operated a fraudulent  scheme in

which they acquired control of large blocks of deeply-discounted securities from

their clients, which usually were small public companies.  These defendants then

touted the  securities to the public in CRG and Gulf Atlantic  publications  and

ordered  CRG  employees  to  promote  the stocks to  brokers.  CRG then sold the

securities at a profit while  promoting  them to the public.  The CRG defendants

omitted to disclose material  information in the promotional  materials and when

buying or selling securities by failing to disclose that they were being paid by

the issuers to promote the stocks,  the amount of the  compensation,  or that at

the same time they were promoting the stocks, they were selling their positions.

                                                      3

<PAGE>

The Commission has alleged three causes of action  addressed in this memorandum.

First, the Complaint alleges that various  defendants  violated Section 17(b) of

the  Securities  Act of 1933  ("Securities  Act")  (15  U.S.C.  ss.  77q(a)]  by

publishing  promotional  materials  which,  though  not  purporting  to  offer a

security for sale,  promoted or "touted"  the  securities  to investors  without

fully  disclosing  the receipt  and amount of  consideration  received  for such

touting.

         Second, the Commission alleges that various defendants violated Section

5 of the Securities Act (15 U.S.C. ss. 77e], which prohibits a person,  directly

or indirectly, from offering to sell or selling a security unless a registration

statement is filed or in effect,  or an  exemption  from  registration  applies.

These violations  occurred in transactions  made purportedly in reliance upon an

exemption  known as  Regulation  S [17  C.F.R.  ss.ss.230.901,  et seq.],  which

permits the offer and sale of unregistered  securities outside the United States

if certain requirements are met.

         Third, the Complaint  alleges that the CRG defendants  violated Section

15 of the Exchange Act [15 U.S.C.  ss. 78o] because CRG acted as a broker-dealer

and neither it nor the individual defendants were registered with the Commission

as brokers or dealers.

         CRG, Veitia, Stratcomm and Gulf Atlantic raise constitutional arguments

against two of these  allegations.  They claim that Section  17(b)  violates the

First Amendment to the Constitution as a content-based  regulation of commercial

speech that cannot withstand either a strict or intermediate  scrutiny analysis.

Defendants also maintain that, from 1994 through 1996, the portion of Regulation

S that dealt with reselling  stock back into the United States was  sufficiently

confusing  that basing  liability  for  violations of Section 5 on violations of

Regulation S would be unconstitutional as a violation of due process.2

-------------
2      Planitiff's memoranda in opposition to motions to dismiss by the CRG and
Gomez defendants provide a more detailed description of the allegations of the
Complaint.

<PAGE>

                              ARGUMENT

I.        SECTION 17(b) DOES NOT VIOLATE THE FIRST AMENDMENT

         A.        Strict Scrutiny Tests are Not Applicable to
                   Statutes Compelling Disclosure in Commercial Speech

         The  defendants  admit  that  the  test in this  case  for  assessing

the  constitutionality  of the anti-touting  provision is that applied to

commercial  speech.  (Veitia Mem. p. 5). They have little  choice, since they do

not contest they touted stock for a fee. They also admit,  albeit  grudgingly,

that as recently as last year the Supreme Court  reaffirmed  that  commercial

speech is not subject to a strict  scrutiny test urged by the defendants.

Greater New Orleans Broadcasting  Association,  Inc. v. United States,

527 U.S. 173, 119 S. Ct. 1923 (1999) (Veitia Mem. p. 9, n. 3).

         Nevertheless,  the  defendants  argue that  strict  scrutiny  should be

applied in this case, and contend that the two decisions which directly  address

and sustain the  constitutionality of Section 17(b) of the Securities Act should

be ignored  because  "these  decisions  completely  fail to take  account of two

decades  of  commercial  speech  cases."  (Def.  Mem.  p.  9).3 For the  reasons

described  herein,  these  two  decisions  appropriately  did not  dwell  on the

authorities the defendants rely upon, which involve  prohibitions on speech, but

instead  relied on  authorities  addressing  laws which  require  disclosure  of

information to the public.

-----------------
3       This contention is believed by the fact that the earlier of the two
decisions, SEC v Wall Street Publishing, Inc., 851 F. 2d 365 (D.C. Cir. 1988),
wass decided years after all but twe of the cases on which the defendants rely,
and was decided only a week before one of the remaining two, Riley v. National
Federation of the Blind of North Carolina, Inc., 487 U.S. 781 (1988).  Only
Greater New Orleans, a case which the defendants barely acknowledge, was decided
after the only decision sustaining Section 17 (b), SEC v. Huttoe, No.96-2543
(D.D.C. Sept. 14,1998)  (attached as Exhibit 1 to Plaintiff's Memorandum in
Opposition to Motions to Dismiss by Defendants CRG, Stratcomm, Gulf Atlantic,
Veitia, Spratt, Skalko and Pow-Wow, filed this date).

<PAGE>

         For that reason,  defendants'  reliance-on 44 Liquormart,

Inc. v. Rhode island, 517 U.S. 484 (1996), is  misplaced.  At issue there was a

complete  ban by the  state on  commercial  speech  related  to liquor

advertising. The Court found that:

         [p]recisely  because bans against  truthful,  nonmisleading  commercial
         speech  rarely  seek to protect  consumers  from  either  deception  or
         overreaching, they usually rest solely on the offensive assumption that
         the  public  will  respond   'irrationally'  to  the  truth.  [citation
         omitted].  The First Amendment directs us to be especially skeptical of
         regulations  that  seek  to  keep  people  in the  dark  for  what  the
         government perceives to be their own good.

44 Liquormart, 517 U.S. at 503, emphasis supplied.4

         In the present  case,  Section  17(b) is not a ban, but is a disclosure

requirement  that seeks to protect  investors  from harm by  providing  material

information  so that they may properly  judge the motives and  objectivity  of a

stock promoter. This distinction was not lost on the Court in 44

Liquormart:

         When a  State  ...  requires  the  disclosure  of  beneficial  consumer
         information,  the  purpose of its  regulation  is  consistent  with the
         reasons for according  constitutional  protection to commercial  speech
         and therefore justifies less than strict review.  However, when a State
         entirely   prohibits  the  dissemination  of  truthful,   nonmisleading
         commercial messages for reasons unrelated to the preservation of a fair
         bargaining  process,  there  is far  less  reason  to  depart  from the
         rigorous review that the First Amendment generally demands.

---------------
4      See  also  Peel  v.  Attorney  Registration  and  Disciplinary
Commission  of Illinois, 496 U.S. 91, 108(1990) ("disclosure of truthful,
relevant information is more  likely to make a  positive  contribution  to
decision  making  than is concealment of such information");  Bates v. State Bar
of Arizona, 433 U.S. 350, 375 (1977) ('Although, of course, the bar retains the
power to correct omissions that have the effect of presenting an inaccurate
picture,  the preferred remedy is more disclosure, rather than less");
Washington Legal Foundation v. Friedman, 13 F.Supp.2d 51, 73 (D.D.C.  1998)
(full  disclosure  "comports with the Supreme Court's  preference for combating
potentially  problematic  speech  with more speech").

<PAGE>

44  Liquormart,  517 U.S. at 501,  emphasis  supplied.  The Court went on to

recognize  that under "less than strict  review,"  only a  "reasonable  fit"

between  a  statute's  requirements  and its  goals  needs  to be

established to be constitutional. 44 Liquormart, 517 U.S. at 507.

         Defendants.'  invocation of the First Amendment to invalidate a statute

that requires  disclosure of material  information -- in an industry  predicated

upon such  disclosure  stands the  amendment on its ear.  Notwithstanding  their

howls of protest,  defendants' true objective is concealment of information they

would rather not have publicly  known -- that these issuers about whom they have

published  glowing  endorsements  have, in fact,  paid  handsomely for that very

privilege.

         Defendants'  reliance  on Rile also is to no avail.  The Court  used a

strict  scrutiny  analysis  to invalidate  a  state  statute  requiring  certain

disclosures  in  the  context  of  soliciting   charitable contributions,

finding the statute to be a "content-based  regulation of speech." Riley, 487

U.S. at 795. But the Court  recognized  that:  (1) a state may

"constitutionally  require"  fundraisers  to  disclose  certain financial

information;  and (2) that "[p]urely  commercial speech is more susceptible to

compelled disclosure requirements."  Riley,  487 U.S. at 795-6,  citing Zauderer

v. Office of Disciplinary  Counsel,  471 U.S. 626, 629 (1985).5  Plainly, in the

purely commercial

--------
5        Several lower courts have recognized, and even applied, the Riley
dicta. See e.g, Scope Pictures of Missouri, Inc. v. City of Kansas City, 140 F.
3d 1201, 1204-5 (8th Cir. 1998) (court found requirement to disclose risks of
certain diseases was content-neutral and narrowly tailored to serve significant
government interest and thus did not violate the First Amendment); Dayton Area
Visually Impaired Persons, Inc. v. Fisher, 70 F.3d 1474, 1481 (6th Cir. 1995)
(citing  Riley, court recognized that "some speech by professional fundraisers
can be regulated without violating First Amendment principles"); Hechler v.
Christian Action Network, 491 S.E. 2d 618, 629 (S. Ct. W. Va. 1997) (court found
that the disclosure requirement at issue was "neutral statement which simply
direct[ed] a donor to a place where he or she may find more information" and
thus burdened no more speech than necessary to further "substantial state
interest" of preventing deception in charitable solicitations).

<PAGE>

speech  arena -- as is the case  before  this Court --  government  may  require

disclosure of certain  information,  as long as the  requirements are reasonably

related to achieving their objective.

         Therefore,  not only does Supreme Court precedent -- including the most

recent  decisions -- dictate that a strict  scrutiny  test not be applied to the

defendant's touting activities,  but the same precedents cited by the defendants

impose only a relatively  light burden on statutes  such as Section  17(b) which

add to the information available to the public.6

         B.      Commercial Speech Disclosure Requirements Such as Section 17(b)
                 Are Subject to a "Rational Basis" Test

         Tacitly  recognizing  that their claim to strict scrutiny will fail,

the defendants argue that Section 17(b) cannot meet an intermediate test applied

to prohibitions on commercial speech.  They rely chiefly on Central Hudson Gas

& Electric Corp. v. Public Service Commission of New York, 447 U.S. 557 (1980),

a case decided eight years before SEC v. Wall Street  Publishing,  Inc., 851 F.

2d 365 (D.C.  Cir.  1988),  affirmed the  constitutionality  of Section  17(b).

But Central  Hudson is inapposite to the disclosure requirements of Section

17(b) because it struck down a state  regulation  completely  banning

advertising by a public  utility.  In doing so, the Court set forth a test to

analyze prohibitions on commercial speech. Central Hudson, 447 U.S. at 563-4.

         The present case, however, deals with a disclosure  requirement,  not a

speech prohibition.  The leading case for determining the  constitutionality  of

such requirements is Zauderer v. Office of Disciplinary  Counsel,  471 U.S. 626,

629  (1985),  which  applied  a  rational  basis  test to such  statutes  in the

commercial arena.

------------------
6     The court can  ignore the  historical  arguments  offered  to  support
strict scrutiny  of  commercial  speech at pp. 10- 11 of  Veitia's  memorandum.
We can safely assume the Supreme Court was aware of The  Federalist  and the
history of the Bill of Rights when it rendered the decisions on which he parties
relies.

<PAGE>

         In Zauderer, the Supreme Court decided the issue of whether a state may

"seek to prevent deception of the public" by requiring  attorneys to disclose in

their advertising certain information regarding fee arrangements.  The appellant

contended  the state  must pass the  Central  Hudson  test for  prohibitions  on

speech. Zauderer, 471 U.S. at 650-5 1.

         In  rejecting  this  contention,  the  Supreme  Court,  found  that the

appellant "overlook[ed] material differences between disclosure requirements and

outright  prohibitions  on  speech,"  and that the  state had not  attempted  to

prevent  attorneys  from  conveying  information,  but merely  required them "to

provide  somewhat  more  information  than they might  otherwise  be inclined to

present." Zauderer, 471 U.S. at 650, emphasis supplied.7 The Court then found:

         Because the  extension  of First  Amendment  protection  to  commercial
         speech  is  justified  principally  by the  value to  consumers  of the
         information  such  speech  provides,  see  Virginia  Pharmacy  Board v.
         Virginia  Citizens  Consumer  Council,   Inc.,  425  U.S.  748  (1976),
         appellant's  constitutionally  protected  interest in not providing any
         particular factual information in his advertising is minimal.  Thus, in
         virtually  all  our  commercial  speech  decisions  to  date,  we  have
         emphasized  that  because  disclosure  requirements  trench  much  more
         narrowly  on an  advertiser's  interest  than do flat  prohibitions  on
         speech,  "warning[s] or disclaimer[s]  might be appropriately  required
         ... in order to  dissipate  the  possibility  of consumer  confusion or
         deception." In re R.M.J., 455 U.S. 191, 201 (1982).

----------------

7        See also  Glickman v. Wileman  Brothers & Elliott,  Inc.,  521 U.S.
457, 474 and n. 18 (1997)  (Supreme  Court found it was "error," for court of
appeals to rely on Central Hudson for purpose of assessing the constitutionality
of a regulation  compelling funding for speech);  Kleese v. Pennsylvania State
Board of Funeral Directors,  738 A. 2d 523, 525 (Pa. 1999) (state court relied
on Zauderer in determining whether a disclosure requirement violated First
Amendment rights, finding  that the parties "have incorrectly  focused on the
Central  Hudson test and that this test does not apply in this  instance  ...
In this case,  there is no prohibition at issue but a disclosure requirement is
at issue.").

                                                                              9

<PAGE>

Zauderer,  471 U.S.  at 651.8  Indeed,  the  Court  specifically  rejected-  the

contention  that a  disclosure  requirement  should  be  subjected  to a  "least

restrictive means" analysis,  which the defendants want the Court to adopt here,

instead  characterizing  disclosure  requirements as "one of the acceptable less

restrictive  alternatives" to suppression of speech.  Zauderer,  471 U.S. at 651

n.14.

         The Court held that an advertiser's rights are "adequately protected as

long as disclosure  requirements are reasonably  related to the State's interest

in preventing deception of consumers.  Zauderer,  471 U.S. at 651.9 As a result,

the  Court  concluded  that a  requirement  that  an  attorney  advertising  his

availability  on a contingent  fee basis  disclose that clients will have to pay

costs even if their lawsuits are  unsuccessful  "easily passes muster under this

standard." Zauderer, 471 U.S. at 652.

         In short,  Section 17(b) is  constitutional  because it is a disclosure

requirement  that  is  reasonably  related  to  the  Commission's   interest  in

preventing deception of investors.

         C.       Compelled Disclosure of Compensation Does Not
                  Violate the First Amendment

         SEC v. Wall Street  Publishing  Institute,  Inc., 851 F. 2d 365, 374

(D.C. Cir. 1988),  squarely  addresses whether Section 17(b) violates the First

Amendment. The Court of Appeals

------------------
8        See also Bates, 433 U.S. at 384 (1977) ("We do not foreclose the
possibility that some limited  supplementation,  by way of warning or disclaimer
or the like, might be required ...so as to assure that the consumer is not
misled").

9        Accord  Kleese.  738 A.2d at 526 ("small" and "fairly  innocuous"
requirement to include name of the  supervising  funeral director in
advertisements  is "reasonably  related to the state's  interest in preventing
reception of consumers");  Gonzalez v. State Bar of Texas,  904 S.W. 2d 823, 829
(Ct. App. Tex.  1995)  (attorney's  rights as advertiser  adequately  protected
as long as state bar's disclosure requirements are reasonably related to state's
interest in preventing the deception of consumers).

<PAGE>

for the  District  of  Columbia,  applying  the  Supreme  Court's  rationale  in

Zauderer,  found that a promoter's failure to disclose consideration received in

return for publication is "constitutionally proscribable."

         To that end, the court made several key  observations.  First,  the

court noted that Section  17(b) did not ban or restrict speech, but rather,

required affirmative disclosure. Wall Street Publishing,

851 F. 2d at 371.10 Indeed,  the  court,  adopted  the language of Virginia

State Board of Pharmacy v. Virginia  Citizens  Consumer  Council,  Inc., 425

U.S. 748 (1976), in observing that challenges  to  disclosure  requirements  are

"paternalistic,"  and that the zeal to protect  the public  from  information

cannot withstand First Amendment scrutiny. Wall Street Publishing  851 F. 2d at

371.11
         Second, the court observed the distinction  between the government's

power to regulate  commercial speech and its power to regulate certain "fields

of economic activity," and in particular,  the securities  industry.  Wall

Street Publishing,  851 F. 2d at 372-3, citing Dun & Bradstreet, Inc. v.

Greenmoss Builders, 472 U.S. 749, 758 n.5 (1985).12

------------------
10       The court found that "[r]equiring  disclosure of a material fact in
order to prevent investor  misunderstanding is the very essence of federal
securities regulation." Wall Street Publishing, 851 F.2d at 373 n.9.

11        Accord Glickman,  521 U.S. 457 (1997) (Supreme Court indicated that
compelled speech regulations that do not infringe upon a "crisis of conscience"
should not be afforded First Amendment protections).

12       In Dun & Bradstreet,  the Supreme Court,  in a plurality  opinion,
observed,  "certain kinds of speech are less central to the interest of the
First Amendment than others." The Court noted "there are '[n]umerous
examples...  of communications that are regulated  without  offending  the First
Amendment,  such as the exchange of  information  about  securities,  corporate
proxy statements, the exchange of price and production information among
competitors, and employers' threats of retaliations for the labor activities of
employees."' Id. citing Ohralik v. Ohio State Bar Assn., 436 U.S. 447, 456
(1978).10 The court found that "[r]equiring  disclosure of a material fact in
order to prevent investor  misunderstanding is the very essence of federal
securities regulation." Wall Street Publishing, 851 F.2d at 373 n.9.

<PAGE>

         The court  concluded  that  "regulation  of the exchange of information

regarding  securities is subject only to limited First  Amendment  scrutiny" and

that, in areas of extensive federal  regulation -- like the securities  industry

-- the  Constitution  does not require a court "to weigh the relative  merits of

particular  regulatory  objective  that  impinge upon  communications  occurring

within the umbrella of an overall  regulatory  scheme." Wall Street  Publishing,

851 F. 2d at 373 Again  citing  Zauderer,  471 U.S. at 650, the court noted that

disclosure  requirements  that regulate  commercial speech have been upheld even

when the government has not shown that,  absent the  disclosure,  the underlying

speech  is  false or  misleading  or that the  disclosure  requirement  serves a

substantial government interest other than preventing deception.

         More  recently,  the United  States  District  Court for the  District

of  Columbia,  relying on Wall Street  Publishing, rejected a claim by the

defendant,  a stock promoter,  that Section 17(b) violated his First Amendment

rights.  SEC v. Huttoe,  No. 96-2543 (D. D.C.  Sept.  14,  1998),  Ex. 1, to

Plaintiff s Mem. in  Opposition  to Motions to Dismiss By CRG et al. In Huttoe,

the District Court recognized that speech relating to securities  transactions

formed a "distinct  category of  communications in which the  government's

power to regulate is at least as broad as with respect to the general  rubric of

commercial  speech" and is thus subject  to  rational  basis  scrutiny.  Huttoe,

slip op.  at 26,  citing  Wall  Street  Publishing,  851 F. 2d at 373,  and Dun

& Bradstreet,  472 U.S. at 758. The court,  applying the rational basis test,

found that the Commission had a "substantial interest in the investing public

'knowing whether an apparently  objective  statement is motivated by the promise

of payment."'  Huttoe slip op. at 27, quoting U.S. v. Amick, 439 F.2d 351, 365

(7th Cir. 1971) cert. denied, , 403 U.S. 918 (1971).

<PAGE>

         D.       Defendants' Conduct Demonstrates Why the Disclosure Provisions
                  of Section 17(b) Are Rational

         The  defendants  assert  that they have met the  first  requirement  of

Section  17(b) that the fact of payment for touting  stock be  disclosed  -- and

that the requirement that the amount of compensation be disclosed fails both the

strict and intermediate scrutiny tests they urge the Court to adopt. 'As we have

shown,  the  appropriate  test is whether the  provisions  of Section  17(b) are

rationally related to the goal of preventing deception in the securities markets

through touting.  The conduct of the defendants  demonstrates that the statute's

requirements  that both compensation and the amount of compensation be disclosed

are  rationally  related  to the goal of  informing  investors  of the degree of

pecuniary interest of touts in recommending stock and to avoid deception.

         Whether reviewed in isolation or as part of the whole package delivered

by Money World and its companion  publications,  the  "disclosures" on which the

defendants  rely are  themselves  deceptive.  The reasons for this are described

fully in a companion  memorandum  and are  specifically  incorporated  herein by

reference.13 To summarize,  the term  "advertorial" is intentionally  ambiguous,

and  plainly  intended  to dilute  the term  "advertisement"  by  suggesting  an

objective  endorsement.  A quick scan of Money World (some of which are attached

as appendices to Spratt's  motion to dismiss)  discloses that the CRG defendants

made every effort to minimize even the modest impact,  if any, of  "advertorial"

by, for  example,  devoting  covers of the  magazine  to the  touted  companies,

promoting the touting articles in publisher's letters, and by seamlessly merging

the touts with  other  editorial  content  by use of the same  type,  headlines,

layout and

---------------
13        See Plaintiffs  Memorandum in Opposition to the Motions to Dismiss by
Defendants CRG,  Stratcomm,  Gulf Atlantic,  Veitia, Spratt, Skalko and Pow Wow,
pp. 24-28.

<PAGE>

editorial  style.14 Other  language  relied on by the defendants to contend they

"disclosed" payment by touted companies is, in fact, deceptive,  suggesting that

CRG  stands  by  the  magazine's   recommendations  as  professional  investment

counselors rather than acting contrary to them.

         The important issue raised by this case is not whether Section 17(b) is

unconstitutional,   but  rather  whether   transparent  ruses  employed  by  the

defendants to avoid the disclosure requirements of the statute will be tolerated

and  the  goals  of  the  statute  eviscerated.  Holding  that  only  clear  and

straightforward  disclosure  of the fact and  amount  of  payment,  rather  than

evasive  conduct to hide those facts,  meets the  requirements of Section 17(b),

will ensure the statute is fairly enforced and the goals of the statute met.

         Only a schemer  could  conclude  the payment for touting was fairly and

straightforwardly  disclosed.  Had CRG also disclosed the amount of compensation

for touting of its client  stocks,  presumably it would have been harder for CRG

to  discount  the statute so  completely  in its  publications,  as it has done.

Clearly, the requirements of Section 17(b) are rationally related to the goal of

requiring touts to disclose who has bought and paid for their promotions and how

large was the payment.  Therefore,  the statute passes the constitutional  tests

applied  to laws  requiring  that  information  be  disclosed  to the  investing

public.15

------------
14 In fact, most of the articles not labeled "advertorial" promote stocks of CRG
client  companies  or of  Stratcomm.  Those  which do not are  generally  filler
material.
15 CRG's argument that because  publications  such as The Wall Street Journal or
Business  Week have not been sued by the  Commission  under Section 17(b) simply
ignores the fact that those publications merely sell advertising space,  clearly
identifiable  as such,  while CRG  offers  its CC  editorial"  services  for the
specific goal of promoting  company stock.

<PAGE>

II.      VIOLATIONS OF SECTION 5 OF THE SECURITIES ACT ARE
         PROPERLY PLED AND REGULATION S SUFFERS NO INFIRMITY

         A. The Complaint States a Claim for Relief for Violations of Section 5

         Defendants  CRG and Gulf  Atlantic  argue that the  Complaint  fails to

state a claim for relief  against them under Section 5 of the Securities Act for

sale of unregistered securities not eligible for any valid exemption.  The basis

for  this is an  extremely  blind  reading  of the  Complaint,  which  fails  to

acknowledge even such obvious and well-pleaded subterfuges such as when, in both

the Delta and IMTECH  deals,  CRG wrote checks to pay Fondo or  Oportunidad  for

stock on the same date that Fondo and  Oportunidad  were  purporting  to buy the

same stock pursuant to the Regulation S exemption for off-shore purchasers.

(Complaint P. P. 69, 75, 109-120).16

         In deciding a motion to  dismiss,  the Court must accept the

plaintiff's  factual  allegations  as true and  construe  the complaint in the

light most favorable to the plaintiff.  Scheuer v. Rhodes, 416 U.S. 232 (1974);

Howry v. Nisus, Inc., 910 F. Supp. 576 (M.D. Fla. 1995). See also Plaintiff s

Memorandum in Opposition to Motions of CRG et at., p. 6.

         Sections 5(a) and 5(c) of the  Securities  Act prohibit any person from

directly or indirectly  offering to sell or selling securities  unless a

registration  statement is in effect or has been filed as to the securities,

or an exemption from registration is available.  Scienter is not required to

establish a violation  of Section 5. Stokes v.  Lokken,  644 F.2d 779,  784

(8th,  Cir. 1981);  SEC v. Friendly Power Co. LLC. et al., 49 F.Supp.2d.  1363

(S.D.  Fla.  1999).  Thus,  the Commission  need only meet simple notice

pleading requirements under Rule 8.

         In order to plead a prima facie  violation of Section 5, the Commission

must allege that (1) securities  were offered or sold for which no registration

statement either was filed or in effect; (2)

--------------
 16  Hereinafter,  paragraph  symbols alone shall refer to paragraphs of the
 Complaint.

<PAGE>

the offering or sale was made through  interstate  commerce or the mails;  and

(3)  defendants,  directly or indirectly,  offered or sold the securities.

Friendly Power Co., at p. 6, citing SEC v. Continental Tobacco Co. 463 F.2d 137,

155 (5th Cir. 1972).

         Direct  sellers  include  the owner of the  securities  being  sold,

and anyone who  personally  solicits  purchases  from investors or offers from

prospective  buyers.  See Pinter v. Dahl, 486 U.S. 622,  646-47  (1988).

The latter  category  applies to persons who have a motivation "to serve [their]

own financial  interests or those of the securities  owner."  Pinter,  48 6 U.S.

at 647.  Indirect  sellers  include  persons who did not have direct contact

with potential  buyers or engage in selling efforts of the securities,  but

instead employed or directed others to sell the securities.  See generally SEC

v. HoIschuh,  694 F.2d 130, 140 (7th Cir. 1982).

         A person who offers or sells a security in reliance upon an exemption

from the  registration  requirements  has the burden of establishing the

availability of the exemption.  SEC v. Murphy,  626 F.2d 633, 645

(9th Cir. 1980).  Such exemptions are narrowly construed. Id.

                  1.       CRG
         CRG  argues  that the  Complaint  alleges  that only  Fondo and

Oportunidad  bought and sold  unregistered  securities  in Regulations S and D

transactions,  and that it did not properly  allege that CRG was involved in

those deals.  CRG Mem. pp. 5-7. CRG then  asserts  that Fondo and  Oportunidad

are not  affiliated  or  associated  with CRG.  CRG Mem.  p. 7. CRG then

concludes  the Commission therefore failed to state a claim for relief.

CRG Mem. p. 7.

         This argument is fatally flawed.  No less than 22 times, the Commission

alleges that CRG directed or controlled  Fondo and  Oportunidad  for purposes of

the unlawful stock transactions, or that these entities were nominees of CRG. P.

P. 2, 30, 33-4,  60, 62, 66, 84-5,  87, 99, 103-5,  122, 32, 147, 149, 167, 172,

191, 222. Defendants simply ignore these allegations. Thus, in the

<PAGE>

context of the various  Regulations S and D  transactions,  the  allegations  of

which cover 24 pages of the Complaint,  the Commission has clearly  alleged that

CRG participated in sales of unregistered securities.

         CRG also argues the  Commission  has alleged  contradictory  theories -

that CRG  controlled  Fondo  and  Oportunidad  and  that,  at  times,  Fondo and

Oportunidad acted  autonomously.  CRG Mem. pp. 9- 10. However,  there is nothing

contradictory  in these  allegations.  It is clear from a simple  reading of the

Complaint, let alone one affording reasonable inferences to the plaintiff,  that

Fondo and Oportunidad  acted in concert with CRG as a "front" for CRG's domestic

ownership of  securities so that a Regulation S exemption  could be claimed.  In

other  instances,  including those in which registered stock was sold, Fondo and

Oportunidad  bought  and  sold  stock in  coordination  with CRG so that all the

defendants could realize a profit from CRG's scalping activities. See Plaintiffs

Memorandum in Opposition to Motion of Gomez,  Fondo and  Oportunidad,  pp. 3-10.

This is not contradictory  pleading, but rather extensive,  detailed pleading of

concerted  conduct to violate the securities laws. The Complaint plainly alleges

a cause of action against CRG under Section 5.17

------------
17     CRG also  claims  the Commission  alleges CRG violated  Section 5 of the
Securities Act in connection with the sale of Tracker stock  pursuant to a Form
S-8  registration  statement.  CRG again  misreads the  Complaint.  The
Commission  does not allege  Section 5 violations regarding these transactions,
but  rather  that  CRG  and  other defendants  violated the antifraud provisions
of the securities laws by selling such stock while they were promoting the
company.

<PAGE>

                  2.       Skalko and Pow Wow

         Skalko and Pow Wow also contest the adequacy of the pleading of Section

5 violations  against them.18 The Complaint  specifically  identifies  Skalko as

having sold the following unregistered  securities:  Tracker and Stratcomm stock

in the fail of 1994,  see P. P. 52, 187; and Ammonia Hold stock in the summer of

1996. See P. 94. The Complaint also  specifically  identifies Pow Wow as selling

unregistered  Delta stock in July 1996. See P. 82. The burden of establishing an

exemption from  registration  for these sales rests with Skalko and Pow Wow, not

the Commission. Murphy, 626 F.2d at 645, In addition, as described more fully at

pp.  9 - 12  of  Plaintiffs  Memorandum  Opposing  Motions  of  Defendants  CRG,

Stratcomm,  Gulf  Atlantic,  Veitia,  Spratt,  Skalko  and Pow  Wow,  Skalko  is

responsible as a manager of CRG for the corporate conduct,  and the plaintiff is

not required to guess at his specific role when Skalko and the other  individual

CRG defendants chose not to testify during the investigation.19

         B.       Regulation S is Not Void for Vagueness

         CRG also contends that Regulation S is  unconstitutionally  vague,

relying solely on a dissenting  opinion of a former SEC commissioner.

CRG Mem. pp. 7-8.  Whatever the target of former  Commissioner  Wallman's

lonely  dissent,  the  defendants had fair notice that their conduct

----------------------
18       Spratt did not make this  argument,  but he, too, is alleged to have
violated the statute.P.P. 52, 55, 63, 106,  114, 123, 129, 130, 133.

19 Skalko also argues the Commission failed to allege he offered to sell or sold
any Stratcomm stock  personally.  Skalko Brief at 2 1. Skalko ignores that which
is  inconvenient.  The  Complaint  clearly  alleges  that  from the fail of 1994
through the end of 1995, CRG and Stratcomm, "through their employees,  including
Spratt,  Skalko and Rodriguez ...  solicited the sale of Stratcomm stock to U.S.
residents....",  1184, and that  "Defendants  Spratt,  Skalko and Rodriguez were
among the employees to whom CRG and  Stratcomm.  paid  commissions  for offering
unregistered  Stratcomm.  stock  for sale to  investors...."  1187.  Given  that
Section 5 proscribes any person from directly or indirectly  offering to sell or
selling securities without an effective  registration statement or an exemption,
these allegations properly state a claim.

<PAGE>

was  prohibited by  Regulation  S. There never has been any  ambiguity  that the

regulation  requires  a  legitimate  offshore  purchaser  and  prohibits  use of

nominees to front for a domestic  purchaser,  the very  corruption  of Section 5

alleged in this case.

         In two places, the "Preliminary  Notes" to Regulation S gave defendants

the direction they claim they lacked. Note 2 advises:

         In view of the objective of these rules and the policies underlying the
         [Securities]  Act,  Regulation S is not  available  with respect to any
         transaction  or series of  transactions  that,  although  in  technical
         compliance  with these rules,  is part of a plan or scheme to evade the
         registration   provisions  of  the  [Securities]  Act.  In  such  cases
         registration under the [Securities] Act is required.

Additionally, Note 6 alerted defendants that:

         Regulation  S is  available  only for  offers  and sales of  securities
         outside the United States. Securities acquired overseas, whether or not
         pursuant to  Regulation  S, may be resold in the United  States only if
         they are registered under the Act or an exemption from  registration is
         available.

17 C.F.R.ss.230.901  (Preliminary  Statement),  see also Securities Act Release

No. 33-6863 at *2 (Apr. 24, 1990) (hereinafter "Reg. S Release").

         Moreover,  pursuant to either safe harbor  provision  of the rule,  the

offer or sale of  securities  "shall be made in an offshore  transaction,"  Rule

903(a) and Rule 904(a) [17 C.F.R.  ss.ss.  903 (a) and 904(a)],  and an offer or

sale is considered  "offshore" if the offer is not made to a U.S.  person and at

the time the buy is  originated,  the buyer is outside  the U.S.  This  language

provides  notice.  All  of  the  Regulation  S  transactions  described  in  the

Commission's  Complaint  constituted schemes or plans by the defendants to evade

registration.  Defendants  introduced  Fondo and  Oportunidad to issuers as bona

fide  offshore  purchasers,  but the  Costa  Ricans  collected  money  from U.S.

persons,  namely, CRG and other domestic codefendants CRG recruited, to fund the

transactions. During this time, defendants were shorting

<PAGE>

or selling  against the position they had purchased,  thus locking in the spread

between the market price and the discounted sale price. Defendants' transactions

were  nothing  more  than a plan to evade  the  registration  provisions  of the

Securities Act.

         From 1991  through  the  present,  the  government  has brought

enforcement  actions for  violations  of the  registration provisions involving

purported reliance on Regulation S.20  Notably,  in May  1995, the United States

Attorney  for  the  Middle District of Florida, as a result of a Commission

investigation, obtained indictments against two individuals in the first

criminal Regulation S prosecution.  U.S. v. Sung and Feher, 95 CRIM. 92

(M.D. Fla.),  Litigation Release No. 14500 (May 25, 1995). The United States

alleged that the defendants  caused a company to sell stock  purportedly

pursuant to Regulation S, to brokerage  accounts in Canada that they controlled.

Thereafter,  the defendants sold the unregistered  stock back into the United

States. In May 1996, the jury convicted one of the defendants  of, among other

things,  conspiracy to sell  unregistered  stock.  See Litigation  Release No.

14901 (May 6, 1996).

--------------------
20        SEC v. Westdon Holding & Investment,  Inc., Litigation Release No.
13088 (Nov. 14, 1991), 1991 WL 288360 (S.D.N.Y.  1991). See also, SEC v.
Rehtorik, Litigation Release No. 13975(Feb. 23, 1994), 1994 WL 62344
(N.D. Tex. 1994) (Commission alleged defendant sold stock issued in unregistered
offerings, purportedly pursuant to Regulation S, to five British Virgin Island
companies he controlled); SEC v. Softpoint , Litigation Release No. 14480
(April 27, 1995),      1995 WL 254717 (S.D.N.Y. 1995) (Commission alleged that
Softpoint issued stock to six foreign entities,  at least three of which were
owned by the  defendants,  and that these  defendants  then  directed the sale
of that stock back into the U.S. without  registering the sales);  SEC v.
Environmental  Holdings,  Inc.,  Litigation  Release No. 14683 (Oct. 6, 1995),
1996 WL 590813 (N.D. Tex. 1996) (improper use of Regulation S to make public
distributions of stock in the U.S.);   In the Matter of Candie's. Inc.,
Litigation Release No. 33 -7263 (Feb. 21, 1996), 1996 WL 75741("each respondent
sold or participated in the sale of unregistered stock to the foreign purchasers
under circumstances in which they know, or should have known, that the
purchasers were acting as conduits for the distribution of securities to U.S.
investors without registration or valid exemption from registration.").

<PAGE>

Although further notice is not necessary,  a Commission  release in June 1995 --

before all but one of the  Regulation S deals  engineered  by the  defendants --

gave additional  guidance.  The Commission said the regulation was not satisfied

when securities

         are in essence being placed offshore  temporarily to evade registration
         requirements  with the result that the  incidence  of  ownership of the
         securities never leaves the U.S. market, or that a substantial  portion
         of the economic risk relating  thereto is left in or is returned to the
         U.S.  market during the restricted  period,  or that the transaction is
         such that there was no reasonable expectation that the securities could
         be viewed as actually coming to rest abroad.

Securities Act Release No. 33-7190 at *3 (June 27, 1995).  The Commission

characterized  such  transactions as "nothing more than a delayed sale by the

seller in the United States,  with the purported offshore purchaser serving as a

statutory  underwriter." Id. at *4.

         As applied to defendants'  conduct,  the  requirements  of Regulation S

could not be  plainer,  and were  plain  from the first  date  Regulation  S was

effective. There is no constitutional infirmity.

III.     THE COMPLAINT PROPERLY ALLEGES STRATCOMM IS LIABLE
         FOR FRAUD AS A CONTROL PERSON OF CRG

         Stratcomm's  contention  that the  Complaint  fails  properly to allege

"control  person'  liability  for the  conduct  of CRG under the  provisions  of

Section  20(a) of the  Exchange  Act [ 15 U.S. C. ss.  78t(a)]  simply  fails to

recognize the standard applicable in this Circuit. Section 20(a) provides:

         Every person who,  directly or  indirectly,  controls any person liable
         under  any  provision  of  this  title  or of any  rule  or  regulation
         thereunder  shall also be liable  jointly and severally with and to the
         same  extent  as such  controlled  person  to any  person  to whom such
         controlled  person is liable,  unless the  controlling  person acted in
         good faith and did not  directly or  indirectly  induce the act or acts
         constituting the violation or cause of action.

         The  Eleventh  Circuit  requires  only that a  plaintiff  allege that a

defendant "had the power to control the general affairs of the entity  primarily

liable at the time the entity violated the

                                                                              21

<PAGE>

securities  laws. and had the requisite  power to directly or indirectly control

or influence the specific  corporate  policy which resulted in the primary

liability."  Brown v. Enstar Group,  Inc., 84 F. 3 d 3 93 (1lth Cir. 1996). The

Eleventh Circuit  expressly rejected the  culpable  participation  doctrine -- a

stricter  standard of control  person  liability  adopted by some  circuits and

offered by Stratcomm that requires actual  participation in the wrongful

transaction.  See also G.A.  Thompson & Co. v. Partridge , 636 F.2d 945

(5th Cir. 198 1); Pharo v. Smith, 621 F.2d 656 (50' Cir. 1980);  Fischler v.

Amsouth  Bancorporation,  971 F. Supp. 533 (M.D. Fla. 1997);  Brown v. Mendel,

864 F.Supp.  1138 (M.D. Ala. 1994).  Rochez Brothers,  Inc. v. Rhoades,  527

F.2d 880 (3rd Cir. 1975), relied upon by Stratcomm, does not state the law in

this Circuit.

         The Commission's Complaint sets forth that Stratcomm conducted business

through CRG, its subsidiary,  and that it was operated by the same principals as

CRG.  See P. P. 3, 5,  10-11.  In  effect,  Veitia,  Spratt and  Skalko,  as the

principal  managers  of both  Stratcomm  and CRG,  were  conducting  Stratcomm's

business through CRG. Thus,  Stratcomm,  through its common principals,  had the

power to control the general  affairs of CRG as well as the  specific  corporate

conduct  which  resulted  in  primary  liability  for CRG  under the law of this

Circuit.

IV.      THE COMPLAINT PROPERLY ALLEGES VIOLATIONS OF
         SECTION 15 OF THE EXCHANGE ACT

         Each of the CRG defendants  has alleged the Complaint  fails to state

acause of action for operating as an unregistered  broker or dealer in violation

of Section 15 of the Exchange Act ( 15 U.S.C. ss. 78o].

         Section  15(a)(1) of the  Exchange  Act  provides it is unlawful  for a

"broker" or "dealer" "to effect any  transaction  in, or to induce or attempt to

induce the  purchase  or sale of, any  security  unless such broker or dealer is

registered [with the Commission]." Scienter is not an

                                                                              22

<PAGE>

element of the violation.  SEC v. Randy,  38 F. Supp. 2d 657, 667

(N.D. M. 1999);  SEC v. Randy,  38 F. Supp. 2d 657, 667 (N.D. III. 1999); SEC v.

National  Executive  Planners,  Ltd., 503 F. Supp. 1066, 1073 (M.D. N.C. 1980).

Thus, only notice pleading is required under Rule 8.

         Section 3(a)(4) of the Exchange Act [15 U.S.C. ss. 78c(a)(4)] defines a

"broker" as "any person  engaged in the  business of effecting  transactions  in

securities for the account of others " Section 3(a)(5) [15 U.S.C. ss. 78c(a)(5)]

defines a "dealer" as "any person  engaged in the business of buying and selling

securities  for his own  account,  through a broker or  otherwise  or any person

insofar as he buys or sells securities for his own account,  either individually

or in some  fiduciary  capacity,  but not as a part of a regular  business." The

"regular business" language has been interpreted to "exclude from the definition

of  'dealer'  members of the public  who buy and sell  securities  for their own

account as ordinary  traders." In the Matter of the Application of Gordon Wesley

Sodorff Jr.,  Exchange Act Rel. No. 31134 (September 2, 1992), 1992 WL 9 224082,

citing E. Weiss, Registration and Regulation of Brokers and Dealers 8 (1965).

         Courts  have  required a showing  that the alleged  broker or dealer

exhibit "a certain  regularity  of  participation  in securities  transactions

at key points in the chain of distribution.  SEC v. Hansen,

[1984 Transfer Binder] Fed. Sec. L. Rep. (CCH) P. 91,426 (S.D.N.Y.  1984),

citing Mass. Financial Services,  Inc. v. SIPC, 411 F. Supp. 411, 415 (D. Mass),

aff'd, 545 F.2d 754 (1st Cir.  1976),  cert.  denied,  , 431 U.S. 904 (1977).

Regularity  of  participation  has been  demonstrated  by the dollar amount of

securities  sold and the active  solicitation  of clients.  See  National

Executive  Planners.,  503 F. Supp.  at 1073.  Indeed,  a corporation could be a

broker even though securities  transactions are "only a small part of its

business  activity." SEC v. Kenton Capital, Ltd., 1998 WL 1121117 (D.D.C. 1998).

<PAGE>

         A.        The Complaint Adequately Alleges CRG, Spratt and
                   Skalko Acted as Unregistered Brokers

         The Complaint  adequately alleges that CRG violated Section 15(a)(1) by

acting as a broker  without proper  registration.  A person is more likely to be

declared  to be acting as a broker if he: (1) is not an  employee of the issuer;

(2) receives  commissions as opposed to salary21;  (3) is selling, or previously

sold, the securities of other issuers;  (4) is involved in negotiations  between

the issuer and the investor; (5) evaluates the merits of the investment or gives

advice; or (6) is an active rather than passive finder of investors.22 Hansen at

98,119.

         To state a claim,  the  Commission  need not  establish  all six Hansen

factors, but the receipt of  transaction-based  compensation is often a critical

-- if not  conclusive  -- factor  in  determining  whether  a person  acted as a

broker. According to one treatise,  registration is invariably required "where a

person is specifically compensated for the function of effecting securities

transactions for others..." N. Wolfson, R. Phillips & T. Russo, Regulation of

Brokers, Dealers and Securities Markets,P. 1.06 at 1-11 (1st ed. 1977).23

---------------

21       See e.g., SEC v. Margolin, [ 1992 Transfer Binder] Fed. Sec. L. Rep.
(CCH)P. 97,025 (S.D.N.Y. 1992) (defendant "engaged in other conduct which
provided evidence of brokerage activity such as receiving transaction-based
compensation....).

22        See e.g., SEC v. Randy, 38 F. Supp. 2d 657, 668 (N.D. M. 1999)
(defendant  acted as broker because he "actively sought to effect securities
transactions on behalf of others....);  National  Executive  Planners,  Ltd.,
503 F. Supp. at 1073 (defendant acted as a broker-dealer because, among other
reasons, it "solicited clients actively").

23 Moreover, in the context of "No-Action Letters," the Commission's Division of
Market  Regulation  often has advised  that a person would be  considered  to be
acting as a broker if he receives transaction-based compensation. See, e.g., The
Security  Mutual Life  Insurance  Company of Lincoln,  Nebraska,  SEC  No-Action
Letter, 1993 WL 455423 (S.E.C.)(Oct.  26, 1993); Davenport Management, Inc., SEC
No-Action Letter, 1993 WL 120436 (S.E.C.)(Apr.  13, 1993); Joseph K. Bannon, CPA
SEC No-Action Letter,  1988 WL 235393 (S.E.C.) (Dec. 9, 1988); Fulham & Co., SEC
No-Action  Letter,  1972 WL 9129 (S.E.C.)  (Dec.  20, 1972).  Compare  Financial
Charters & Acquisitions Inc., SEC No-Action Letter, 1984 WL 45923 (S.E.C.)(Nov.

<PAGE>

         The  Complaint  alleges  that,  from  September  1994  through at least

December 1996, CRG touted its clients' securities to registered  representatives

through its Broker Relations  Executive  ("BRE") sales force (P. P. 29, 190) and

that CRG,  Veitia,  Spratt and Skalko touted  securities "to the public" through

CRG  publications.  P. P. 1, 27-28.  The  Commission  further  alleges that BREs

contacted registered  representatives to induce them to solicit their clients to

buy stock of companies  CRG was then  promoting,  and that after  proving to CRG

management, namely Spratt and Skalko, that they caused buying activity, CRG paid

commissions to the BREs. P. 190.

         The Complaint also alleges that Spratt and Skalko solicited the sale of

Stratcomm.  stock to U.S.  residents,  P. P. 184, 220; negotiated with investors

for such sales,  P. 220; and received  commissions  from CRG and  Stratcomm  for

selling this stock.  P. P. 187,  220. The  Complaint  further  alleges that this

sales effort continued from late 1994 through,  at least, the end of 1995, P. P.

184-185.

         The Commission pleads a number of the Hansen criteria,  including, most

importantly,    that   BREs   (who   worked   at   CRG's   direction)   received

transaction-based  compensation.  P. 190.  Moreover,  the Commission has alleged

regularity of business - CRG  solicited  investors in this fashion for more than

two  years.   P.  190.  Thus,  the  Complaint   meets  simple  notice   pleading

requirements.

         CRG argues  primarily  that,  as a matter of fact,  it did not  solicit

investors,  and  that  the  Complaint  fails  to  allege  it  communicated  with

investors.24 The Complaint alleges, however, that

----------------
25, 1994)(staff granted no-action based, in part, because fee earned was "flat"
and would "not be based, directly or indirectly, on transactions in
securities").

24  Defendants  contend the  Commission  failed to allege  facts  sufficient  to
sustain each of eight factors that purportedly  demonstrate  whether a person is
acting as a broker.

<PAGE>

CRG, through its BREs, solicited investors through the investors' brokers.P.P.

29, 190. This is sufficient.

         In In the Matter of Joseph  Kemprowski and The Cambridge  Consulting

Co., 58 S.E.C.  Docket 448,  Securities  Exchange Act Release No.  34-35058

(Dec. 8, 1994), a settled  administrative  action which CRG cites,

the Commission  found that the respondents acted as brokers by virtue of the

following actions:

         Kemprowski and Cambridge [1)] repeatedly contacted potential investors,
         direct and through registered  representatives,  to make sales pitches;
         2) facilitated stock sales; and 3) received  compensation based in part
         on sales of [stock]. [emphasis added]

Indeed,  the facts of Kemprowski are remarkably  similar to those in the present

case.  There, as here, an issuer hired a company to perform  "public  relations"

work; that company hired  individuals to promote the issuer;  in promoting sales

of the issuer's stock, the company and its  representatives  contacted investors

directly  and  through  registered  representatives;  and  recommended  that the

investors buy the issuer's stock.25

         CRG also argues that,  through its BREs,  it did not actually  sell any

stock,  and that the  Commission  failed to allege that CRG sold any stock.  The

Complaint, however, alleged that

-----------------
25 Moreover,  in his treatise,  Wolfson  maintains that "[t]he absence of direct
investor   contact,   is,  however,   not   determinative  of  the  question  of
broker-dealer  regulation, if the proposed activity is repetitive by nature." N.
Wolfson, R. Phillips PP T. Russo, Regulation of Brokers,  Dealers and Securities
Markets, P. 1.06 at 1- 14 (1st ed. 1977). Wolfson cites a no-action request from
a company  which,  through its sole  employee,  sought to solicit the investment
company industry to buy a unique insurance product. See IMF Services,  Inc., SEC
No-Action Letter, 1971 WL 9607 (S.E.C.)(July 8, 1971). The company stressed that
neither it nor its  employees  would contact  potential  investors or even their
registered   representatives,   but  rather  only   underwriters   and  national
distributors.  The staff  nevertheless  concluded  the company  was  required to
register as a  broker-dealer.  Id. See also Michael D.  Barrett,  SEC  No-Action
Letter,  1972 WL 8544 (S.E.C.)  (March 30, 1972) (staff  concluded  corporations
that provided certain securities information only

<PAGE>

BREs  contacted  registered  representatives  to induce  them to  solicit  their

clients to buy stock of companies CRG was then promoting, and that after proving

to CRG management,  namely Spratt and Skalko,  that they caused buying activity,

CRG paid  commissions to the BREs. P. 190. This language puts CRG on notice that

BREs did, in fact, cause sales of stock.

         Neither  Spratt nor Skalko  advances a compelling  argument in favor of

dismissal.  Each  maintains  the  Commission  failed to satisfy  the  regularity

requirement.  The Complaint alleges, however, that CRG's and Stratcomm's efforts

to sell  Stratcomm.  stock  continued  for more  than one year,  and that,  more

particularly,  Spratt and Skalko  solicited such sales from October 1994 through

the  spring  of  1995.   Both   defendants   also  overlook  the  importance  of

transaction-based   compensation.   See  supra.   Indeed,  one  commentator  has

maintained  that "[t]he payment of sales  commissions is often critical to those

broker  determinations in cases where an issuer is seeking to distribute its own

securities  through its officers,  directors,  and  employees,"  N. Wolfson,  R.

Phillips & T. Russo,  Regulation of Brokers,  Dealers and Securities Markets, P.

1.06 at 1 - 11 (1" ed. 1977), and that "the SEC staff has consistently held that

registration  as a broker was  required  whenever the  employees  engaged in the

distribution  effort  received a  commission  based on the sales of the issuer's

securities." Id. at 1-13. (citations omitted).26

----------------
to register representatives and not members of the general public still would be
require to register as broker-dealers).

26 Indeed,  Spratt's  and  Skalko's  receipt of  transaction-based  compensation
disqualifies  them  from  the  safe  harbor  provided  by Rule  3a4-1  entitled,
"Associated Persons of an Issuer Deemed Not toBe Brokers." See Rule 3a4-1(2) [17
C.F.R. ss. 3a4-1(2)],

<PAGE>

         B.        The Complaint Adequately Alleges CRG and Stratcomm Acted
                   As Unregistered Dealers

         The "primary  indicia in  determining  that a person has 'engaged in

the  business'  within the meaning of the term 'dealer' is that the level of

participation in purchasing and selling securities  involves more than a few

isolated  transactions." In the Matter of the Application of Gordon Wesley

Sodorff,  Jr., Admin. Proc. File No. 3-7390,  Securities  Exchange Act Rel. No.

31134 (September 2, 1992).  "There is no requirement,  however,  that such

activity be a person's principal business or the principal source of income."

Id.  If the  purchaser  became  the  owner of the stock it is irrelevant to the

"dealer"  analysis  whether  or not the stock was registered in the purchaser's

name. Id.

         The  Complaint  alleges  that CRG  acted as an  unregistered  dealer by

engaging in the business of buying and selling  securities  for its own account,

predominantly through its nominees, Fondo and Oportunidad. P. 191, The Complaint

specified  that CRG bought  securities on at least one dozen  occasions  from at

least  five of its  issuer-clients  and sold those  securities  in  hundreds  of

transactions.  P. 191 For more detailed  allegations  concerning CRG's purchases

and sales,  the  Complaint  then refers to Section IV of the Complaint (P. P. 45

through 133), entitled,  "Specific  Securities  Transactions in Which Defendants

Violated the Antifraud,  Touting and  Registration  Provisions of the Securities

Laws." These 24 pages, which itemize  transactions in the securities of Tracker,

Delta  Petroleum,  Ammonia Hold,  IMTECH and  Foreland,  provide CRG with proper

notice.

         CRG  admits  that  it  engaged  in  activities  as  an  underwriter  in

connection  with the  Regulation S  transactions  in the  securities of Tracker,

Delta Petroleum,  Ammonia Hold,  IMTECH and Foreland.  Nevertheless,  it asserts

that a party "is not engaged in the business of buying and

<PAGE>

selling securities if he does not" [emphasis added] engage in seven criteria.

CRG  mischaracterizes  the standard.  Although citing to the  Davenport

no-action  letter,  the  original  language  comes from  Professor  Loss,  who

stated  merely  that "a dealer has characteristic  attributes" as embodied in

the criteria he then enumerated.  L. Loss & I Seligman,  Securities Regulation,

Vol. VI, at 2983 (3d ed. 1990).  Loss continued:  "Needless to say, a person

does not have to exhibit all or any given number of these dealer characteristics

in order to be considered a dealer." Id. At 2983-4. Thus, one criterion will

suffice.

         Moreover,  scienter is not an element of a Section  15(a) claim,  see,

e.g.,  Randy,  38 F. Supp. 2d at 667;  thus,  CRG's self-serving understanding

that it complied with Regulation S is irrelevant,

                                CONCLUSION

         For the reasons stated above,  as well as those in companion  memoranda

filed this date opposing other motions to dismiss the Complaint,  the motions of

the CRG defendants to dismiss should be denied.

                                   Respectfully submitted,

                                    ________________________________
                                    James A. Kidney ( Trial Counsel)
                                    Jeffrey P. Weiss
                                    William McGovern

                                    Attorneys for Plaintiff
                                    U.S. Securities and Exchange Commission
                                    Mail Stop 8-8
                                    450 Fifth Street, N.W.
                                    Washington, D.C. 20549-0808
                                    (202) 942-4797 (Kidney)
                                    (202) 942-9581 (Kidney Fax)
Date: January 28, 2000              kidneyj@sec.gov

<PAGE>

                           UNITED STATES DISTRICT COURT
                        FOR THE MIDDLE DISTRICT OF FLORIDA
                              (Orlando Division)

-----------------------------------)
UNITED STATES SECURITIES AND       )
EXCHANGE COMMISSION,               )
                                   )
                                   )
Plaintiff,                         )         C.A. No. 99-1222-CV-22-A
                                   )         Hon. Anne C. Conway, Judge
V.                                 )         Hon. Karla R. Spaulding,
                                   )         Magistrate Judge
                                   )
                                   )
CORPORATE RELATIONS GROUP, INC.,   )
ET AL.,                            )
                                   )
                                   )
             Defendants.           )
-----------------------------------)

                           CERTIFICATE OF SERVICE

         The undersigned counsel for the plaintiff, the Securities and Exchange

Commission, hereby certifies that copies of the enclosed:

         1.       Plaintiffs  Memorandum  in  Opposition  to  Constitutional and
                  Other  Arguments  Raised in  Motions to Dismiss by
                  Defendants Veitia, CRG, Stratcomm and Gulf Atlantic;
         2.       Plaintiff's Memorandum in Opposition to Motions to Dismiss By
                  Defendants Gomez, Fondo and Oportunidad;
         3.       Plaintiffs Memorandum in Opposition to Motions to Dismiss By
                  Defendants CRG, Stratcomm, Gulf Atlantic, Veitia, Spratt,
                  Skalko and Pow Wow;

were served this 28th day of January,  2000, via Federal Express for delivery on

January 3 1, 2000, postage pre-paid,  upon the following counsel for the parties

or on pro se defendants at the addresses shown:

<PAGE>

<TABLE>
<CAPTION>
<S>                                                                   <C>

PARTY                                                                  COUNSEL

------------------------------------------------------------------------------------------------------------------------------------
James W. Spratt, III                                                   Carl F. Schoeppl, Esq.
------------------------------------------------------------------------------------------------------------------------------------
                                                                       Schoeppl & Burke, P.A.
                                                                       4800 North Federal Highway, Suite 210-A
                                                                       Boca Raton, Florida 33431-5176

                                                                             And

                                                                       Howard Hawkins, Esq.
                                                                       Keith Miller, Esq.
                                                                       Cadwalader, ' Wickersham & Taft
                                                                       100 Maiden Lane
                                                                       New York, New York 1003 8

------------------------------------------------------------------------------------------------------------------------------------
Roberto Veitia                                                         Mark L. Horwitz, Esq.
Corporate Relations Group                                              Law Offices of Horwitz & Fussell
Stratcomm                                                              17 East Pine Street
Gulf Atlantic                                                          Orlando, Florida 32801
------------------------------------------------------------------------------------------------------------------------------------
James Skalko                                                           Joseph I. Goldstein, Esq.
Pow Wow                                                                Charles R. Mills, Esq.
                                                                       Kirkpatrick & Lockhart
                                                                       1800 Massachusetts Ave. N.W.
                                                                       2nd Floor
                                                                       Washington, D.C. 20036-1800
------------------------------------------------------------------------------------------------------------------------------------
Jose Antonio Gomez Cortez                                              Rodney F. Page
Fondo de Adquisiciones E Inversiones                                   Therese D. Pritchard
Internationales XL, S.A.                                               Bryan Cave LLP
Oportunidad, S.A.                                                      700 Thirteenth Street, N.W.
                                                                       Washington, D.C. 20005-3960

                                                                       And

                                                                       G. Kenneth Norrie
                                                                       James M. Riley
                                                                       Rogers, Towers, Bailey, Jones & Gay
                                                                       1301 Riverplace Blvd., Suite 1500
                                                                       Jacksonville, Florida 32201-9020

</TABLE>

<PAGE>

<TABLE>
<CAPTION>

<S>                                                                  <C>

New Concepts LLC.                                                      Gordon B. Nash, Jr.
CJL Corporation                                                        Scott Murray
Arnold Zousmer                                                         Gardner, Carton & Douglas
Charles I Lidman                                                       Quaker Tower - # 3400
                                                                       321 North Clark Street
                                                                       Chicago, Illinois 606104795

                                                                       And

                                                                       Michael A. Paasch, Esq.
                                                                       Mateer & Harbert, P.A.
                                                                       Two Landmark Center
                                                                       225 East Robinson Street, Suite 600
                                                                       Orlando, Florida 32803

------------------------------------------------------------------------------------------------------------------------------------
Jack R. Rodriguez                                                      Pro Se
237 Mt. Blanc Ct.
No. 105
Casselberry, Florida 32707

</TABLE>

                                     ________________
                                     James A. Kidney
                                     Jeffrey P. Weiss
                                     William F. McGovern
                                     Counsel for Plaintiff Securities
                                     and Exchange Commission

                                     U.S. Securities and Exchange Commission
                                     Mail Stop 8-8
                                     450 Fifth St., N.W.
                                     Washington, D.C. 20549-0808
                                     (202) 942-4797 (Kidney)
January 28, 2000                     (202) 942-9581 (Fax)

<PAGE>

Group 2

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA

SECURITIES AND EXCHANGE COMMISSION

Plaintiff,

v.                                               Civil Action No. 96-2543 (GK)

CHARLES 0. HUTTOE, et al.,

Defendants and Relief Defendants

MEMORANDUM OPINION

         The Securities and Exchange Commission "SEC" brings this action against
Defendant  Shannon B. Terry  ("Terry"  and his wholly owned  Bahamian  corporate
shell, Dunbar Holdings, Ltd. ("Dunbar Holdings" , charging violation of sections
17(a) and 17(b) of the  Securities  Act of 1933,  15 U.S.C.  ss.ss.  77q(a)  and
77q(b) " SA ss. 17 (a) 11 and "SA ss. 17 (b) 11  respectively)  , section 10 (b)
of the Securities  Exchange Act of 1934, 15 U.S.C. 77j (b) SEA ss. 10(b) "), and
Rule 10b-5 thereunder, 17 C.F.R. 240.10b-5 " Rule 10b-5") . The SEC also charges
that Relief Defendant J.S. Holdings,  Inc. "J.S. Holdings"),  a holding company,
is holding $255,000 in illegal proceeds for the benefit of Defendant  Charles 0.
Huttoe.

         This matter  comes before the Court on  Plaintiff's  Motion for Summary
Judgment or in the Alternative,  Preliminary  Injunction as to Defendants Terry,
Dunbar Holdings and J.S.  Holdings [#156].  Defendants Terry and Dunbar Holdings
jointly filed a motion for summary  judgment  [#177] in which they argue that SA
ss. 17 (b) , if

<PAGE>

applied  against Terry,  would violate the First  Amendment's  guarantee of free
expression and the Fifth Amendment's guarantee of process of law

         Upon  consideration  of the  motions,  oppositions,  replies and entire
record herein,  for the reasons set forth below,  Plaintiff's Motion for Summary
Judgment  [#156] is granted in part and denied in part, and  Defendants'  Motion
for Summary Judgment [#177] is denied.

1.        BACKGROUND1

        The SEC brought  charges  against  named  Defendant  Charles O.  Huttoe,
Chairman of the Board and Chief Executive officer of Systems of Excellence, Inc.
("SOE"  for fraud in  connection  with the  registration  and sale of SOE common
stock.2 The SEC also named several  cc-defendants  in its  complaint,  including
Defendants Terry Dunbar Holdings,  alleging that these  individuals and entities
fraudulently  promoted SOE stock or illegally  received  unregistered  shares or
proceeds from the sale of such shares.

         The present motion relates only to Defendants Terry and Dunbar
Holdings,  and Relief Defendant J.S. Holdings.  The SEC alleges that

---------
       1 Pursuant to Local Rule 108(h), "[i]n determining a motion for summary
judgment, the Court may assume that facts identified by the moving party in its
statement of material facts are admitted, unless usch a fact is controverted in
the statement of genuine issues filed in opposition to the motion."  The court
thus recites uncontroverted facts from the Plaintiff's Statement of Material
Uncontested Facts.

        2 A final judgment was entered, under seal, against Defendant Huttoe in
November 1997.

<PAGE>

Terry,  directly and through the Dunbar  Holdings  entity,  was a participant in
Huttoe's fraud. Terry is also charged with the fraudulent promotion of stocks in
a number of  companies  unrelated to Huttoe.  Relief  Defendant  J.S.  Holdings,
though not charged with  violation of the  securities  laws,  is alleged to be a
repository of funds fraudulently earned by Defendant Huttoe

         A.        Shannon Terry & Dunbar Holdings

         Shannon Terry,  age 28, was an independent  contractor  employed by SGA
Goldstar  Research,  Inc. ("SGA" from August 1993 until November 1996. His prior
education  and training  included a degree in Finance and  Economics,  earned in
June 1992, two months of unspecified  work at SGA in June and July 1992, and one
year of employment by a bank as a credit analyst.

          SGA published the SGA Goldstar  Whisper  Stocks  newsletter  ("Whisper
Newsletter")  Theodore Melcher,  the sole shareholder of SGA3 was also publisher
and editor of the Whisper Newsletter.  did business out of Melcher's home, where
the Newsletter prepared using desktop publishing  equipment.  Terry -and Melcher
were the only two people working at SGA during most of Terry's tenure.

         The Whisper  Newsletter was a "high-risk  aggressive growth" newsletter
containing  profiles  of  companies  and making  recommendations  regarding  the
purchase of stock in those companies.

--------------------
        3  SGA Goldstar Research, Inc. and Theodore Melcher are also named
Defendants in the SEC's original complaint against named Defendant Charles
Huttoe.
                                                                               3
<PAGE>

Each edition typically  featured promotion of largely unknown and untested penny
stock or small  capitalization  companies.  The Newsletter was available through
direct  subscription,  as well  as  indirectly  through  several  news  provider
services.  SGA  subscribers  received the Whisper  Newsletter by facsimile  each
evening or  downloaded  a copy by logging  into SGA's  Internet  web page.  Each
evening's  edition  was-post-dated  to the  following  day,  In 1996  there were
approximately  280  subscribers  to the Whisper  Newsletter.  In addition to its
subscription revenue, SGA received compensation from companies publicized in the
Whisper Newsletter.

         Terry   performed  a  range  of  tasks  including   bookkeeping,   word
processing,  and answering phones. One of his main  responsibilities was selling
subscriptions to new and existing clients. Terry also assisted in the production
and distribution of the Newsletter,  reviewing press release  information  about
companies   profiled  by  the  Whisper   Newsletter  and  writing  articles  and
commentaries  about some of these same companies.  During his employment,  Terry
wrote an  increasing  number of articles,  and at times wrote as many as half of
all of the articles in the Newsletter

         For his work,  Terry received a base  compensation  of $25,000 per year
and 12.5 percent of all new and renewal  subscriptions.  In addition,  companies
paid SGA with  stock in  exchange  for  articles  promoting  their  stock in the
Whisper  Newsletter,  and SGA would in turn give Terry  stock for  companies  he
promoted in the  articles he wrote.  Thus,  although  the stock was not directly
given to Terry by the issuing  company,  it came from the issuing company to SGA
and
                                                                           4

<PAGE>

then  directly to Terry for the  articles he wrote  about  those  stocks.  Terry
admits to being  present at some of the meetings  where the stock  payments were
negotiated,  but denies being a decision maker or negotiator in these meetings.4
Between  October 1994 and September  1996,  Terry received stock in 18 companies
which

---------
        4  Terry admits participation in meetings to negotiate stock in exchange
for promoting Central Resources, American Bio Medica, and Systems of Excellence.
(See Pls. Stmt. of Material Uncontested Facts at   5; Defs. Rsponse to Stmt of
Material Uncontested Facts at  5.)
<PAGE>

                                                                               5

were then promoted in the whisper Newsletter.5 The ultimate value
<TABLE>
<CAPTION>

Stock                       Shares        Dates          Dates          Dates        Shares
Issuer                      Rec'd         Rec'd          Promoted      SOLD         SOLD          Proceeds
------------------------------------------------------------------------------------------------------------
<S>                        <C>           <C>          <C>            <C>            <C>         <C>

Affinity Tele                85,000       7/14/95;

                                          7/21/95;

                                          8/8/95                                                    $57,625
Aimrite Holdings             51,750       2/22/96
                                          5/31/96                                                 $20,530.50

American Bio                 20,000       7/15/96        7/15/96-       7/17/96       7,500
                                                         8/30/96        7/19/96       2,500
                                                                        7/25/96       2,500
                                                                        7/26/96       2,500
                                                                        7/29/96       2,500
                                                                        9/04/96       2,500        $116,250
Ameriquest                   2,500        2/3/95         3/31/95-       4/05/95       2,500        $7,187.50
                                                         4/3/95

Century Tech                 75,000       1/8/96         1/19/96        1/19/96        12,000

                                                                        5/10/96       63,000       $31,402.50
Chancellor Group             2,500        6/11/96        6/11/96-       7/11/96-        1,000

                             2,500        6/26/96        7/25/96        8/5/96        1,500        $20,937.50

Dragon Envir.                37,500       6/13/96        6/13/96        6/17/96       5,000
                             16,500       10/30/96       6/17/96        6/18/96       10,000
                                                                        9/18/96       3,000
                                                                        9/30/96       3,000        $58,031.10
Essential Res.               40,000       7/12/96        7/30/96        8/9/96       2,000

                                5,000     9/13/96        9/19/96        8/12/96     1,50:

                                                                        8/15/96     1,500         $49,375
Fidelity Med.                  15,000     5/10/95                                                 $6,555

Garcis USA              (Buys) 20,000    4/3/95          4/4/95-        4/12/95     2,500

                                3,000    5/4/95          4/17/95        4/17/95
                                                                        4/28/95     17,500
                                                         (Free)         5/5/95      3,000          $7,717.50

Insulpro Indus.                15,000    3/13/95         3/15/95        4/21/95
                   (Buys)       5,000    3/13/95         4/3/95         5/3/95      20,000         $10,740

Int'l Std. Group               50,000    3/14/96                                                   $47,509.10

NVID Int'l                    225,000    2/15/96                                                   $53,375

Silent Radio                   10,000    10/21/94                                                  $22,874.50

</TABLE>

                                                                               6
<PAGE>

of all stocks he received from his allegedly illegal activities was $828,448.6

         Terry is the sole owner of Dunbar  Holdings,  a corporate shell that is
located in Grand Turks,  Bahamas.  Terry maintains and directs a trading account
in the name of Dunbar Holdings with a Canadian brokerage firm. Stocks that Terry
received for his  commentaries  in the Whisper  Newsletter  were placed into the
Canadian trading account of Dunbar Holdings.

         As the table in footnote 5  demonstrates,  Terry's  trading of,  stocks
either coincided with the publication of stories about these, same stocks in the
Whisper  Newsletter  or took place shortly  after  publications  of the stories.
Terry wrote some of the articles and co-authored  others with Melcher who always
retained  final  editorial  control  over  articles  appearing  in  the  Whisper
Newsletter. These stories would recommend that the subscribers buy the stocks in
companies  promoted  However,  after  some of the  stories  were  printed in the
Whisper  Newsletter,  Terry would turn around and sell his personal  holdings of
that  particular  stock  within a few days Since the price of a  featured  stock
often  increased  soon  after  Whisper  Newsletter's   aggressive  promotion  to
subscribers, made substantial profits from his sales. This pattern of selling in
contravention of the Whisper recommendations was repeated over

-------------
        6  For purposes of summary judgment, the SEC reduced its disgorgement
request from $851,322.50 to $828,448 in its Reply Memo in response to Defendant
Terry's denial that he received stock valued at $22,874.50 in exchange for
promoting Silent Radio, Inc. (p1's Reply at 3, n.3; see also p1's Stmt of Mat.
Uncontested Facts,  34; Terry Response,   34.)

<PAGE>

a two year period for all stocks Terry received as compensation for promotion of
these stocks.

         B.       J.S. Holdings

     J. S. Holdings is a holding  company,  owned by Jeffrey Szur, which in turn
owns J.S.  Securities.  J.S.  Holdings received a wire transfer in the amount of
$255,000 from Defendant  Huttoe on August 21, 1996.  Plaintiff  claims that this
amount represents  proceeds of the sale of unregistered SOE stock from a nominee
account in name of National Trading Services, Inc. ("NTSI" a Florida Corporation
controlled by Huttoe.

II.       STANDARD OF REVIEW

         A party  against whom a claim . . . is asserted . . . may, at any time,
         move with or without  supporting  affidavits for a summary  judgment in
         the  party's  favor as to all or any part  thereof  . . . The  judgment
         sought  shall be  rendered  forthwith  if the  pleadings,  depositions,
         answers to  interrogatories,  and admissions on file, together with the
         affidavits,  if any,  show  that  there is no  genuine  issue as to any
         material  fact and that the moving  party is  entitled to judgment as a
         matter of law.

Fed. R. Civ.  P. 56 (b) - (c).  The party  seeking  summary  judgment  bears the
initial burden of  demonstrating an absence of a genuine issue of material fact.
Celotex Corp. v. Catrett,  477 U.S. 317 322 (1986) . In determining  whether the
movant has met this burden a court must  consider all factual  inferences in the
light most favorable to the non-moving  party.  McKinney v. Dole, 765 F.2d 1129,
1135 (D.C. Cir. 1985). Once the moving party makes initial showing, however, the
nonmoving party must demonstrate  specific facts showing that there is a genuine
issue for trial."

                                                                              8

<PAGE>

Celotex,  477  U.S.  at  324;  McKinney,  765  F.2d  at  1135.  Moreover,  "[i]n
determining  a motion  for  summary  judgment  the court may  assume  that facts
identified by the moving party in its statement of material  facts are admitted,
unless such a fact is  controverted  in the statement of genuine issues filed in
opposition to the motion." Local Rule 108(h).

III.     CLAIMS AGAINST SHANNON TERRY & DUNBAR HOLDINGS

         The SEC alleges that Terry  violated SA ss. 17(a),  SEA ss. 10(b),  and
SEC Rule  10b-5  when he (1  touted  publicly  traded  securities  to  potential
investors  in  articles  he wrote  for the  Whisper  Newsletter  in  return  for
undisclosed  compensation  from the issuers of those  securities,  (2 traded his
personal share holdings in stocks even as he was writing articles in the Whisper
Newsletter  recommending  their  purchase,  and (3) failed to disclose either of
these practices when he solicited  subscriptions to the Whisper Newsletter.  The
SEC also alleges that Terry  violated SA ss. 17(b) when he failed to disclose to
subscribers  that  he  received   consideration  in  exchange  for  writing  and
publishing article promoting stock.

         Terry  deposited  the  proceeds he received  for the articles in Dunbar
Holdings.  The SEC requests that Terry and Dunbar Holdings disgorge payments for
promoting  stocks,  trading profits,  and subscription  commissions,  as well as
prejudgment  interest on all illegal profits.  The SEC also seeks to permanently
enjoin Terry and Dunbar Holdings from  participating in further violation of the
securities laws

                                                                               9

         A.        Violation of SAss.17(a),1 SEA 5 10 (b)2 and Rule 10b-5.3

-------------
     7 Section 17(a) of the Securities Act, 15 U.S.C.ss.77q(a) provides:
         It  shall  be  unlawful  for any  person  in the  offer  or sale of any
securities by the means or instruments of  transportation  or  communication  in
interstate  commerce- of by the use of the mails,  directly or indirectly (1) to
employ a device,  scheme,  or  artifice to  defraud,  or (2) to obtain  money or
property by means of any untrue  statement of a material fact or any omission to
state a material  fact  necessary in order to make the  statements  made, in the
light of the circumstances under which they were made, not misleading, or (3) to
engage in any transaction practice or course of business which operates or would
operate as a fraud or deceit upon the purchaser.

     8 Section 10(b) of the Securities  Exchange Act, 15 U.S.C.  78j (b) , makes
it unlawful  for "any  person,  directly or  indirectly,"  to use or employ,  in
connection  with the purchase or sale of any security  registered  on a national
securities  exchange or any  security  not so  registered  any  manipulative  or
deceptive  device or contrivance in  contravention of such rules and regulations
as the  Commission  may  prescribe  as necessary  or  appropriate  in the public
interest or for the protection of investors.

     9 SEC Rule 10b-5,  17 C.F.R.  Sec.  240.10b-5,  pursuant to its power under
-a(.Lion 10(b). It provides:
         It shall be unlawful for any person,  directly or indirectly,  by the
use of any means or instrumentality of interstate commerce, or of the mails, or
of any facility of any national securities exchange,
(1) to employ any device, scheme, or artifice to defraud,
(2) to make any untrue  statement of a material fact or to omit to state a
material fact  necessary in order to make  statements made, in the light of the
circumstances under which they were made, not misleading, or
(3) to engage in any act, practice, or course of business which operates or
would operate as a fraud or deceit upon any person, in connection with the
purchase or sale of any security.

                                                                       10

<PAGE>

     It is a fraud for "any person' to make any statement in  connection  with a
securities transaction that is materially false or misleading.  15 U. S. C.ss.77
(q) (a) ; 15 U. S. C.ss.78j (b) ; 17 C. F. Rss.  240.10b-5.  A statement is made
"in  connection  with" the sale of any security  "whenever it may  reasonably be
expected that a publicly  disseminated  document will cause reasonable investors
to buy or sell  securities  in  reliance  thereon,  regardless  of the motive or
existence of contemporaneous  transactions by or on behalf of the violator." SEC
v. Savoy Industries.  Inc., 587 F.2d 1149, 1171 (D.C. Cir. 1978),  cert. denied,
sub nom.  Zimmerman  v. SEC,  440 U.S.,  913 (1979) A  statement  is  materially
misleading if there is a substantial likelihood that a reasonable investor would
consider an omitted fact  significant in making his or her investment  decision.
See Basic, Inc, v. Levinson.  485 U.S. 2,24, 2-3.2 (1988) (adopting  standard of
materiality in TSC Industries Inc. v. Northway,  Inc., 426 U.S 438 (1976 for the
SEAss.10(b and Rule 10b-5  context) ; SEC v.  Steadman,  967 F.2d 636, 643 (D.C.
Cir. 1992) (using Basic and TSC materiality standard in SAss.17(a) context)
     A material  misstatement  violates  SAss.17 (a (1) , SEAss.10  (b) and Rule
10b-5 when made with  scienter,  and  violates SA ss.ss.17  (a) (2) and 17 (a) 3
when made negligently.  Aaron v. SEC, 446 U.S. 680 (1980). Scienter is "a mental
state  embracing  intent to deceive,  manipulate,  or defraud," Ernst & Ernst v.
Hochfelder, 425 U.S. 185 (1976), as demonstrated by "extreme recklessness".  SEC
v. Steadman, 967 F.2d at 641. Extreme recklessness is an "extreme departure from
the standard of ordinary care,...which presents

                                                                            11
<PAGE>

a danger of  misleading  buyers or sellers that is either known to the defendant
or is so  obvious  that the actor  must  have  been  aware of it." Id. at 641-42
(citing  Sundstrand  Corp. v. Sun Chemical  Corp.,  553 F.2d 1033, 1045 7th Cir.
1977), cert. denied, sub nom. Meers v., Sundstrand Corp.-, 434 U.S 875 (1977)).

         1.        Nondisclosure of Paid Promotional Nature of Articles

The SEC maintains  that Terry failed to inform  Whisper  subscribers of the paid
promotional  nature of the articles appearing in the Whisper Newsletter and that
this   nondisclosure   was  material.   The  record  reflects  that  Terry  sold
subscriptions  to, and wrote the contents  of, much of the Whisper  Newsletters.
Although, Terry did not write all of the commentaries, he did write many about a
number of stocks appearing in the Whisper  Newsletter.  Terry admits that he was
compensated with the stock of companies he profiled or otherwise wrote about.4

         The fact that Terry  received  stock in exchange  for writing  articles
appearing  in the  Whisper  Newsletter  is  "material"  so  long as  there  is a
"substantial that a. reasonable investor
------------------

     10  In  its  Motion  for  Summary  Judgment,   and  Statement  of  Material
Uncontested  Facts,  the SEC  describes  these  payments as the "receipt of free
stock" in exchange for  promotion of such stock.  The  Defendant  denies that he
received  "free stock" in the companies  touted by the Whisper  Newsletter,  but
admits that he received stock as compensation for writing articles  appearing in
the Newsletter.  (Compare,  e.g. Pls. Stmt. of Mat.. Uncontested FactsP.P. 2, 3,
5-9, with Defs. Response to Pls. Stmt of Mat. Uncontested Facts,P.P.  2, 3, 5-9.
See also Pls. Reply Mot. at 8, n.8.)

         What is  material,  and  uncontested,  is that the  Defendant  received
stocks in exchange for writing  articles that promoted those stocks.  It is also
uncontested  that  Melcher  was  also  paid  to  promote  stock  in the  Whisper
Newsletter.

                                                                              12
<PAGE>

would consider the motivation of the person recommending the purchase of a stock
a significant factor in making an investment  decision.  Basic, Inc., 485 U.S at
232.   "[S]uppression   of   information   material  to  an  evaluation  of  the
disinterestedness  of investment  advice  operate[s] as a deceit on purchasers."
Capital Gains  Research,  375 U.S. at 198 (citing SEC v. Torr, 15 F. Supp.  315,
317  (S.D.N.Y.  1936),  rev'd on other  grounds,  87 F.2d 446 (2nd Cir.  1936)).
Consequently,  the  paid  promotional  nature  of the  articles  was  clearly  a
"material',  fact for subscribers of the Newsletter who were potential investors
     Indeed,  Terry does not argue that the compensation he and Melcher received
was not a "material" fact requiring  disclosure.  He argues,  rather,  that this
fact was disclosed to whisper Newsletter subscribers. It is uncontested that the
Whisper Newsletter  contained a disclaimer which,  during most of Terry's tenure
read as follows:  "Personnel associated with SGA may own shares in the companies
mentioned herein or may act as consultants thereto." On July 12, 1996, the words
"for  compensation" were added to the end of this sentence.5 The question before
the court,

--------------
     11 The full text of the disclosure, as amended, reads:

SGA  Goldstar  Research  is not  an  -investment  advisor!  Information
contained  in SGA  Goldstar is obtained  from  sources  believed to be reliable;
however,  in certain  instances such  information  involves rumors or other time
sensitive   materials  which  cannot  adequately  be  verified.   SGA  makes  no
representation or warranty as to the accuracy or adequacy of the information and
recommendations  provided. This material is not deemed as a solicitation for the
purchase  or  sale  of a  security  or  commodity.  Use of the  information  and
recommendations is at the subscriber's sole risk.  Personnel associated with SGA
may own shares in the companies mentioned

                                                                              13

<PAGE>

wrote and,  thus,  were deprived of information  substantially  likely to affect
their investment decision.  Consequently,  Terry committed fraud by making these
misleading statements in the Newsletter.

         Moreover, there is no question that Terry acted with requisite scienter
to violate SA ss. 17 (a) (i) , SEA 10 (b) and Rule 10b-5.  Scienter is reflected
in the  Defendant's  pattern of "touting  stock" for more than two years.  Terry
admits that he and Melcher  received stock in return for promoting the issuer of
the stock and that he knew that the "disclaimer" appearing in the Newsletter did
not state that the staff  received  stock in return for  promoting the issuer in
the  Newsletter.  The  ineffectiveness  of the  Newsletter's  disclosure was not
merely negligent. These statements were so likely to mislead subscribers that it
either known to the  defendant or [was] so obvious that the actor must have been
aware of it." SEC v. Steadman, 967 F.2d at 641-42. Clearly Terry must have known
that  the  footnote  in  the  Newsletter  could  not  have  adequately   alerted
subscribers  to the fact that he and Melcher  received  free stock for promoting
the companies they urged subscribers of the Newsletter to buy.

         Terry raises a number of defenses to the SEC's  allegations.  First, he
responds that the  information  appearing in the Whisper  Newsletter was not "in
connection  with" the offer or sale of  securities  within  the  meaning  of the
securities  laws.  In  support  of this  argument,  Terry  directs  the Court to
language in the  Newsletter's  disclaimer  which  states  "This  material is not
deemed as a solicitation for the purchase or sale of a security or

<PAGE>

commodity." Notwithstanding the disclaimer, it is clear that the stocks promoted
by Terry and the Whisper  Newsletter were designed to provide  subscribers  with
information that would cause "a reasonable investor to buy or sell securities in
reliance  thereon",  SEC v. Savoy  Industries  Inc.,  587 F.2d at 1171, and were
therefore,  "in  connection  with"  the offer or sale of  securities.  (See P1's
Stmt.P.P. 12-27.)
         Second, Terry argues that he did not commit fraud because he wrote only
some of the articles  appearing in the Whisper  Newsletter  and because  Melcher
exercised final editorial control over its content.1 Yet, Terry concedes that he
was responsible for selling subscriptions,  writing and preparing the Newsletter
for  distribution,  and  distributing the Newsletter to subscribers by facsimile
and the  Internet.  Terry  further  concedes  that he was  paid  stock  in those
companies for which he was writing  promotional  articles in the  Newsletter The
fact that  Melcher  committed  fraud  would not  excuse the fraud  committed  by
Defendant Terry

         Terry argues,  finally, that the Court cannot find that the articles he
wrote were  fraudulent  because  the SRC  failed to prove  that the  information
contained  in the  articles  was  inaccurate.  To the extent that  articles  are
inaccurate,  Terry argues that he was permitted as a journalist to rely upon the
press  releases  and other  sources  of  information  that were the basis of his
writing. In particular, Terry argues that any inaccuracies about SOE were the

--------------

     12 Melcher  reviewed  Terry's  commentaries  when he was in the office but,
when Melcher was traveling, Terry's commentaries were published without editing.
(Pls. Stmt. atP. 4.)
<PAGE>

extreme recklessness in failing to disclose the paid promotional nature of
articles appearing in the  Whisper Newsletter
         2.       Terry's Nondisclosure of Sales Contrary to the Newsletter's
Recommendations to Buy.

         The SEC maintains  that Terry failed to inform  Newsletter  subscribers
that  he  intended  to  sell  his  personal   holdings  of  stock   despite  the
recommendations to buy being made in the Whisper Newsletter. The record reflects
that  Terry  sold  stocks  after the  Whisper  Newsletter  recommended  that its
subscribers  purchase those stock There are ample and  uncontested  facts in the
record that  establish  that this was not an isolated  incident but a pattern of
behavior repeated  continuously over a two year period.2 As has been established
above,  Terry  received stock in exchange for promoting  those  companies in the
Whisper  Newsletter.  It is also uncontested in the record that Terry sold stock
in 18 companies shortly after the Whisper Newsletter made strong recommendations
that its  subscribers  buy those very same  stocks,  and profited to the tune of
$828,448.3

         Terry's practice of selling when the Newsletter was recommending buying
has long been understood to operate as a fraud

--------
     13 The SEC has provided, and the Court has reviewed,  voluminous records of
Terry's trading activities,  Whisper Stock Newsletters corresponding to the time
of Terry's trading, and Defendant's  deposition.  The significant  activities at
issue are reflected in the table located, supra, at footnote 5.

     14 While most of the stocks Terry sold were  received as  compensation  for
touting the issuer,  some were  purchased by Terry  shortly  before  promotional
articles appeared in the Whisper Newsletter. (See Pls. Stmt. of Mat. Uncontested
Facts atP.P. 14, 15, 18, 21, 22,24, and 26.)
<PAGE>

or deceit upon investors. In SEC v. Capital Gains Research Bureau, Inc., 374 U.S
180 (1963), the Supreme Court held that "scalping", a known practice whereby the
owner of shares of a security  recommends  that security for investment and then
immediately sells it at a profit upon the rise in the market price which follows
the recommendation,  was a violation of the Investment Advisers Act. 375 U.S. at
181.4  Similarly,  in Zweig v. Hearst Corp.,  594 F.2d 1261 (9th Cir. 1979), the
Ninth Circuit held that a financial columnist's failure to reveal to readers his
practice of  "scalping"  the stocks of  companies  he wrote about was a material
nondisclosure creating liability under Rule 10b-5 LA. at 1266.5
         To be clear,,  the fraud lies not in Terry's practice of selling stocks
contrary to  Whisper's  recommendations,  but in the  failure to  disclose  that
practice to  potential  investors  and  readers.  The  practice  reflects on the
objectiveness of the investment advice and is therefore material.  Capital Gains
Research, 375 U.S. at 198.

------------------
     15 Section 206 of the Investment  Advisors Act ("IAA") provides in relevant
part that "it shall be unlawful  for any  investment  adviser . . . to engage in
any  transaction,  practice or course of business  which  operates as a fraud or
deceit upon any client or  prospective  client."  15 U.S.C.  ss.  80b-6(2).  The
Supreme Court in Capital Gains Research  recognized  that this language  mirrors
that used in SA ss. 17 (a) (3) , which also appears in Rule 10b- 5 (3) under SEA
ss.  10 (b).  While  the  basis of  liability  under  the IAA  results  from the
fiduciary  relationship  between the  investment  advisor and the  advisee,  the
Supreme Court understood that Congress intended that both Acts reflect a general
proscription  against  fraudulent  or deceptive  practices  such as the material
nondisclosure involved in scalping. 375 U.S. at 197-98.

     16 The  Ninth  Circuit  also held that it was  "fully  consistent  with the
spirit and letter of the securities  laws" to impose on the columnist "a duty to
non-readers"  who were harmed by the effect his  manipulation had on the stock's
price.594 F. 2d at 1270 & n.16.

                                                                              19

<PAGE>

Non-disclosure  of  the  practice  of  scalping  stock  recommended  to  Whisper
Newsletter  subscribers  certainly violated a duty of ordinary care under SA ss.
17(a)(2)-(3  The  non-disclosure  operated as fraud or deceit on subscribers who
purchased  stock  in  connection  with  the  recommendations  appearing  in  the
Newsletter. Id. at 181.

         Furthermore,  scienter is evident in Terry's pattern of active scalping
over a period of two years,  thus  violating SA ss. 17 (a) (1) SEA ss. 10(b) and
Rule  10b-5.  Engaging  in the well  known  fraud  of  scalping  is an  "extreme
departure from the standard of ordinary care". SEC v. Steadman, 967 F.2d at 641.
Terry  trust have been aware of the danger of  misleading  subscribers  since he
continued this practice with more stocks and more writing  responsibility over a
two year period. Moreover,  actual knowledge of the fraud he was perpetrating is
strongly  suggested  by Terry's  effort to keep his trading  activity  secret by
purchasing  Dunbar holdings a shell  corporation in the Bahamas,  and by trading
the  stocks he  scalped  under the name of Dunbar  Holdings  through a  Canadian
brokerage account

         Terry's  main  response  is that he did not write  all of the  articles
appearing in the Whisper  Newsletter which  recommended  stocks he later sold He
argues that Defendant Melcher had final editorial control over any article Terry
wrote, and that Terry was generally unaware of what information  appeared in the
Whisper  Newsletter.  (See Defs.  Response at P. 11-35.) Although Terry tries to
create an issue of fact about what he knew and did not know,  his attempts  must
fail. Assuming for purposes of summary judgment that

                                                                              20

<PAGE>

he did not know about every article in the  Newsletter  and that he did not have
editorial  control,  those facts are  immaterial to the SEC's  charges.  What is
material for purposes of this motion for summary  judgment is what Terry did not
disclose to subscribers  -that he knew he was selling stocks while  recommending
that everyone buy those stocks -- and  therefore he is not saved from  liability
under SA 17(a), SEA ss. 10(b) or Rule 10b-5

         First,  Terry's  argument  concedes  that he did  author  and cc author
articles  promoting  stock which he then sold.  Since Terry's  actions were done
with scienter,  as this Court has already found this admission is enough to hold
Terry in violation of SA ss. 17(a)ss. 10 (b) or Rule 10b-5. Second, Terry admits
that he was on a daily basis for assembling and  disseminating the Newsletter to
subscribers and was aware of the information  contained  therein.  He also faxed
the Newsletter to subscribers called potential subscribers,  and was responsible
for  editorial  changes when Melcher was not in the office The fact that Melcher
or any other  person was also aware of the contents of the  Newsletter  does not
diminish Terry's responsibility to disclose refrain from selling contrary to his
own  recommendations.  Third,  nowhere  does Terry  suggest that he disclosed or
attempted  to  disclose  his  intent  to sell  contrary  to the  recommendations
appearing in the  Newsletter.  Thus,  the factual issues raised by Terry are not
material, and do not preclude summary judgment.

         Terry, once again,  alleges that the "disclaimer"  appearing Newsletter
was adequate disclosure; and once again, he is

                                                                              21

<PAGE>

incorrect The Court finds no wording in the disclaimer to suggest, that Terry or
any of the SGA  "personnel"  --which at all relevant times  consisted  solely of
Terry and Melcher would sell stocks despite the recommendations to buy appearing
in the Newsletter. Rather, the statement that personnel "may own" shares doesn't
even suggest to readers that Terry or Melcher may  actively  "trade"  those same
shares  especially  in the short term after  writing  articles  that promote the
stock as a "Buy" a "Strong Buy" an  "Aggressive  Buy" or as "an excellent . long
term portfolio  holding".6 See also SEC v. Blavin,  760 F.2d at 712  (disclaimer
that an investment advisor "may" trade in recommended securities can itself be a
"material  misstatement") Since the practice of scalping is not disclosed,  as a
matter of law,  the  disclaimer  appearing  in the Whisper  Newsletter  does not
constitute  "disclosure"  within  meaning of the  securities  laws,  nor does it
divest Terry of scienter.

                  3. Fraudulent Sale of Subscriptions

         Having found that Terry engaged with extreme recklessness in the frauds
of touting and scalping stocks over a two year period,  the Court must also find
that Terry's failure to disclose these practices when soliciting  subscribers is
a "practice"  and "course of business  which operates as a fraud or deceit upon"
prospective subscribers to the Newsletter. SEC Rule 10b-5(3).

-------------
     17  These  examples  are  typical  of  language  appearing  in the  Whisper
Newsletter  before Terry commenced  selling stock in these same  companies.  For
these and other examples,  see Pls. Stat. Of Mat.  Uncontested Facts atP. 11-27.

                                                                        22
<PAGE>

         The Court first turns to Terry's statutory  arguments first argues that
he did not violate section 17(b) because he disclosed being  compensated for his
promotional  writing  addressed  previously,  the  disclaimer  appearing  in the
Whisper  Newsletter does not indicate that Terry received any  consideration  in
exchange for promoting  stock.  Thus,  Terry did not "disclose" that he received
consideration for describing stocks. SA ss. 17(b).

          Terry's second  statutory  argument is that he did not in fact receive
"consideration" in exchange for promoting stock because SGA Goldstar  "bargained
for" the  consideration  and in turn paid Terry for his  journalistic  services.
Yet,  Terry "admits that he  participated  in  negotiations  with  companies who
desired to retain the services of SGA....."(Defs. Response at P. 5.) Terry also
admits that he received through SGA "stock issued by the subject companies as
compensation for his services" rendered as a journalist writing articles for the
Whisper Stocks Newsletter.  (Defs. Response atP.P. 5-7.)
         Terry's  attempt to  distinguish  stock  received from SGA stock
received  directly from the issuer  ignores the plain language of the statute
which  proscribes  undisclosed  consideration  received "directly or indirectly"
for describing a security  consideration Terry received was not exempted from
the disclosure obligation because it was processed through SGA.  Nor can
absence of a written  agreement  between  Terry and the issuer be dispositive.
To accept such an argument would render section 17(b)

                                                                              24
<PAGE>

completely ineffective because' any person could avoid its requirements with the
most transparent evasions.

         Terry's final statutory argument is that, even if this Court finds that
he violated the letter of section  17(b),  the SEC must prove that he acted with
scienter.  While  there is no  controlling  authority  explicitly  holding  that
scienter  is or is not a required  element  of a section  17(b)  violation,  the
language and relevant  case law strongly  suggest that scienter is not required.
By its clear  language,  section  17(b)  proscribes  a certain  type of  conduct
undisclosed touting of securities. If Terry published his articles and disclosed
his receipt of consideration he did not violate the statute; if he published and
did not disclose his receipt of  consideration,  section  17(b)  prohibits  that
conduct whether he intended to disclose or not.

     This appears to be the  understanding  which guided this Circuit's Court of
Appeals  in  Wall  Street  Publishing,  851  F.2d at  375-76.  The  Wall  Street
Publishing   Court   treated  a   financial   magazine's   failure  to  disclose
consideration  in exchange for  publication as a per the violation of section 17
(b) ; scienter was not a necessary element of the violation, nor did the Circuit
Court  consider it necessary to its analysis  Id.; see also,  SEC v. Wall Street
Publishing  Inst.,  Inc.,  664 F. Supp.  554, 556 (D.D.C.  1986) (finding per se
violation of section 17(b) without any discussion of scienter).
          At least two  earlier  cases from the  Southern  District  of New York
reached the same conclusion that scienter should be restricted

                                                                              25
<PAGE>

to causes of action under SAss.17 (a) and SEA 10 (b) . Weber v. CMP Corp., , 242
F. Supp.  321, 324  (S.D.N.Y.  1965) Thele v.  Shields,,  121 F. Supp.  416, 419
(S.D.N.Y.  1955).  Thus, the SEC need only prove that Terry violated the conduct
proscribed  in  section  17 (b) , which it has  done by  means  of  Terry's  own
admissions.  Moreover,  this  Court has  already  held  that  Terry did act with
scienter.  The Court  holds that Terry did not  disclose  the  consideration  he
received in exchange for promoting stock and therefore, violated section 17(b).
         Terry  argues next that,  as applied to him,  the statute  violates his
rights to freedom of expression  under the First Amendment and to due process of
law under the Fifth  Amendment.  As a preliminary  matter,  the Court recognizes
that speech  relating to the purchase and sales of securities  "forms a distinct
category of  communications  in which the  government's  power to regulate is at
least as broad as with respect to the general rubric of commercial speech," Wall
Street  Publishing,  851 F.2d at 373 and is therefore  subject to rational basis
scrutiny.  ELL; see also Dun_& Bradstreet.  Ina. v. Greenmoss Builders, 472 U.S.
749, 758 (plurality opinion) (exchange of information  relating to securities is
an area of permissible regulation).19

--------------
     19 Citing Reno v. ACLU,_ U.S.  _, 117 S. Ct. 2329  (1997),  Terry  suggests
that strict scrutiny should apply because the Whisper Newsletter was distributed
on the Internet.  However, strict scrutiny was triggered in Reno v. ACLU because
the Communications Act of 1934, 47 U.S.C.ss.  223 (ad) , was a regulation of the
content of  communication  premised on standards of  obscenity,  not because the
content was found on the Internet.  Surely,  Terry does not mean to suggest that
otherwise proscribable behavior is not saved from proscription simply because it
takes place on the

                                                                              26

<PAGE>

          In  employing  rational  basis  scrutiny,  the Court  need only find a
rational relationship between a substantial government interest and the behavior
proscribed  by section  17(b).  The  government  a  substantial  interest in the
investing public "knowing whether an apparently objective statement is motivated
, by the promise of payment." United States v. Amick, 439 F.2d 351, 365 (7th Cir
1971) cert. denied, 403 U.S 918, 403 U.S. 932, and 404 U.S 823 (1971) (upholding
section 17(b) against a challenge to the existence of disclosure requirement).

         Terry argues that, as applied to him,  section 17(b) violates his right
to free  expression  in several  ways.  Terry  contends  that  section  17(b) is
unconstitutional  because  it gives the SEC right to  censor  communications  he
makes as a journalist.  Terry also argues that the disclosure requirement forces
affirmative  communication or disclosure,  thereby changing the inherent meaning
that he would otherwise  intend to communicate.  In these ways Terry argues that
the statute discriminates against the content and the viewpoint of his writing

          Regulations  which turn solely on whether  consideration  was paid for
publication   of  an  article,   and  not  the  content  of  the  article,   are
constitutionally  permissible. In Wall Street Publishing, a case with facts very
similar  to  those  presented  here  our  Court  of  Appeals  held  that  it was
constitutionally permissible for the SEC to require a publisher to disclose that
it received

-----------
Internet.  Moreover, the Whisper Newsletter was distributed by facsimile, as
well as the Internet

                                                                              27

<PAGE>

compensation for articles which otherwise would appear as mere text. 851 F.2d at
375. The Court noted that section 17(b) was  "particularly  designed to meet the
evils of the 'tipster  sheet' as well as articles in newspapers  or  periodicals
that  purport to give an  unbiased  opinion  but which  opinions  in reality are
bought and paid for." Id, at 376 (citing H.R. Rep. No. 85, 73rd Cong., 1st Sess.
24 (1933)) The SEC "does not seek to control the content of Terry's speech, only
to require him to disclose his compensation." (Pl. Opp'n to Defs. Mot. For Summ.
Judg. at 2 [hereinafter  Pl.  Opp'n]) The only issue is whether Terry  disclosed
the payment he received  for  promoting  the stocks.  The SEC is not telling him
what  stocks to tout,  what advice to give or what  viewpoint  to express in the
Newsletter.
     Terry next argues that section 17(b) violates due process of laws under the
Fifth  Amendment  because it is vague and  overbroad.  Terry  suggests  that the
statuteis vague because a person "of common  intelligence must necessarily guess
at its meaning and differ as to its  application."  Connally v. General  Constr.
Co.,  269 U.S.  385,  391  (1926).  As proof Terry  argues  that the  disclaimer
appearing  in  the  Whisper  Newsletter,  discussed  extensively  supra,  was  a
reasonable  interpretation  of the  requirements of section 17(b) even if it did
not "fully disclose" that he was paid to tout stock.  But, applying the Connally
standard of "common intelligence", id., it is the Whisper

                                                                              28
<PAGE>

Amendment.  Nor does he have a response to the fact that section 17 (b) has been
considered valid law for 65 years.  Most fatally,  as applied to Terry's conduct
in the  present  case,  it is clear  that the  statute  accomplishes  the  quite
constitutional purpose for which it was "particularly designed to meet the evils
of the 'tipster  sheet' as well as articles in  newspapers or  periodicals  that
purport to give an unbiased opinion but which opinions in reality are bought and
paid for." Wall Street Publishing, 851 F.2d at 376 citation omitted)

         C.        Remedies for Terry's Fraudulent Conduct

     Upon a  finding  of  violation  of  the  securities  laws,  the  Court  may
permanently  enjoin  the  defendants  from  further  violations.  SEC  v.  Savoy
Industries,  587 F.2d 1149, 1168 (D.C. Cir. 1978),  cert.  denied, , 440 U.S 913
(1979) Under the Savoy  Industries  test, the Court  considers  whether  Terry's
violation  was 1 isolated or part of a pattern,  (2) flagrant and  deliberate or
merely  technical  --'-n nature,  and 3) whether the  defendant's  business will
present  opportunities to violate the law in the future.  SEC v. First City Fin.
Corp., 890 F.2d 1215, 1228 (D.C Cir 1989). The determination should focus on the
propensity for future violations based on the totality of the circumstances. Id.
     First,  the SEC has shown in the  evidence  before the Court  that  Terry's
conduct was not isolated,  but part of a pattern of behavior which continued for
a period of over two years, and finally terminated only when this Court issued a
temporary injunction Second, the nature of the fraud was not merely technical:
(1) Terry

                                                                              30
<PAGE>
acted  with  scienter,   deliberately  misleading  subscribers  of  the  Whisper
Newsletter  through the practices of touting and scalping;  (2) he  purposefully
established  Dunbar  Holdings a shell  corporation,  and  utilized  a  brokerage
account in Canada to  secretly  conduct the  trading  activities  related to his
scalping;  and (3) he has never  acknowledged  any  misconduct.  Third,  the SEC
points out that Terry's youth,  his  significant  work and education  experience
related to stock promotion, and the maintenance and control Dunbar Holdings, all
support a finding that there is a strong  likelihood of future  opportunities to
violate the securities  laws. For example,  his current  occupation of preparing
web pages for a fee is substantially  similar to the activity that he engaged in
at SGA.

         For the foregoing reasons,  the Court deems it appropriate to grant the
SEC's request for a permanent  injunction  against both Shannon Terry and Dunbar
Holdings, Ltd.

     In the further exercise of its well established  equitable power, see, e.g.
SEC v. First City Fin.  Corp.,  890 F.2d at 1230, the Court will also order that
Shannon Terry and Dunbar  Holdings  disgorge the proceeds  from Terry's  illegal
activities.  This order is designed "to deprive [Terry] of his unjust enrichment
and to deter others from violating the securities  laws." Id.  Defendants  Terry
and Dunbar  Holdings  will  disgorge  profits of $828,448  realized from Terry's
unlawful  touting  and  scalping  of  stock,   commissions  earned  for  selling
subscriptions to the-Whisper

                                                                           31
<PAGE>

Newsletter in 1995 and 1996, plus 'prejudgment interest on amounts to be
computed from November 7, 1996.

IV.      CLAIM AGAINST J.S. HOLDINGS

         The SEC alleges that Defendant J.S.  Holdings  received a $255,000 wire
transfer from one of Huttoe's accounts Because the funds are allegedly  proceeds
of Huttoe's fraud, Plaintiff requests that the Court impose a constructive trust
over the funds on behalf  of  defrauded  investors,  or in the  alternative,  to
freeze J.S. Holdings' assets.  J.S. Holdings  cross-motions for an order lifting
all existing injunctive relief.

         To prevail on a motion for summary  judgment,  Plaintiff must establish
that there is no genuine  issue of material fact with respect to each element of
its prima facie case. In order to establish a constructive trust, Plaintiff must
establish  that (1) there is a wrongful act; (2) specific  property  acquired by
the wrongdoer must be traceable to the wrongful act; and 3) there is some reason
why the party holding the property  should not, in good  Conscience be permitted
to keep the  property.  Stewart  - v.  O'Malley,  1998 WL 29499,  at *4  (D.D.C.
1998).21 Our Court of

---------------

     21 Defendant  J.S.  Holdings cites  Caballero v. Anselmo,  759 F. Supp. 144
(S.D.N.Y. 1991), for the proposition that the SEC must show "i) that there was a
fiduciary  duty,  ii) that the money was accepted  with  knowledge of a fraud or
iii) for less than fair value and iv) that a promise was given and that  promise
was breached." Relief Defendant J.S.  Holdings,  Inc.'s Memorandum in Opposition
to  Plaintiff's  Motion for  Summary  Judgment or  Injunction  and In Support of
Defendant's  Cross-Motion for Alternative- Relief (Defendant's opposition) p. 3.
(emphasis added).

         Similarly,  Defendant cites three cases, Schmid, Inc. v. Zucker's
Gifts, Inc., 766 F. Supp, 118 (S.D.N.Y. 1991), Lines v.

                                                                              32

<PAGE>

Appeals  has  additionally  emphasized  that "in order to obtain a  constructive
trust,  a  plaintiff  must  generally  connect  specific  property  held  by the
fiduciary with the property  misappropriated  from the  partnership."  TMG II v.
United States, 1 F.3d 36, 40 (D.C. Cir. 1993).
     J.S.  Holdings  does not  contest  the fact that  Huttoe  was  engaged in a
wrongful act. Where, as here, a securities fraud violator transfers fraudulently
obtained proceeds to a third party, the federal courts are empowered to exercise
traditional equitable remedies to recover the proceeds,  even if the third party
is not alleged to have violated the securities laws. See Deckert v. Independence
Shares Corp., 311 U.S. 282, 287-89 (1940)
         The SEC, however, fails to meet its burden of showing that the specific
property held by J.S.  Holdings is traceable to Huttoe's  fraud.  The SEC argues
that the reason it is unable to trace

------------------------
Bank of America Nat. Trust & Say, Ass'n,  743 F. Supp. 176 (S.D.N.Y.  1990), and
Hutton v. Klabal,  726 F. Supp. 67 (S.D.N.Y.  1989),  for the  proposition  that
Plaintiff  bears the burden of showing that "I)  defendant:  had notice that the
money in question was obtained  through fraud, or 2) defendant did not give fair
value  for the  money,  and 3) that a  fiduciary  relationship  existed  and was
breached,  and 4) that a promise was made and breached."  Defendant's Opposition
p. 9. (emphasis added).

         Upon reading of these cases, it is apparent that none of them stand for
the  propositions  for which they are cited.  In  particular,  none of the cited
cases place the burden of establishing  non-bona fide purchaser  status upon the
plaintiff,   as  J.S.  Holdings  asserts.  In  short,  Defendant  has  seriously
misrepresented   the  holdings  of  these  cases  on  an  issue  of  substantial
significance.  This is the kind of  misrepresentation  that warrants referral to
the disciplinary  authorities and undermines  confidence in the integrity of the
bar.
<PAGE>

specific funds is because of Jeffrey  Szur's22  exercise of his Fifth  Amendment
right  not to  testify  regarding  the  transactions  underlying  the  funds  in
question.  The SEC asks the  Court to draw an  adverse  inference  against  J.S.
Holdings as a result of Szur's silence.

          Plaintiff  correctly asserts that "the Fifth Amendment does not forbid
adverse  inferences against parties to civil actions when they refuse to testify
in  response  to  probative   evidence  offered  against   them...."  Baxter  v.
Palmigiano, 425 U.S. 308, 318(1976). The Court is not, however, required to draw
an adverse  inference based on an  individual's  exercise of his Fifth Amendment
right not to testify.  It is in the Court's  discretion  whether to draw such an
adverse inference, and the Court declines to do so in this case. To do so where,
as here, the  government  seeks to compel  testimony from an individual  against
whom a collateral  criminal  action is pending  would be to  undermine  the very
purpose of the Fifth  Amendment  and to penalize  those who assert  their rights
under that Amendment.

         Even if this  Court  were to grant an adverse  inference  against  J.S.
Holdings,  summary judgment would still be  inappropriate  The Supreme Court, in
permitting  a court to draw  adverse  inferences  in civil  cases,  specifically
limited  its  holding to the facts of Baxter.  Baxter  involved a  challenge  to
prison  administrative  disciplinary hearing procedures.  In deciding that there
was no

-------------------

        22 Principal of J.S. Holdings.
                                                                              34
<PAGE>

constitutional  error in  drawing  an  adverse  inference  from the  defendant's
exercise of his Fifth Amendment  rights,  the Supreme Court  specifically  noted
that there were no criminal  proceedings  pending  against the  defendant at the
time he exercised his Fifth  Amendment  right.  The Court also  emphasized  that
under the Rhode Island  prison  discipline  procedure,  the defendant "is not in
consequence of his silence  automatically  found guilty of the  infraction  with
which  he  has  been  charged....[D]isciplinary   decisions  must  be  based  on
substantial evidence manifested in the record of the disciplinary proceeding. It
is thus  undisputed  an  inmate's  silence in and of itself is  insufficient  to
support an adverse decision...." Id. at 317-18 (citations omitted).  Because the
defendant's  silence was merely one  consideration  among many other evidentiary
factors,  the Supreme  Court  concluded  that "this does not smack of an invalid
attempt  by the  State to  compel  testimony  without  granting  immunity  or to
penalize the exercise of the  privilege."  Id. at 318.23 Thus,  it is clear from
both the  factual  context of Baxter and the Court's  analysis  that it does not
compel the  drawing  of an  adverse  inference  in this  case,  where  there are
criminal proceedings pending against Jeffrey Szur.

--------------------
     23 The Supreme Court  further  explained its holding in Baxter in Lefkowitz
v. Cunningham,  431 U.S. 801 (1977).  There, the court wrote "Baxter did no more
than permit an inference  to be drawn in a civil case from a party's  refusal to
testify. Respondent's silence inBaxter was only one of a number of factors to he
considered  by the finder of fact in assessing a penalty,  and was given no more
probative value than the facts of the case warranted...." Id. at 808 n.5.

                                                                              35

<PAGE>

The Seventh Circuit Court of Appeals  addressed nearly the same issue in LaSalle
Bank Lake View v. Seguban, 54 F.3d 387 (7th Cir 1995). In LaSalle,  the district
court  entered  summary  judgment in a civil RICO case  against  defendants  who
exercised their Fifth Amendment right not to testify.  The Court of Appeals,  in
reversing the lower court,  wrote that 'even in a civil case a judgment imposing
liability  cannot rest solely upon a privileged  refusal to admit or deny at the
pleading  stage.  -(T1he entry of judgment  based only on the  invocation of the
privilege  and 'without  regard to the other  evidence'  exceeds  constitutional
bounds. U at 391.

         This Court  declines to draw an adverse  inference  from Jeffrey Szur's
exercise  of his  Fifth  Amendment  right  not to  testify.24  Such  an  adverse
inference would not, in any case,  support a grant of summary  judgment  without
additional evidence that J.S. Holdings, funds are traceable to Huttoe's wrongful
act.  Because the SEC has failed to demonstrate that there are no genuine issues
of material fact with respect to its prima facie case,  summary judgment against
J.S. Holdings is denied.25

     J.S.  Holdings  has filed a cross  motion to lift all  existing  injunctive
relief. Plaintiff requests, in the alternative,  an extension of the preliminary
injunction freezing J.S. Holdings,

-----------------
     24  Because  the Court  declines  to draw an adverse  inference,  it is not
necessary to address  Plaintiff Is  contention  that a corporate  entity may not
assert the Fifth Amendment rights of its principals

     25 Because  Plaintiff has not satisfied its burden of showing a prima facie
case, the Court need not reach the question of J.S.  Holdings'  status as a bona
fide purchaser

                                                                             36
<PAGE>

assets. In order for this Court to extend the preliminary injunction,  Plaintiff
must be able to demonstrate a substantial  probability of success on the merits.
The Court is now unable to make such a finding  for the  reasons  stated  herein
Thus, there is no justification on the record as it now stands for extending the
preliminary injunction. Accordingly, J.S. Holdings' cross motion to lift current
injunctive relief is granted.

V.      CONCLUSION
Defendant Terry is clearly liable for violating ss.ss. SA 17(a) and (b), SEA ss.
10(b) and Rule 10b-5  because (1) he failed to disclose to  subscribers  that he
was paid for touting  stock,  and (2) he failed to disclose  that at the time he
was recommending  that subscribers buy the stock, he was selling that same stock
at a higher value because of the  recommendations he made. There are no material
facts in dispute  regarding  these  issues.  Consequently,  the  failure to make
adequate  disclosure  under the applicable  case law entitles the SEC to summary
judgment as a matter of law As such,  Plaintiff's  Motion for  Summary  Judgment
with respect to  Defendants  Terry and Dunbar  Holdings is granted.  Plaintiff's
Motion for Summary Judgment with respect to Defendant J.S. Holdings

                                                                              37
<PAGE>

Jeffrey P. Weiss
William McGovern

Attorneys for Plaintiff
U.S. Securities and Exchange Commission

Mail Stop 8-8
450 Fifth Street, N.W.
Washington, D.C. 20549-0808
(202) 942-4797 (Kidney)
(202) 942-9581 (Kidney Fax)
kidneyj@sec.gov

<PAGE>

TABLE OF CONTENTS

INTRODUCTION                                                                  2

SUMMARY OF ALLEGED FACTS                                                      3

I.        THE STANDARDS OF REVIEW                                             6

A.                 Rule 12(b)(6)                                              6
B.                 Rule 9(b)                                                  6

II.       THE COMPLAINT ALLEGES FRAUD WITH SUFFICIENT
          PARTICULARITY                                                       8

A.                 Specific Allegations in the Complaint                      8
B.                 Veitia, Spratt and Skalko May be Held Liable for the
                   Acts of CRG, Stratcomm. and Gulf Atlantic                  9
C.                 Defendants' Rule 9(b) Arguments Are Without Merit         12
                   1. The Defendants Are Not Impermissibly "Lumped"          12
                   2. The Complaint is Pled In Sufficient Detail             16

III.      THE COMPLAINT PROPERLY STATES CAUSES OF ACTION UNDER
          THE SECURITIES LAWS                                                18

A.                 The Elements of a Securities Fraud Claim                  18
B.                 The Complaint Adequately Alleges Scalping by the CRG
                   Defendants                                                19
                   1 . Each Defendant Was a Primary Violator of the
                       Antifraud Laws                                        20
                   2. The Omissions and Misrepresentations Were Material     21
                   3. The Fraud Was "In Connection With' ' the Purchase
                      or Sale of Securities                                  22
                   4. The Complaint Clearly Alleges Willful Acts
                      Constituting Scienter                                  23
                   5. Whether the Purported Disclaimers in CRG Publications
                      Constituted Sufficient Disclosure Under Either the
                      Antifraud or Anti-Touting Provisions Are Questions of
                      Disputed Material Fact Not Appropriate for Resolution
                      At this Time                                           24

IV.       ASSESSING THE REQUESTED RELIEF IS PREMATURE                        28

CONCLUSION                                                                   29

<PAGE>

TABLE OF AUTHORITIES

Federal Cases

Anthony Distributors, Inc. v. Miller Brewing Co., 904 F.Supp. 1363
  (M.D. Fla. 1995)............................................................7
Basic v. Levenson, 485 U.S. 224 (1988)....................................18,22
Beck v. Manufacturers Hanover Trust Co., 820 F.2d 46 (2nd Cir. 1987).........23
Bill Buck Chevrolet v. GTE Florida, Inc., 54 F.Supp.2d 1127 (M.D. Fla.
  1999) ......................................................................7
Brooks v. Blue Cross Blue Shield, 116 F.3d 13 64 (11th Cir. 1997) .......15, 16
Bryant v. Avado Brands, Inc., 187 F.3d 1271 (11th Cir. 1999) ................23
Central Bank of Denver, N.A. v. First Interstate Bank of Denver, N.A., 11 U.S.
 164 (1994)............................................................20,21,28
Conley v. Gibson, 355 U.S. 41 (1957)..........................................6
Ernst & Ernst v. Hochfelder, 425 U.S. 18 5 (1976)............................18
Friedlander v. Nims, 755 F.2d 8 10 (11th Cir. 1985) ..........................7
Future Tech International, Inc. v. Tae Il Media, Ltd., 944 F.Supp.
 1538 (S.D. Fla. 1996) .......................................................6
Harper v. Blockbuster Entertainment Corp., 139 F.3d 1385 (11th Cir. 1998)
 cert. denied -U.S, -, 119 S. Ct. 509 (1998) .................................6
Herman & MacLean v. Huddleston, 459 U.S. 375 (1983) .........................23
Howry v. Nisus, Inc., 910 F.Supp. 576 (M.D. Fla. 1995) .......................6
In re Apple Computer Securities Litigation, 886 F. 2d 1109 (9th Cir. 1989)...22
In re Blech Securities Litigation, 961 F. Supp. 569 (S.D. N.Y. 1997) .....21,24
In re Checkers, 858 F.Supp. 1168 (M.D. Fla. 1994) ........................10,13
In re MDC Holdings Securities Litigation, 754 F. Supp. 785 (S.D. Cal. 1990)..10
In re Sahlen & Associates, Inc. Securities Litigation, 773 F. Supp. 342
 (S.D. Fla. 199 1) ........................................................7,10
In re Southeast Banking Corp., 69 F.3d 1539 (11th Cir. 1995) .................6
In re U.S. Oil and Gas Litigation, 1988 WL 28544 (S.D. Fla. 1988) ............7
Kowal v. MCI Communications Corporation, 16 F. 3d 1271 (D.C. Cir. 1994) ......8
Merrill Lynch v. Del Valle, 528 F. Supp. 147 (S.D. Fla. 198 1)................7
Miller v. U.S. Dept. of Agric. Farm Servs Agency 143 F.3 d 1413
 (11th Cir. 1998) ............................................................6
Metrahealth Insurance Company v. Anclote Psychiatric Hospital
 Ltd., 1997 WL 728084, *3 (M.D. Fla. 1997)...................................14
Midwest Grinding v. Spitz, 976 F.2d 1016 (7th Cir. 1992).....................15
Ong v. Brown, Rudnick, Freed, Gesmer, P.A., 1994 WL 143075 (M.D. Fla. 1994)...7
Raber v. Osprey Alaska, Inc., 187 F.R.D. 675 (M.D. Fla. 1999) ................6
Rickman v. Precisionaire, Inc., 902 F.Supp. 232 (M.D. Fla. 1995) .............6
Scheuer v. Rhodes, 416 U.S. 232 (1974) .......................................6
Schultz v. Rhode Island Hosp. Trust Nat. Bank, 94 F.3d 721 (1st Cir. 1996) ..16
SEC v. Adler, 137 F.3d 1325 (11th Cir. 1998) ................................23
SEC v. Capital Gains Research Bureau, Inc., 374 U.S. 180 (1963) .............18
SEC v. Fischbach Corp., 133 F. 3d 170 (1997) ................................29
SEC v. Huttoe, Civ. Action 96-2543 (unpublished)(D.D.C.
Sept. 14, 1998) .......................................................18,21,27
SEC v. Manor Nursing Center, Inc., 458 F. 2d 1082 (2d Cir. 1972) ............29

<PAGE>

SEC v. Palmisano 135 F. 3d 860 (2nd Cir. 1998)...............................29
SEC v. Physicians Guardian Unit, 1999 WL 997317 (M.D. Fla. 1999)..............7
SEC v. Texas Gulf Sulphur Co., 401 F. 2d 833 (1968)..........................28
SEC v. U.S, Environmental, Inc., 897 F.Supp. 117 (S.D.N.Y. 1995)..........7, 17
Shields v. Citytrust Bancorp., Inc., 25 F.3d 1124 (2nd Cir. 1994)............24
Stem v. Leucadia National Corp., 844 F.2d 997 (2nd Cir.), cert. denied,
 488 U.S. 852 (1988).........................................................23
Summer v. Land & Leisure, Inc., 571 F. Supp. 3 80 (S.D. Fla. 1983) ...........7
TSC Industries, Inc. v. Northway, Inc., 426 U.S. 438 (1976)...............18,21
U.S. v. Eisenberg, 773 F. Supp. 662 (D.N.J. 1991) ...........................21
U.S. v. Funt, 896 F.2d 1288 (11th Cir. 1990) ................................14
U.S. v. Magellan Health Services, Inc., 1999 WL 10513 10 (M.D.
 Fla. 1999) ..............................................................15,16
Vicinisch v. Paine, Webber, Jackson & Curtis, Inc., 739 F. 2d 1434
 (9th Cir. 1984) ............................................................22
Woodward v. Metro Bank of Dallas, 522 F.2d 84 (5th Cir. 1975) ...............14
Wool v. Tandem Computers, Inc., 818 F.2d 1433 (9th Cir. 1987) ...............10
Zweig v. Hearst Corp., 594 F.2d          1261 (9th Cir. 1979) ............18,21

SEC Administrative Actions

In the Matter of Sky Scientific, Inc., et al.,1999 WL 114405, *29-*30 (SEC ALJ
Initial Decision, March 5, 1999).............................................27

Federal Statutes

15 U.S.C.ss.78j(b) ...........................................................4
15 U.S.C.ss.77q(b) ...........................................................4
15 U.S.C.ss.77e ..............................................................4
15 U.S. C.ss.77q(a) ..........................................................4

Federal Regulations

17 C.F.R.ss.240.10b-5.........................................................7

Other Authorities

Fed. R. Civ. Proc. 8(a) ......................................................6
Fed. R. Civ. Proc. 9(b) .....................................1,3,6,7,9,12,13,20
Fed. R. Civ. Proc. 12 (b)(6) .......................................1,3,6,19,24
Restatement of the Law Second, Agencyss.348..................................11

<PAGE>

                         UNITED STATES DISTRICT COURT

                       FOR THE MIDDLE DISTRICT OF FLORIDA

                               (Orlando Division)

------------------------------
UNITED STATES SECURITIES AND

EXCHANGE COMMISSION,

             Plaintiff,                     C.A. No. 99-1222-CV-22-A
                                            Hon. Anne C. Conway,
                                             Judge
                                            Hon. Karla R. Spaulding,
       v.                                    Magistrate Judge

CORPORATE RELATIONS GROUP, INC.,
 ET AL.,

             Defendants.
--------------------------------

            PLAINTIFF'S MEMORANDUM IN OPPOSITION TO MOTIONS TO DISMISS BY
           DEFENDANTS CRG, STRATCOMM, GULF ATLANTIC, VEITIA, SPRATT, SKALKO
                                   AND POW WOW

         Plaintiff,  the  Securities  and Exchange  Commission  ("Commission"),
submits this  memorandum  in  opposition to motions to dismiss the Complaint
pursuant to Fed. R. Civ. P. 9(b) and Fed. R. Civ. P. 12(b)(6),  filed by
defendants  Corporate  Relations Group, Inc. ("CRG'),  Stratcomm Media Ltd.
("Stratcomm"),  Gulf Atlantic  Publishing,  Inc. ("Gulf Atlantic"),
Roberto E. Veitia ("Veitia"), James W.  Spratt  III  ('Spratt"),  James A-Skalko
("Skalko")  and  Pow-Wow,  Inc.  ('Pow  Wow").  Collectively,  these are "the
CRG defendants."1

                                        1

--------
1 See the opening  paragraphs  of  plaintiff's  memorandum  in opposition to the
motions to dismiss of Veitia,  Stratcomm,  CRG and Gulf  Atlantic for a complete
breakdown  of the  issues  addressed  by the  plaintiff  in its three  memoranda
opposing the defendants' six memoranda.

<PAGE>

                                  INTRODUCTION

         The Commission  alleges that each individual  and- corporate  defendant
engineered  a garden  variety  stock  scalping  scheme in which they  unlawfully
realized  millions of dollars over a two-year  period.  The defendants  obtained
large blocks of discounted stock -- often  unregistered -- directly from issuers
in exchange for agreements to tout the stocks to the public.  Unregistered stock
was  sold   unlawfully  in  the  United  States  with  the  knowing  and  active
participation of Jose Antonio Gomez Cortes and two offshore  entities,  Fondo de
Adquisiciones  E Inversiones  Internacionales  XL, S.A.,  and C.A.  Oportunidad,
S.A.,  hereinafter  "the Gomez  defendants."  This stock,  along with registered
securities   received  by  CRG,  the  Gomez   defendants  and  other  non-moving
defendants,  was then sold in  contravention  of CRG's  recommendations  to U.S.
investors.  The  defendants'  failure to disclose this scheme in connection with
their purchase and sale of securities constitutes fraud. The Complaint describes
the use of  this  scheme  by the  defendants  in  connection  with 14  different
issuers.1

         The Complaint is the result of a painstaking  three-year  investigation
in which the Commission pieced together the tangled trading  relationships among
the  defendants,  including  those who have not filed  motions to dismiss.  This
investigation  was conducted  without the  cooperation  of any of the individual
movants.  The  individual  CRG  defendants  Veitia,  Spratt  and  Skalko -- each
asserted his right not to testify when  subpoenaed by the  Commission.  Gomez, a
Costa Rican against whom an investigative  subpoena by an administrative  agency
is

                                        2

--------
2         Different allegations involving a fifteenth issuer, defendant
Stratcomm, are also in the Complaint.

<PAGE>

unenforceable, declined the Commission's request for an interview and to produce
documents  on behalf of himself  and Fondo and  Oportunidad.  None of the CRG or
Gomez defendants took advantage of the Commission's "Wells" procedure to present
statements  in their  defense when the  Commission  was  determining  whether to
authorize the Complaint.

     Each of the CRG and Gomez  defendants has moved to dismiss the Complaint on
grounds that the Commission has not alleged fraud with sufficient  particularity
under Fed. R. Civ. P. 9(b) and that the  Complaint  does not state a claim under
Fed. R. Civ. P.  12(b)(6).  As this  Memorandum  demonstrates,  neither of these
arguments  has  merit.  All of the  motions  should be denied in their  entirety
forthwith so that discovery can commence.

                          SUMMARY OF ALLEGED FACTS

         The allegations of the well-pleaded  Complaint are that each of the CRG
defendants  participated  in a scheme to defraud and violated  the  registration
requirements  of the  federal  securities  laws and  other  provisions  of those
statutes.  They  did  so by  enlisting  poorly  capitalized  issuers  of  public
securities  to use the CRG  defendants  to promote  their  stocks to the public.
(Complaint,  P. P. 1, 27, 3 0).3 Because these client companies had little cash,
CRG and its codefendants were generally  compensated with stock,  which both the
CRG and the Gomez  defendants sold while CRG was promoting the same stock to the
public. (P. P. 2, 27, 30, 32, 41).

         Frequently,  CRG's  client  companies  did not even have enough  freely
tradable registered stock with which to compensate CRG. In those instances,  CRG
arranged for the company to sell stock to the Gomez  defendants,  purporting  to
take advantage of Regulation S, an exemption to

------------
3        Hereinafter, paragraph symbols alone shall refer to paragraphs of the
 Complaint.

<PAGE>

the usual  registration  requirements of the Securities Act available if certain
conditions are met, including that stock be sold to a non-U.S.  investor. (P. P.
40-44).  These  transactions  with the  Gomez  defendants  did not  comply  with
Regulation S, either because CRG arranged for itself and other U.S. residents to
fund purchases by the Gomez defendants (P. P. 41), or because the CRG defendants
schemed with the Gomez defendants to time the sales of the Regulation S stock to
take advantage of CRG's touting of the stocks in CRG  publications.  (P. P. 42).
Both the CRG and the Gomez  defendants  violated Section 5 of the Securities Act
by  selling  stock  which was not  registered  with the  Commission  and was not
subject to any valid exemption from registration.

         Each of the CRG and Gomez defendants sold stocks of U.S.  securities in
a  coordinated  fashion  while  those  stocks  were  being  promoted  by the CRG
defendants to the public.  (P. P. 27, 30- 35-37,  41-42,  55, 59-60,  66, 68-84,
87-88, 92-94, 97, 101-103, 108-121, 125-131, 134-137, 141-142, 145-148, 152-154,
157-160,  163-166,  169-171,  174-175,  178-18 1). The CRG and Gomez defendants'
failure to disclose the scalping scheme and,  because it was part of the scheme,
the purchase or control by CRG of securities bought by the Gomez defendants,  to
issuers or investors in connection  with the purchase or sale of securities  was
material, and constituted a violation of Section 17(a) of the Securities Act [15
U.S.C. ss. 77q(a)], Section 10(b) of the Exchange Act [15 U.S.C. ss. 78j(b)] and
Rule 10b-5  thereunder  [17 C.F.R.  ss.  lOb-5].  (P. P. 62-63  85-86,  105-106,
122-123, 132-133, 138-139, 143-144, 149-150, 155-156, 161-162, 167-168, 172-173,
176-177, 182-183). The failure of the CRG defendants adequately to disclose that
they were being  compensated  for  touting  stock,  and how much they were being
compensated,  violated  Section 17(b) [15 U.S.C.  ss.  77q(b)] of the Securities
Act.  The  purchase or sale of  unregistered  securities  by the CRG  defendants
through the Gomez defendants violated Section 5 of the

                                        4

<PAGE>

Securities  Act [ 15 U. S. C.ss.77e]  because  the  defendants  sold stock
which was  neither  registered  nor  subject to a lawful exemption from
registration.
         Although  even a cursory  review of the CRG  publications  appended  to
Spratt's  motion  and  quoted in the  Complaint  discloses  that  florid  prose,
exaggeration,  and unlimited optimism were hallmarks,  of the CRG publications,4
it is important to note that the  Complaint  does not allege the contents of the
articles are false or fraudulent.  Rather, the contents constitute touting,  for
which  compensation was  inadequately  disclosed as required by Section 17(b) of
the Securities Act. As important, the articles are incontrovertible  evidence of
the  "pumping"  of the  stock by the CRG  defendants  while  they and the  Gomez
defendants  were  selling  the stock.  Promoting  stock to  potential  investors
without  disclosing  the  promoter  is at the same  time  selling  the  stock is
fraudulent,  and is called  "scalping."  Thus,  the repeated  contentions by the
defendants  that  the  Complaint  fails  to  identify   statements  in  the  CRG
publications  constituting fraud are beside the point. The fraudulent conduct in
this case  reflected in the CRG  publications  largely is one of  omission,  not
affirmative misrepresentation. 5 Affirmative misrepresentations2 material to the
fraud and to buyers and sellers of securities occurred when the Gomez defendants
were represented as legitimate offshore purchasers under Regulation S to acquire
more stock for scalping purposes, but these misrepresentations  occurred outside
the CRG publications.

                                        5
---------------------
     4 The  small,  undercapitalized  companies  which  retained  CRG often were
trumpeted in CRG publications as, for example, the next McDonald's or Microsoft.
(P. P. 60, 84, 103, 121, 131, 137, 142, 148, 154, 160, 166, 171, 175, 181).
     5 However,  as  described  at pp. 24 to 28 herein,  language  which the CRG
defendants claim to be exculpatory in CRG publications was in fact misleading.

<PAGE>

                             LEGAL ARGUMENT

I.        THE STANDARDS OF REVIEW

          A.      Rule 12(b)(6)

     A motion  filed  under Fed. R. Civ.  Proc.  12(b)(6)  challenges  the legal
sufficiency of the  allegations of the Complaint.  "[A] complaint  should not be
dismissed  for failure to state a claim unless it appears  beyond doubt that the
plaintiff  can prove no set of facts in support of his claim which would entitle
him to relief " Conley v.  Gibson  355 U.S.  41  (1957);  Harper v.  Blockbuster
Entertainment  Corp.,  139 F.3d 1385 (11th Cir. 1998) cert.  denied,  U.S. , 119
S.Ct.  509 (1998).  In  deciding a motion to dismiss,  the Court must accept the
plaintiff's  factual allegations as true and construe the complaint in the light
most favorable to the plaintiff.  Scheuer v. Rhodes 416 U.S. 232 (1974);  Miller
v. U.S.  Dept. of Agric.  Farm Servs.  Agency,  143 F.3d 1413 (11th Cir.  1998);
Howry v. Nisus,  Inc., 910 F.Supp.  576 (M.D. Fla. 1995).  The court may examine
only the four comers of the Complaint in deciding a motion to dismiss.  Raber v.
Osprey  Alaska,  Inc.,  187  F.R.D.  675 (M.D.  Fla.  1999),  citing  Rickman v.
Precisionaire, Inc., 902 F.Supp. 232 (M.D. Fla. 1995). The test a complaint must
meet to survive a motion to dismiss is exceedingly low. In re Southeast  Banking
Corp.,  69 F.3d 1539, 1551 (11th Cir.  1995).  Rule 12(b)(6)  motions are viewed
with  disfavor and rarely  granted.  Future Tech  International,  Inc. v. Tae 11
Media, Ltd., 944 F. Supp. 153 8 (S.D. Fla. 1996).

         B.        Rule 9(b)

     Fed. R. Civ. Proc.  8(a) embodies the principle of notice  pleading,  which
requires only that a complaint include "a short and plain statement of the claim
showing  that the  pleader  is  entitled  to relief " Fed.  R. Civ.  Proc.  9(b)
provides that "in all averments of fraud. the circumstances  constituting fraud.
shall be stated with particularity." The two rules must be read together.

<PAGE>

"Rule 9(b) must not be read to abrogate  Rule 8. [A] court  considering a motion
to dismiss  for  failure  to plead  fraud with  particularity  should  always be
careful to  harmonize  the  directives  of Rule 9(b) with the broader  policy of
notice pleading."  Friedlander v. Nims, 755 F.2d 810, 813 n. 3 (11th Cir. 1985).
Therefore,  a complaint need allege fraud only with sufficient  particularity to
permit "the person  charged with fraud.  [to] have a reasonable  opportunity  to
answer the complaint and adequate  information  to frame a response." In re U.S.
Oil and Gas  Litigation,  1988 WL 28544  (S.D.  Fla.  1988);  SEC v.  Physicians
Guardian Unit, 1999 WL 997317 (M.D. Fla. 1999).  Judge Kovachevich of the Middle
District of Florida has stated that the "law in this  jurisdiction is clear, the
particularity  requirements  of Fed.  R.  Civ.  P. 9(b) are  satisfied  when the
plaintiff  provides  a  reasonable   delineation  of  the  underlying  acts  and
transactions  constituting fraud." Ong v. Brown,  Rudnick,  Freed, Gesmer, P.A.,
1994 WL 143075 (M.D.  Fla. 1994),  quoting In re Sahlen & Associates,  Inc., 773
F.Supp.  342 (S.D. Fla. 1991). See also Merrill Lynch v. Del Valle, 528 F. Supp.
147  (S.D.  Fla.  198 1)  ("pleading  of  detailed  evidentiary  matter"  is not
necessary to satisfy Rule 9(b)).
     The degree of specificity  required by Rule 9(b) will vary according to the
background of the parties and the  information  available to them at the time of
pleading. In re Sahlen & Associates,  Inc. Securities Litigation, , 773 F. Supp.
342 (S.D. Fla. 199 1), quoting Summer v. Land & Leisure, Inc., 571 F. Supp. 3 80
(S.D. Fla. 1983).  Less  specificity is required when the alleged fraud occurred
over an  extended  period of time and  involved  numerous  overt  acts.  Anthony
Distributors,  Inc, v. Miller Brewing Co., 904 F.Supp.  1363 (M.D.  Fla.  1995);
Bill Buck Chevrolet v. GTE Florida- Inc., 54 F.Supp.2d  1127 (M.D.  Fla.  1999).
When,  as here,  the chief  defendants  decline  to  testify  on  constitutional
grounds, the leniency granted the plaintiff is even broader.  Indeed,  pleadings
on information and belief are permitted when "the necessary
                                        7
<PAGE>

information lies within defendants' control." Kowal v. MCI Communications
Corporation, 16 F.3d 1271, 1279 (D.C. Cir. 1994).

II.      THE COMPLAINT ALLEGES FRAUD WITH SUFFICIENT PARTICULARITY

         A.       Specific Allegations in the Complaint

         The  Complaint  alleges  that Veitia,  Spratt and Skalko,  as principal
managers at CRG (including  Stratcomm and Gulf Atlantic),  "designed,  developed
and  implemented  a fraudulent  scheme.  by causing CRG's  corporate  clients to
distribute  securities,  to  CRG  and  its  nominees  at  deep  discount  to the
prevailing  market  price.  CRG then  promoted  these  securities  to the public
through  CRG  publications  and  directly to brokers.  CRG  realized  profits by
selling the securities  while  recommending  that the public buy the stock." (P.
27). The Complaint also alleges that the fraudulent scheme was advanced when the
Gomez defendants  allowed "CRG to direct trading and other transactions in Fondo
and  Oportunidad  brokerage  and bank accounts and by acting at the direction of
CRG, Veitia and Spratt." (P. 37).

         The Complaint also describes in detail the publications produced by CRG
to tout stocks (P. 28), the use of broker relations  executives who were paid to
"develop" interest in a stock (P. 29), CRG's receipt of unregistered  securities
from its  clients as  compensation  for  promotional  services  (P.  30),  CRG's
practice of selling the stock it received  from its clients  while touting it to
the public at great profit (P. P. 31-32),  and CRG's effort to bribe  brokers to
push stocks on their clients (P. P. 35-36, 61). Of course,  all of this occurred
in the absence of any meaningful  disclosure to the investing public. (P. P. 28,
32, 39).

         After describing the contours of the fraudulent  scheme,  the Complaint
proceeds to show precisely how it was  implemented  with respect to 14 different
issuers  between 1994 and 1996.  The  components  of the scheme are identical or
nearly identical with respect to each issuer: (1)

<PAGE>

CRG was compensated for touting stock; (2) CRG, sometimes with the help of Fondo
and Oportunidad, sold shares of stocks that were being touted, some of which was
neither registered with the Commission nor subject to a valid exemption; and (3)
CRG failed to disclose any of these  practices the  compensation  received,  the
scalping, or the use of the Gomez defendants -- in its publications.6

         There can be no doubt that these  allegations  provide  each  defendant
with notice of what is alleged  against him sufficient to prepare a response the
Rule 9(b) standard.  The defendants  cite no authority in which a complaint with
the degree of specificity  alleged here has been dismissed on Rule 9(b) grounds.
Rather,  they focus solely on those paragraphs in the Complaint which mention an
individual  defendant  by name,  ignoring  that  Veitia,  Spratt  and Skalko are
alleged to have been primary participants in the activities of the corporate CRG
defendants and, therefore,  direct participants in the scheme to defraud by CRG,
Stratcomm. and Gulf Atlantic.

         B. Veitia, Spratt and Skalko May be Held Liable for the Acts of CRG,
            Stratcomm and Gulf Atlantic

The individual  defendants - each of whom asserted his Fifth Amendment privilege
not to testify when subpoenaed  during the  investigation of this matter - argue
that the Complaint  fails to comply with Rule 9(b) because it does not, in their
view,  sufficiently  distinguish  the  role of  each  of them in the  fraudulent
scheme. In fact, the Complaint frequently  attributes to individual  defendant's
actions taken in furtherance of the fraudulent scheme.  These allegations,  such
as soliciting new clients,  entering into contracts,  managing CRG's  investment
accounts and bribing

----------------------
     6 See  Tracker P. P.  46-55,  62;  Delta P. P.  65-85;  Ammonia  Hold P. P.
87-105;  IMTECH P. P.  108-122;  Foreland  P. P.  125-132;  Atlas  Pacific P. P.
135-138; EC02 P. P. 140-143;  Global Intellicom.  P. P. 145-149; Global Spill P.
P.  152-155;  Golf  Ventures P. P.  157-161;  Jreck Subs P. P.  163-167;  Vector
Automotive P. P. 174-176; Viking Management P. P. 178-182.

                                        9
<PAGE>

brokers,  make clear that Veitia,  Spratt and Skalko were primary  actors at CRG
and can be held  accountable for its fraud.  See P. P. 13-14, 28, 33-37, 42, 65,
76, 88, 97, 104, 110, 19, 128, 13 140, 145, 159, 169, 174.

     Even where allegations are made generally against corporate defendants CRG,
Stratcomm or Gulf Atlantic,  individual defendants Veitia, Spratt and Skalko are
liable for those  allegations.  The Court may not dismiss the  Complaint  merely
because the Commission was not present at CRG during the fraud and cannot always
identify  which  individual  defendant did which  fraudulent act on a particular
day, which is the sort of detail the defendants  demand.  The law recognizes the
difficulty inherent in specifying individual conduct in corporate fraud cases. A
plaintiff  may  seek  to  hold  corporate  officers,   directors  and  employees
accountable for acts attributed to the corporate entity. In In re Checkers,  858
F.Supp.  1168  (M.D.  Fla.  1994),  a case  involving  a group  which  published
documents  similar to Money  World,  Judge  Kovachevich  adopted  the  following
language from In re Sahlen & Associates,  Inc. Securities Lit., 773 F.Supp. 342,
362 (S.D. Fla. 1991):

         No specific  connection  between  the  fraudulent  representations  and
         particular  defendants is necessary in cases of corporate fraud brought
         against  insiders  and  affiliates  where  the  false   information  is
         disseminated  in group  published  documents.  As long as the complaint
         describes  the  fraudulent  acts in detail and provides the  defendants
         with sufficient  information to respond, a court may presume that these
         acts have been  committed by the officers and  directors.

     Other courts have  similarly  held that it is  reasonable to presume that a
group of persons controlling the day-to-day operations of a corporation have the
ability to control the  transactions  giving rise to a securities  violation and
thus  should be held  individually  liable  for the  violation.  Wool v.  Tandem
Computers,  Inc., 818 F.2d 1433 (9th Cir. 1987);  In re MDC Holdings  Securities
Litigation,  , 754 F. Supp. 785 (S.D.  Cal.  1990)  (officers and directors of a
broker-dealer

                                       10

<PAGE>

individually  liable for  misrepresentations  in the firm's  published  research
reports).  Moreover, it is black letter law that an agent who assists in a fraud
on behalf of a principal is  individually  liable.  The  Restatement  of the Law
Second, Agency, ss. 348 states the rule:

         An agent  who  fraudulently  makes  representations,  uses  duress,  or
         knowingly  assists in the  commission of a tortious  fraud or duress by
         his  principal  or by others is  subject  to  liability  in tort to the
         injured person  although the fraud or duress occurs in a transaction on
         behalf of the principal.

         Thus,  Spratt,  Skalko and Veitia  cannot be absolved of  liability  by
arguing  that they were  working  on  behalf  of CRG or  Stratcomm.  or that the
Commission is unable to allege with greater detail the specific actions taken by
each in violating the law under a corporate aegis.

         The Complaint  makes plain that the  publication of Money World and the
other CRG  magazines  and  newsletters  used to tout stocks was a group  effort.
Roberto Veitia was the named publisher and both Spratt and Skalko wrote articles
for the  publications,  bribed brokers,  executed trades on behalf of themselves
and CRG, and otherwise were fully  participant  in the scheme to defraud.  Since
they  each had the  ability  to make  management  decisions  and  conduct  CRG's
business  affairs,  they  can  each be held  accountable  for  omissions  in the
published documents and the resulting fraud. It is immaterial that the Complaint
does not describe this conduct in further detail.  To hold  otherwise,  as these
defendants wish,  would mean that no individuals  could be defendants in a fraud
carried out under a corporate veil, since few plaintiffs would have been present
at the time of the fraud to detail which defendant  undertook  which  fraudulent
act.

         The defendants are merely  attempting to shield their misconduct with a
corporate  smoke  screen.  The wisdom which denies  defendants  this shield when
trying to dismiss a  complaint  is  especially  compelling  when,  as here,  the
defendants  chose not to describe their activities under oath when subpoenaed to
do so. To this day, the  defendants  have not informed the  Commission  of their
specific  duties  in CRG and its  associated  entities.  But  neither  have they

<PAGE>

presented  any  evidence  to the  Court,  in the form of sworn  declarations  or
testimony under oath,  contesting  that they each had a substantial  role in the
fraudulent scheme.  The Commission,  on the other hand, has fairly described the
general  responsibilities of each individual  defendant,  and identified them as
principal managers of the fraud. At this stage of the proceedings,  the Court is
obliged to take the  allegations of the Complaint,  and inferences  fairly to be
drawn from them, as true and deny the motions to dismiss.

         C.        Defendants' Rule 9(b) Arguments Are Without Merit

The  defendants  make  essentially  the same set of arguments that the Complaint
fails to plead  fraud  with  sufficient  particularity  and they  support  these
arguments  by cobbling  together a  seemingly  random  collection  of cases from
various  circuits.  The defendants'  principal  arguments are that the Complaint
unfairly  lumps them  together  without  establishing  that each  defendant is a
primary  violator" and that it fails to allege sufficient detail about dates and
times of fraudulent acts. These arguments have no merit.7

                  1.        The Defendants Are Not Impermissibly "Lumped"
         Each of the defendants argues that the Complaint  improperly lumps them
together.  Skalko  adds  the  closely  related  argument  that  in  lumping  the
defendants  the Complaint  fails to establish  that each is liable as a "primary
violator." Both arguments are wrong.

------------------

     7 Stratcomm also argues that it is not liable as a control person for CRG's
conduct. This issue is addressed in the plaintiffs companion memorandum opposing
the motions to dismiss filed by CRG, Stratcomm, Gulf Atlantic and Veitia.

                                       12

<PAGE>
         First, as described in Section II.B. above,  Veitia,  Spratt and Skalko
are liable as principal  managers for the  fraudulent  actions of the  corporate
defendants. Second, also as described above, since all three declined to testify
when   subpoenaed  to  do  so,  and  more  specific   information   about  their
responsibilities  at CRG is in their  control,  the  plaintiff  is  entitled  to
additional  latitude when the Court  assesses the  pleadings for  particularity.
Third,  the Complaint  itself puts the lie to contentions that the plaintiff has
merely lumped all defendants  together.  The Gomez defendants,  for example, are
alleged to have participated in the fraudulent scheme with respect to only eight
of the 14 issues in which the CRG defendants participated.  (P. 200). Defendants
Ammonia Hold,  Michael Parnell and Jack R. Rodriguez are alleged to have schemed
to defraud with respect to only one issuer each. (P. P. 207, 202).8

     Rule 9(b) and the relevant case law require only that the Complaint contain
allegations about an individual's violative conduct in connection with the fraud
in order to establish  primary violator  liability.  It does not require that an
individual commit every act in a scheme to defraud.  Individuals may each Commit
separate acts of fraud that, when taken together,  constitute a scheme to commit
fraud.  In re Checkers  Securities  Litigation,  , 858 F. Supp.  1168 (M.D. Fla.
1994)  ("Any  person or entity  who  employs  a  manipulative  device or makes a
material  misstatement  or omission on which a purchaser or seller relies may be
liable as a primary violator. "). Silence or inaction may constitute substantial
assistance sufficient for primary

-------------------------

     8 The  Complaint  also is not faulty for grouping  Stratcomm,  CRG and Gulf
Atlantic.  Stratcomm owns CRG and Gulf Atlantic,  all three  companies  operated
from the same  facilities  and all three were  operated  by  Veitia,  Spratt and
Skalko,  who declined to testify about the  differences in  operations,  if any,
among the three companies.  (1110-15).  No meaningful gain resultsfrom detailing
with  greater  precision  which  of  these  companies   committed  a  particular
fraudulent act on a particular  day, even if that were possible,  since there is
no  meaningful  distinction  between the  companies  and none is asserted by the
defendants.

                                       13
<PAGE>

liability  if the  party  has a  conscious  intent  to  further  the  fraudulent
activity.  Metrahealth  Insurance Company v. Anclote Psychiatric  Hospital Ltd.,
1997 WL  728084,  at *3 (M.D.  Fla.  1997),  quoting  Woodward  v. Metro Bank of
Dallas, 522 F.2d 84, 96-97 (5th Cir. 1975). See also U.S. v. Funt, 896 F.2d 1288
(11th  Cir.  1990)  (personal  involvement  is not  required  after a  defendant
involves himself in a fraudulent  scheme-,  he may be liable for the acts of his
co-schemers).
         The  Commission's  Complaint  pleads facts that  establish that Veitia,
Spratt and Skalko each committed  essential,  violative acts  sufficient to make
them principal  violators  under the securities  laws. The acts they  committed,
taken together,  comprise a wide-ranging  fraudulent  scheme.  For example,  the
Complaint  alleges that Spratt executed  agreements to perform public  relations
work with CRG's  clients  in  exchange  for stock (P.  178),  scalped  stock for
personal profit (P. 180),  scalped stock for the benefit of CRG (P. P. 46, 182),
bribed  brokers to push the stock of CRG's clients (P. 61),  shorted Delta stock
while CRG was promoting it to lock in profits (P. P. 65, 66, 70-71,  78, 82-83),
wrote an article for Rumor Mill touting  Delta stock without  disclosing  his or
CRG's  financial  interest  (P. P.  84-85),  shorted  Ammonia Hold while CRG was
promoting it to lock in profits (P. P. 88, 92),  received  finders fees from CRG
for bringing in new clients to keep the scheme going (P. 94), and touted Ammonia
Hold in Money World without making proper disclosures (P. P. 103-105).

         The Complaint alleges that Skalko executed agreements to perform public
relations work with CRG's clients in exchange for stock (P. 174),  scalped stock
for personal  profit (P. 180),  scalped  stock for the benefit of CRG (P. P. 46,
182),  bribed  brokers  to push the stock of CRG's  clients  (P.  61),  received
finders  fees from CRG for  bringing in new clients to keep the scheme going (P.
94), and touted  Global Spill in Money World  without  disclosing  his financial
interest (P. P.

                                       14
<PAGE>

53-155).9  These  allegations  are  sufficiently  particular  under  Rule 9 even
without considering the fact that the trio of individual  defendants declined to
shed light on their own roles by testifying.

         Authorities  relied upon by the CRG  defendants  involve  complaints in
which boilerplate was substituted for pleading of facts. The complaint in Brooks
v. Blue Cross Blue Shield,  116 F.3d 1364 (11th Cir. 1997),  alleged  misconduct
"during  the last 12  years,  since  1983" and  provided  no  details  about the
individual  defendants.10 The Eleventh Circuit merely held that a Complaint must
include  allegations  that are sufficiently  detailed to "reasonably  notify the
defendants  of their  purported  role in the fraud."  Brooks,  116 F.3d at 1382,
quoting  Midwest  Grinding  v.  Spitz,  976  F.2d  1016  (7th  Cir.  1992).  The
Commission's Complaint in the instant matter does precisely that. Veitia, Spratt
and Skalko are charged as principals of the CRG corporate defendants jointly and
severally  liable for the  fraudulent  conduct  undertaken in the names of those
companies.  The fact that the Commission was unable to identify specific conduct
by the individual  actors in some instances does not mean the defendants are not
liable for the overall conduct of the companies which they jointly directed.

     Likewise, the complaint in United States v. Magellan Health Services, Inc.,
1999 WL 10513 10  (M.D.  Fla.  1999),  lacked  any  detail.  It  identified  the
defendants only as "Norththrop  employees" without identifying any individual or
claim involved in the fraud. The complaint was

------------------
     9 For  additional  descriptions  of Spratt's  violative  acts see, P. P. 4,
27-28, 3 5, 52-5 5, 5 8, 110, 113, 119,  125-131,  134, 136, 141, 143, 145, 153,
155, 161, 184, 187; for Skalko see, P. P. 4, 27-28, 36, 52-55, 58, 34, 136, 169,
184, 187.

     10 The defendants fail to point out that the Brooks Court never reached the
Rule 9(b) issue. The case was dismissed on a summary judgment motion for reasons
unrelated to the defects of the Complaint.

                                       15
<PAGE>
equally  deficient  with  respect to  identifying  the time period of the fraud,
alleging  that it took place  "beginning  on an  unknown  date prior to 1989 and
continuing to the date of this complaint." Magellan 1999 WL 1051310 at *16.   11

                  2.       The Complaint Is Pled In Sufficient Detail

     The  defendants   also  argue  that  the  Complaint   includes   conclusory
allegations  rather  than  detailed  allegations  of the  fraudulent  acts.  For
example,  Veitia  argues  that "to  satisfy  Rule 9(b),  [he] is  entitled to be
informed  of the time and place  each  statement  was made  which  contained  an
omission, what statements were made, the manner in which they were made and what
the defendants received from the alleged fraud." Veitia Mem. p. 23. CRG and Gulf
Atlantic  echo this  lament  when they allege that the "times and content of the
representations are not alleged." CRG Mem. p. 4.   12
         The Complaint provides sufficient detail about each defendant's role in
a stock scalping scheme to allow him to frame a response. The cover dates of the
various CRG publications in which issuers were "pumped" are identified. The time
frames in which stock was bought and sold are similarly  described.  Contentions
that the Commission must identify "the place, manner or

-----------------
     11 Veitia's  reliance on Schultz v Rhode Island Hosp.  Trust Nat.  Bank, 94
F.3 d 721 (1" Cir. 1996),to support his "lumping"  argument is equally misplaced
but requires even less  analysis.  The Court  dismissed  RICO claims  against an
innocent  escrow agent because the  complaint  failed to establish the agent was
connected in any way to the alleged fraud.  The Commission's  Complaint  clearly
establishes such a connection in the case of each of the defendants.

     12 Skalko  asserts  that the  Complaint  "fails to identify  any person who
relied on the article in purchasing or selling a security. Indeed, the Complaint
does not identify even one reader of the article, much less any investors at all
who were misled by any of the publications..."  Skalko Mem. p. 9. However, as is
described more fully at pp. 22 of the Plaintiffs Memorandum in Opposition to the
Gomez defendants'  motion to dismiss,  such reliance is not even an element of a
securities fraud claim brought by the Commission based on material omissions and
misrepresentations.

                                       16
<PAGE>

recipient of the alleged misrepresentations" in greater detail and other claimed
flaws constitute nothing more than a demand for detailed evidence, something the
Federal Rules clearly do not require. There is no requirement, for example, that
the  Complaint  identify  the date of each of hundreds  (perhaps  thousands)  of
securities  purchases  and  sales  in  14  different  securities  in  which  the
defendants failed to disclose their fraudulent conduct. As noted at pp. 4-5, 8-9
and 21-22,  herein, the alleged fraud is largely one of material omissions,  not
affirmative misrepresentation, but specific language used by CRG to promote each
issuer is included  in the  Complaint.  The  defendants  cannot  claim they have
insufficient notice of what is alleged against them.

     Defendants'  citation to SEC v. U.S.  Environmental.  Inc., 897 F.Supp. 117
(S.D.N.Y.  1995), is yet another instance in which the defendants  inadvertently
highlight the strength of the instant Complaint compared to those which have not
passed muster.  No paragraph in the U.S.  Environmental  complaint alleged facts
relating the defendant to the claimed violation. Id. at 12 1, This is not a case
in which  summary  allegations  have been made  without also  alleging  facts to
support the allegation, as is thoroughly evident from the body of the Complaint,
which alleges numerous  published  statements in which the defendants  failed to
disclose their fraudulent conduct.
         In short,  the defendants  demand a level of precision in drafting that
was never  anticipated by the Federal Rules of Civil  Procedure.  The defendants
have  sufficient  notice of what is alleged against them, and are themselves the
source of additional  detail if they need it. The  Complaint  meets all relevant
pleading  standards and the Court should deny  defendants'  wasteful  efforts to
dismiss this case.

                                       17

<PAGE>

III.      THE COMPLAINT PROPERLY STATES CAUSES OF ACTION UNDER
          THE SECURITIES LAWS

         A.       The Elements of a Securities Fraud Claim

Material  misrepresentations  and omissions in  connection  with the purchase or
sale of any security are unlawful  under  Section  10(b) of the Exchange Act and
Rule 10b-5  promulgated  thereunder.  An  omission is  "material"  if there is a
substantial likelihood that a reasonable investor would consider an omitted fact
significant in making his or her decision to buy, sell or hold a security. Basic
v. Levenson, 485 U.S. 224, 232 (1988); TSC Industries,  Inc. v. Northway,  Inc.,
426 U.S. 438 (1976).  Scienter,  or a "mental state embracing intent to deceive,
manipulate, or defraud," is required. Ernst & Ernst v. Hochfelder,  425 U.S. 185
(1976).
     The failure to disclose a practice of selling stock while touting the stock
to the public has long been held to operate as a fraud or deceit upon  investors
as defined by Rule 10b-5.  In SEC v. Capital Gains  Research  Bureau,  Inc., 374
U.S. 180 (1963),  the Supreme Court held that scalping," a practice  whereby the
owner of shares of a security  recommends  that security for investment and then
immediately sells those shares, is a fraud on a client or prospective  client of
an investment adviser.  Similarly,  in Zweig v. Hearst Corp., 594 F.2d 1261 (9th
Cir.  1979),  the Ninth  Circuit  held that a financial  columnist's  failure to
reveal his practice of  "scalping"  the stocks of companies he wrote about was a
material  nondisclosure  creating  liability  under Rule 10b-5.  See also SEC v.
Huttoe,  Civ.  Action 96-2543 (D. D.C. Sept. 14, 1998),  Ex. 1, hereto  (holding
that the employee of a newsletter violated Rule 10b-5 when he failed to disclose
that he sold  stock in  contravention  of  recommendations  to the  public  in a
newsletter for which he wrote).

                                       18

<PAGE>

Failure adequately to disclose  compensation for promoting  securities  violates
Section 17(b) of the Securities Act. Touting becomes part of a fraudulent scheme
when  accompanied  by the tout's  undisclosed  selling of the  securities  he is
recommending to the public.

         B.      The Complaint Adequately Alleges Scalping by the CRG Defendants
The Complaint,  in its detailed  description of CRG's scalping  scheme,  alleges
facts  sufficient  to establish  each of the elements of  securities  fraud with
respect to 14 different issuers. Defendants contend that (i) the Complaint fails
to allege facts sufficient to hold them as "primary" fraud defendants; (ii) that
it does not establish that any omission was  "material";  (iii) that it fails to
allege facts  sufficient to show the fraud was "in connection with" the purchase
or sale of  securities;  and (iv)  that it fails to allege  that the  defendants
possessed the requisite  "scienter." In the  alternative,  the defendants  argue
that  adequate  disclosures  were made to defeat a fraud claim based  largely on
omissions of material information.    13

         In  asserting  that the  Complaint  fails to set forth the  elements of
securities  fraud, the defendants  misconstrue the law and ignore their exposure
as managers of the corporate  defendants.  Their  alternative  contention  -that
their activities were adequately disclosed -proves how obtuse the defendants are
to their own wrongs and raises issues of disputed  fact which are  inappropriate
for resolution under Rule 12(b)(6).

-------------

13 CRG,  Gulf  Atlantic  and  Stratcomm.  also  argue  that  the  violations  of
Regulation S fail to state a claim and, along with Veitia, that Section 17(b) is
unconstitutional.  These  arguments are addressed in the  Commission's  separate
memorandum in opposition to the motions by these defendants.

                                       19

<PAGE>

            1.       Each Defendant Was a Primary Violator of the Antifraud Laws

     The leading  argument of each  individual  CRG defendant is that hell's not
alleged to have  personally  made an actionable  misrepresentation  or omission.
This argument shares the fallacies offered in the defendants' Rule 9(b) attack.-
Relying only on those paragraphs in which a defendant is specifically named, the
defendants  assert that since only a part of the fraudulent  conduct is ascribed
to them, they cannot be a primary  defendant.  As was fully described at section
II.B.,  herein, the Complaint alleges that each of the individual CRG defendants
had a  significant  managerial  role at the CRG  companies and the law permits a
plaintiff to ascribe generally the unlawful conduct of the corporate  defendants
to such individuals.

         This is not a case, as Spratt and Skalko would have the Court  believe,
that alleges a conspiracy" among the defendants.  Spratt argues that "the law in
the civil  securities  law arena  does not  provide  for what is  tantamount  in
substance  to  thinly-veiled  allegations  of secondary  liability  based upon a
conspiracy  theory,"  while  Skalko  asserts  that the "SEC's  reliance  on such
allegations is but a transparent  attempt to hold defendant Skalko liable on [a]
discredited  conspiracy theory of liability." Spratt Mem. at 11-12;  Skalko Mem.
at 13-14.  Spratt  and  Skalko,  in a classic  demonstration  of the  rhetorical
technique of defeating  the straw man,  wrongly  characterize  the  Commission's
Complaint in this fashion so that they can spend several  paragraphs arguing the
irrelevant  proposition  that the  securities  laws do not  entertain  causes of
action based on conspiracy.

     The Complaint alleges that each of the CRG defendants is a primary violator
of the  securities  laws  and  describes  willful  acts  undertaken  by  them in
furtherance of the fraud.  This is not a case of aiding and abetting a principal
wrongdoer,  as was addressed in Central Bank of Denver, N.A. v. First Interstate
Bank of Denver, N.A., 511 U.S. 164, 177-78 (1994), cited by the

                                       20

<PAGE>

defendants.  Rather,  the CRG defendants  willfully violated the securities laws
directly by recruiting companies whose stock they then touted and sold, with and
through  other  defendants.  The fact that  Veitia,  Spratt and Skalko acted "in
concert  with and at the  direction  of" each other  does not  shield  them from
liability as principal  violators of the securities laws. In re Blech Securities
Litigation,  961 F  Supp.  569,  581  (S.D.N.Y.  1997).  As  the  Supreme  Court
recognized in Central Bank, "secondary actors" in a securities fraud may be held
liable as  primary  violators  if they  employ a  manipulative  device or make a
material  misstatement  or omission on which a purchaser or seller of securities
relies.  The court noted that "in any complex  securities fraud,  moreover there
are likely to be multiple  violators..."  Central  Bank,  511 U.S.  at 191.  The
complaint  states  primary  violations  by each of the  CRG  defendants  by both
alleging  individualized  conduct  when  known  group  conduct  on behalf of the
corporate entities they managed.

2.       The Omissions and Misrepresentations Were Material

     CRG's practice of scalping stocks is clearly "material information" because
it is  information  that a  reasonable  investor  would  want to  consider  when
deciding  whether to  purchase  or sell a stock.  A  reasonable  investor  would
presumably give greater credence to a recommendation to purchase stock made by a
disinterested party than a recommendation made by someone who is paid to promote
the stock at the same time he is selling it.  Indeed,  as described  above,  the
Courts  have long held that such an  omission is  material.  See Huttoe,  Ex. 1,
hereto,  po. 13; Zweig,  594 F.2d at 1266; U.S. v.  Eisenberg,  773 F. Supp. 662
(D.N.J.  1991)("That the defendants were materially interested in the securities
at issue would  certainly be viewed as material by the investing  public because
such  information  would reflect on the  credibility  of the  statements").  The
complaints repeated descriptions of the nature of CRG's scalping scheme, and the
failure to disclose the scheme,  adequately establishes the materiality standard

<PAGE>

for Rule lOb-5 and Rule 12(b)(6) purposes.  In any event, whether an omission is
material is normally a question of fact, not subject to a motion to dismiss.  In
re Apple Computer Securities  Litigation,  886 F. 2d 1109, 1113 (9th Cir. 1989),
citing Basic, Inc. v. Levinson 485 U.S. 224 (1988);  Vicinisch v. Paine, Webber,
Jackson & Curtis, Inc., 739 F. 2d 1434, 1436 (9th Cir. 1984).

         3.        The Fraud Was "In Connection With" the Purchase or Sale of
                   Securities

         CRG's omissions were made "in connection  with" the purchase or sale of
securities  because the CRG defendants  for at least a two-year  period (1) were
buying stock, directly and through the Gomez defendants, from issuers and on the
market;  and (2) were  selling  stock  in their  own  names  and  those of their
co-defendants,  all without  informing  actual or  potential  buyers and sellers
either that they were  selling  stock  while  touting it or were using the Gomez
defendants  to  "wash"  unregistered  stock  which  they,  in  effect,  owned or
controlled, to increase the amount of stock they could scalp.

         Additionally,  the Complaint alleges that CRG published Money World and
other publications that were designed "to showcase  recommendations to investors
of  securities  that CRG was paid to promote." (P. 28). The plain meaning of the
phrase,  the  prevailing  case law and common sense compel the  conclusion  that
publication  of a monthly  magazine  that touts  stocks to investors is done "in
connection with" the purchase of securities.

         The  Complaint  contains  specific  allegations  of buying and  selling
securities  with  respect  to  each of the 14  issuers  that  establish  the "in
connection  with"  element of Rule lOb-5.  (P. P. 27,  30-33 35-37,  41-42,  55,
59-60, 66, 68-84, 87-88, 92-94, 97, 101-103, 108-121, 125-131, 134-137, 141-142,
145-148, 152-154, 157-160, 163-166, 169-171, 174-175, 178-181).

                                       22
<PAGE>

         4.     The Complaint Clearly Alleges Willful Acts Constituting Scienter

         The actions alleged in the Complaint -- recruiting  customers,  bribing
brokers,  arranging  for the Gomez  defendants  to  purchase  stock,  buying and
selling stock, promoting stocks in CRG publications and disguising or minimizing
disclosure  of  compensation  are willful  acts that  evidence  the  defendants'
extreme recklessness and conscious disregard of the securities laws. These facts
establish  the  requisite  scienter for  securities  fraud.  See Bryant v. Avado
Brands Inc., 187 F.3d 1271, 1286 (11th Cir. 1999) (a securities  fraud plaintiff
must plead  scienter  with facts that give rise to a strong  inference  that the
defendant acted in a severely reckless fashion);  Beck v. Manufacturers  Hanover
Trust  Co.,  820 F.2d 46, 50 (2d Cir.  1987) (a  plaintiff  need  only  identify
circumstances  that indicate conscious behavior by the defendants to satisfy the
pleading requirements of scienter).

     Certainly,  the  allegations  in the  Complaint  constitute  circumstantial
evidence of scienter,  and it is well settled that scienter may be inferred from
circumstances.  "The proof of scienter  required in [securities]  fraud cases is
often a  matter  of  inference  from  circumstantial  evidence.  Me  have  noted
elsewhere that  circumstantial  evidence can be more than sufficient."  Herman &
MacLean v. Huddleston,  459 U.S. 375, 390-91 n. 30 (1983). See SEC v. Adler, 137
F.3d  1325,   1340  (11th  Cir.   1998)   (evidence  of  suspicious   timing  of
communications  and trading may support an inference of bad faith and scienter).
Moreover, as noted, supra, Rule 9(b) does not require that scienter be pled with
particularity.  Stem v.  Leucadia  National  Corp.,  844 F.2d 997,  1003-04 (2nd
Cir.),  cert.  denied,  488 U.S. 852 (1988) (knowledge and intent may be alleged
generally;  great  specificity  not  required in pleading  scienter).  "A strong
inference of scienter can be  established  by showing  conscious  misbehavior or
recklessness on the part of the defendant."

                                       23

<PAGE>

In re Blech  Securities  Litigation,  , 961 F. Supp.  569, 581 (S.D. N.Y. 1997),
citing Shields v. Citytrust  Bancorp.,  Inc., 25 F.3d 1124 (2 d Cir. 1994) (sham
transactions "in concert with and under direction of' another  defendant held to
sufficiently allege scienter' ,
         Finally,  the Complaint  sufficiently  establishes scienter by alleging
that the defendants engaged in the same willful, reckless conduct not just once,
but in connection with 14 different  securities over a two year period. As such,
scienter is alleged 14-fold.

                  5. Whether the Purported Disclaimers in CRG Publications
                     Constituted Sufficient Disclosure Under Either The
                     Antifraud or Anti-Touting Provisions Are Questions of
                     Disputed Material Fact Not for Resolution at this Time

Defendants  contend that CRG's  publications  contained  language  that informed
readers that CRG was paid to promote and scalp stock.  They also purport to rely
on filings by CRG clients disclosing compensation to CRG as a shield against the
touting and antifraud violations.  That is, the defendants contend that they (or
their clients)  disclosed their fraud (or, at least,  compensation  for touting)
and, therefore, the defendants cannot be found liable under what are essentially
disclosure statutes.  Where their arguments are not false on their face, they at
best  raise  issues of  disputed  material  fact which are not  appropriate  for
resolution as either a Rule 12(b)(6) motion or, at least at this time, a Rule 56
motion for summary judgment.

         In support of their  argument  the  defendants  attached  13  different
copies of Money World and  Commission  filings by seven of the fourteen  issuers
whose  stock was  scalped by the  defendants.  The  defendants  argue that their
practice of labeling certain  articles in Money World as a "Special  Advertorial
Feature" in  conjunction  with their  general  disclosure  at the end of certain
articles that CRG was "retained as investor relations counsel" adequately convey
that CRG was compensated for publishing  recommendations contained in the issue.
Further they

<PAGE>

argue that the phrase  "[o]fficers,  directors and  employees,  may from time to
time have a position in the securities  mentioned [in Money World]" contained in
some  CRG  publications  adequately  informs  readers  of their  stock  scalping
practice.  At the least,  they claim,  disclosure of  compensation to CRG by its
clients  in  Commission  filings  constitutes  disclosure  attributable  to  the
defendants.

         The  defendants'  arguments fail on legal and factual  grounds for many
reasons. Among them are:

         1 The word "advertorial" is not commonly used and conveys no meaning to
the  typical  reader.   If  anything,   the  word,   which   apparently   blends
"advertisement" and "editorial," tends to disguise rather than to illuminate the
commercial nature of the articles.  Overall,  the Money World publications are a
somewhat  sophisticated  deception in which use of editorial type, headlines and
graphics,  repeated  reference  to the touted  security in articles  not labeled
"advertorials,"  including in the  publisher's  note,  and even  devotion of the
front  cover of Money World to the subject of  "advertorials,"  are  intended to
minimize and hide what is, at most,  niggardly disclosure that an article is, in
fact, paid  advertising.  The defendants'  willful,  refusal to simply label the
"articles" advertisements evidences deceptive intent. Certainly, use of the term
"advertorial' is not a talismanic shield against touting. At a minimum,  whether
the use of the term,  and the  overall  editorial  context  in which it is used,
constitutes  meaningful  disclosure  of  payment  for  antifraud  purposes  is a
material  contested matter for  determination by the finder of fact based on the
evidence and not a matter for dismissal on defendants' motion.

         2. In any event, the term "advertorial' does not disclose  compensation
in detail sufficient to pass muster under the anti-touting  provision of Section
17(b) of the Securities Act, which requires not merely disclosure of the receipt
of compensation, but also the amount.

                                       25
<PAGE>

         3  Nor does the term  "advertorial" in any fashion  disclose that
the CRG defendants are selling  securities they are touting as "advertorials"
and elsewhere in their publications (i.e., committing scalping fraud).
         4. Many articles touting stocks named in the Complaint were not
identified as "advertorials.
         5. CRG's  "disclosure"  that it was  retained  as  "investor  relations
counsel" for its client issuers is itself deceptive and is by no means a defense
to either scalping fraud or touting.  It is extremely  doubtful that the average
investor  would believe that an "investor  relations  counsel" was being paid to
tout the  company,  or that he was being paid in company  stock,  or that he was
selling the stock while  promoting it to his readers.  In fact, the clear import
of an "investor  relations  counsel"  urging a reader to acquire a stock is that
the "investor  relations  counsel" must think the stock is a good  investment to
acquire,   not  one  that  should  be  dumped  onto  the  market  for  immediate
profit-taking. Defendants only hurt their own cause by relying on this language.

         6. For similar reasons,  stating that CRG "may from time to time have a
position in the securities mentioned" discloses neither that CRG was compensated
in stock for its touting  (rather than  investing in a stock because it believes
it to be a sound  investment)  or that  the  stock  is sold  while  it is  being
recommended.  Again,  the opposite  impression  is created,  also as part of the
somewhat sophisticated package CRG creates to hide its fraud. Presumably one who
has a position "in the securities  mentioned" would have a long position,  since
the CRG  articles are so  favorable.  As the  Complaint  alleges,  however,  CRG
usually  created a short  position in the stock,  locking in profits even before
obtaining the stock,  which it then used to "cover." This is an  extraordinarily
"bearish"  tactic,  not the kind of "position in the  securities  mentioned" one
would expect from an honest counselor recommending the stock. Without exception,
the Complaint

<PAGE>

alleges the  defendants  took  bearish  positions  in their own  accounts  while
boisterously promoting bullish positions in the same securities for others. This
is  nowhere  hinted at in any of the  copies  of Money  World  submitted  to the
Court.14

         7 Many of  CRG/Stratcomm/Gulf  Atlantic's  publications contain none of
the language on which the defendants rely.  These,  too, were used to pump stock
as part of the scalping scheme and in violation of the anti-touting provision of
Section 17(b) of the Securities Act.

         Defendants'  contention that filings by its clients with the Commission
disclosing  payment of fees to CRG somehow shields the CRG defendants is perhaps
the most  preposterous  among many such arguments in the defendants'  memoranda.
Section 17(b) puts the He to the argument by its terms:

         it  shall  be  unlawful  for  any  person.  . . to  publish  ...  for a
         consideration received or to be received directly or indirectly from an
         issuer ...  without  fully  disclosing  the  receipt,  whether  past or
         prospective of such consideration and the amount thereof

Emphasis supplied.  Clearly, the person who touts is the "any person" obliged to
disclose  the  compensation.  It cannot be  delegated  to others.  Nor would the
statute be rationally applied if the disclosure obligation could be satisfied in
a manner not reasonably  calculated to reach the tout's audience.  Disclosure of
material information must be effective to overcome fraudulent omissions.

---------------
     14 The Court in Huttoe  concluded that language such as  "personnel...  may
own shares" or  "providing  consulting  advice"  (ellipses in original)  did not
adequately disclose that newsletter  publishing  defendants were compensated for
touting.  Ex. 1, hereto, p. 14. See also In the Matter of Sky Scientific.  Inc.,
et al., 1999 WL 114405, *29-*30 (SEC ALJ Initial Decision,  March 5, 1999) (Fine
print  disclaimer  that "the publisher and its affiliates may have a position in
[the touted stock] or receive  compensation for  dissemination of information on
the company" held not to satisfy full disclosure requirement of Section 17(b)).

                                       27

<PAGE>

SEC v. Texas Gulf Sulphur Co., 401 F. 2d 833, 854 (1968).  There is no evidence,
and no  rational  reason to  believe,  that the  readers of Money  World and its
sister  publications  are also.  perusing the SEC filings of CRG's  advertisers.
Money World knows who its subscribers  are and where it circulates.  It is Money
World's obligation to make sure those same readers learn the touting is paid for
and how  much is  paid.  The  cases  relied  on by the  defendants  are  totally
inapposite.  This is not a "fraud on the  market"  case by an issuer.  This is a
case in which  specific  fraud is alleged by virtue of material  omissions  from
specific  publications used as a vehicle to scalp stock. The omissions cannot be
deemed  "corrected" by others in separate  publications  not likely to reach the
reader of CRG publications.

         Although no amount of disclosure by  issuer-customers  would excuse the
defendants from their obligations,  the filings with the Commission proffered by
the  defendants  are  proof of how  issuers  and  investors  were  misled by the
defendants'  fraud.  For  example,  in  October  1995,  Delta  reported  to  the
Commission that CRG held a large amount of Delta stock,  without also disclosing
that CRG had a substantial  short  position it created by selling  company stock
while promoting  Delta,  or that ownership  attributed to Fondo should have been
attributed to CRG. Compare Spratt Ex. 27(a) and P. 65-66 of the Complaint.

         Reliance on the filings of CRG's  customers  fails as a defense to both
fraud  and  touting  as a matter of law and of fact.  The  filings  are  instead
evidence of fraud and violations of Section 5.

IV.      ASSESSING THE REQUESTED RELIEF IS PREMATURE

         CRG and Gulf Atlantic argue that the relief  requested in the Complaint
is beyond the enumerated relief available in the Securities Act and the Exchange
Act. However,  they acknowledge that such ancillary relief has been won in other
cases.  They contend that Central  Bank v. First  Interstate  Bank,  51 U.S. 164
(1994), which addressed aiding and abetting liability

                                       28

<PAGE>

under the  statutes,  not relief,  and involved  only private  parties,  not the
Commission,  requires a  limitation  on the equity  powers of this  Court.  This
argument  is purely  fictional.  Nothing in Central  Bank  purports to limit the
power of a court to use its equity powers to fairly  correct a wrong,  including
to require defendants to disgorge all profits from any unlawful activity. SEC v.
Manor Nursing Center,  Inc., 458 F. 2d 1082 (2d Cir. 1972).  Courts have ordered
such relief in many cases since Central Bank. See, e.g., SEC v. Fischbach Corp.,
133 F. 3d 170 (2d Cir. 1997) (disgorgement of fraudulently obtained profits is a
proper remedy in securities  fraud cases);  SEC v. Palmisano,  135 F. 3d 860 (2d
Cir.  1998)  (disgorgement  remedy is within the equity  powers of the  district
court).
         In any event,  it is premature to assess the appropriate  remedy.  Such
issues should await a finding of liability.

                                   CONCLUSION

         The Complaint far exceeds the  particularity  requirements of Rule 9(b)
and plainly states causes of action for the  securities law violations  alleged.
The motions to dismiss contending otherwise should be denied.

                             Respectfully submitted,

                         James A. kidney (Trial Counsel)

                                        Jeffrey P. Weiss
                                        William McGovern

                                        Attorneys for Plaintiff
                                        U.S. Securities and Exchange Commission
                                        Mail Stop 8-8
                                        450 Fifth Street, N.W.
                                        Washington, D.C. 20549-0808
                                        (202) 942-4797 (Kidney)
                                        (202) 942-9581 (Kidney Fax)
Date: January 28, 2000                  kidneyj@sec.gov

                                       29
<PAGE>

                          UNITED STATES DISTRICT COURT

                       FOR THE MIDDLE DISTRICT OF FLORIDA

                               (Orlando Division)

UNITED STATES SECURITIES AND

EXCHANGE COMMISSION,

Plaintiff,                                     C.A. No. 99-1222-CV-22-A

                                               Hon. Anne C. Conway, Judge
V.                                             Hon. Karla R. Spaulding,
                                                 Magistrate Judge

CORPORATE RELATIONS GROUP, INC., ET AL.,

Defendants.

            PLAINTIFF'S MEMORANDUM IN OPPOSITION TO MOTIONS TO DISMISS BY
                        DEFENDANTS GOMEZ. FONDO AND OPORTUNIDAD

                                        James A. Kidney (Trial Counsel)
                                        Jeffrey P. Weiss

                                        Attorneys for Plaintiff
                                        U.S. Securities and Exchange Commission
                                        Mail Stop 8-8
                                        450 Fifth Street, N.W.
                                        Washington, D.C. 20549-0808
                                        (202) 942-4797 (Kidney)
                                        (202) 942-9581 (Kidney Fax)
Date: January 28, 2000                  kidneyj@sec.gov

<PAGE>

                                TABLE OF CONTENTS

I.        PROCEDURAL HISTORY                                                 2

II.       FACTS ALLEGED IN THE COMPLAINT                                     3
          A.   Transactions in Tracker Securities                            4
          B.   Transactions in Delta Securities                              5
          C.   Transactions in Ammonia Hold Securities                       6
          D.   Transactions in IMTECH Securities                             7
          E.   Transactions in Foreland Securities                           8
          F.   Global Intellicom, Jreck Subs and Sobik's Subs
                 Transactions                                                9

III.      THIS COURT PLAINLY HAS PERSONAL JURISDICTION OVER GOMEZ           10
          A.       The Applicable Standards                                 10
          B.       Gomez' Conduct Requires the Exercise of This Court's
                     Jurisdiction                                           11

IV.       THE COMPLAINT PROPERLY ALLEGES A SCHEME TO DEFRAUD
                   BY THE GOMEZ DEFENDANTS                                  15
          A.       The Applicable Legal Standards                           15
                   1 .      Rule 12(b)(6)                                   15
                   2.       Rule 9(b)                                       16
          B.       The Complaint States a Cause of Action Against the
                     Gomez Defendants                                       17
          C.       The Complaint Alleges Facts Sufficient to Plead
                     Scienter                                               21
          D.       Market Impact Is Not Required Where Market
                     Manipulation Is Not Alleged                            22
          E.       The Complaint Pleads Fraud With Particularity            23
          F.       Violations of Registration Statutes Are
                     Sufficiently Alleged                                   25

CONCLUSION                                                                  27

<PAGE>

TABLE OF AUTHORIMS

Federal Cases

Anthony Distributors, Inc. v. Miller Brewing Co., 904 F. Supp. 1363 (M.D.
  Fla. 1995).................................................................17
Beck v. Manufacturers Hanover Trust Co., 820 F.2d 46 (2nd Cir. 1987).........21
Bill Buck Chevrolet v. GTE Florida, Inc., 54 F.Supp.2d 1127 (M.D. Fla.
  1999)......................................................................17
Brooks v. Blue Cross and Blue Shield of Florida, Inc., 116 F. 3d 1364
  (11th Cir. 1997)...........................................................24
Bryant v. Avado Brands, 187 F.3d 1271 (11th Cir. 1999).......................10
Burger King Corp. v. Rudzewicz, 471 U.S. 462 (1985)..........................10
Calder v. Jones, 465 U.S. 783 (1984).........................................13
Central Bank of Denver, N.A. v. First Interstate Bank of Denver, N.A-,
  511 U.S. 164 (1994).....................................................20,21
Chase & Sanborn Corp. v. Granfinanciera, S.A., 83 5 F.2d 1341 (11th Cir.
  1988)......................................................................13
Conley v. Gibson, 355 U.S. 41 (1957)......................................15,18
Dietrich v. Bauer, 1999 WL 126438 (S.D.N.Y. 1999)............................26
Francosteel Corp. v. M/V Charm, 19 F.3d 624 (11th Cir. 1994).................10
Friedlander v. Nims, 755 F.2d 8 10 (11th Cir. 1985) .........................16
Future Tech International, Inc. v. Tae II Media, Ltd.,
944 F. Supp. 1538 (S.D. Fla. 1996) .......................................16,17
Harper v. Blockbuster Entertainment Corp., 139 F.3d 1385, 1387 (11th Cir.
  1998) cert.denied, U. S.) 119 S.Ct. 509 (1998).............................15
Herman & MacLean v. Huddleston, 459 U.S. 375 (1983)..........................21
Howry v. Nisus, Inc., 9 10 F. Supp. 576 (M.D. Fla. 1995).....................16
In re Blech Securities Litigation, 928 F. Supp. 1279 (S.D.N.Y. 1996).........22
In re Blech Securities Litigation, 961 F. Supp. 569 (S.D.N.Y.
  1997).............................................................20,21,22,24
In re First Merchants Acceptance Corp. Securities Litigation,
1998 WL 781118 (N.D. M. 1998).....................................  .........17
In re Sahlen & Associates, Inc. Securities Litigation, 773 F. Supp. 342
  (S.D. Fla. 1991)...........................................................17
In re Southeast Banking Corp., 69 F.3d 1539 (11th Cir. 1995) ................16
In re U.S. Oil and Gas Litigation, 1988 WL 28544 (S.D. Fla. 1988) ...........16
In the Matter of Enforcement of an SEC Subpoena v. Knowles, 87 F.3d 413
  (10th Cir. 1996)........................................................13,14
Kowal v. MCI Communications Corporation, 16 F. 3d 1271 (D.C. Cir. 1994) .....17
Merrill Lynch v. Del Valle, 528 F. Supp. 147 (S.D. Fla. 198 1) ..............17
Miller v. U.S. Dept. of Agric. Farm Svcs. Agency, 143 F3d 1413 (11th
   Cir. 1998)................................................................16
Perez-Rubio v. Wyckoff 718 F. Supp. 217 (S.D.N.Y. 1989) .....................14
Perkins v. Benguet Consolidated Mining Co., 342 U.S. 437 (1952)..............13
Pinter v. Dahl, 406 U.S. 622 (1988) .........................................18
Raber v. Osprey Alaska, Inc., 187 F.R.D. 675 (M.D. Fla. 1999) ...............16
Rickman v. Precisionaire, Inc., 902 F. Supp. 232 (M.D. Fla. 1995) ...........16
Scheuer v. Rhodes, 416 U.S. 232 (1974) ............................ .........16
Sculptchair, Inc. v. Century Arts, Ltd., 94 F.3d 623 (11th Cir.
   1996) ...........................................................10,12,14,15

<PAGE>

Sears v. Liken, 912 F. 2d 889 (7th Cir. 1990) ...............................24
SEC v. Adler, 13 7 F.3 d 13 25 (11th Cir. 1998) .............................21
SEC v. Blavin, 760 F.2d 706 (6th Cir. 1985) .................................22
SEC v. Carrillo, 115 F.3d 1540 (11th Cir. 1997) ..............10,11,12,13,14,15
SEC v. Musella, 678 F. Supp. 1060 (S.D.N.Y. 1988)............................22
SEC v. Physicians Guardian Unit 1999 WL 997317 (M.D. Fla. 1999) .............16
SEC v. Rana Research, Inc., 8 F. 3 d 13 5 8 (9th Cir.. 1993) ................22
SEC v. Softpoint, Inc., 958 F. Supp. 846 (S.D.N.Y. 1997), aff'd,
  159 F. 3d 1348 (2d Cir. 1998) .............................................25
Shields v. Citytrust Bancorp., Inc., 25 F.3d 1124 (2d Cir. 1994) ............22
Stem v. Leucadia National Corp., 844 F.2d 997 (2d Cir.), cert.
  denied, 488 U.S. 852 (1988) ...............................................21
Summer v. Land & Leisure, Inc., 571 F. Supp. 380 (S.D. Fla. 1983) ...........17
United States v. Charnay, 537 F. 2d 341 (9th Cir.), cert. denied,
  429 U.S. 1000 (1976) ......................................................22
United States v. Mulheren, 938 F. 2d 364 (2d Cir. 1991) .....................26
United States v. Naftalin, 441 U.S. 768 (1979) ..............................18

Regulatory Decisions

In the Matter of Candie's Inc., SEC Rel. No. 33-7263, 1996 WL 75741 .........26

Federal Statutes

Section 2(a)(3) of the Securities Act, 15 U.S.C. 77b(a)(3)...................18
Section 20 of the Securities Exchange Act, 15 U.S.C. 78t.....................23

Federal Regulations

17 C.F.R.ss.230.901 (Regulation S)...................................4,6,7,8,24

Other Authorities

Fed. R. Civ. Proc. 8(a) ..................................................16,19
Fed. R. Civ. Proc. 9(b) .......................................2,15,16,19,21,23
Fed. R. Civ. Proc. 12(b)(6) .........................................2,10,15,18

<PAGE>

                          UNITED STATES DISTRICT COURT

                       FOR THE MIDDLE DISTRICT OF FLORIDA

                               (Orlando Division)

UNITED STATES SECURITIES AND

EXCHANGE COMMISSION,

Plaintiff,                                      C.A. No. 99-1222-CV-22-A

                                                Hon. Anne C. Conway, Judge
V.                                              Hon. Karla R. Spaulding,
                                                      Magistrate Judge

CORPORATE RELATIONS GROUP, INC., ET AL.,

Defendants.

           PLAINTIFF'S MEMORANDUM IN OPPOSITION TO MOTIONS TO DISMISS BY
                     DEFENDANTS GOMEZ. FONDO AND OPORTUNIDAD

         According to the well-pleaded Complaint,  defendants Jose Antonio Gomez
Cortes ("Gomez"), Fondo de Adquisiciones E Inversiones  Internacionales XL, S.A-
("Fondo") and C.A. Oportunidad, S.A. ("Oportunidad")  (collectively,  "the Gomez
defendants")  were  essential  partners  with  other  defendants  in a scheme to
violate the  registration  and antifraud  provisions  of the federal  securities
laws. In carrying out this scheme,  the defendants  unlawfully  sold  securities
which were  required to be  registered  with the United  States  Securities  and
Exchange  Commission.  The Gomez defendants bought and sold securities of United
States  companies in the United States,  reaped  substantial  profits from those
sales to United States investors,  maintained bank and brokerage accounts in the
United States,  and otherwise directed their activities toward the United States
and took advantage of the laws of the United States such that  jurisdiction over
each of them by this Court unquestionably meets the minimum contacts

<PAGE>

requirements of the Due Process  Clause of the Fifth  Amendment  and  associated
principles of justice and  fairness.

Further,  the  Complaint  plainly describes  unlawful  conduct by the Gomez
defendants which puts them on fair notice of the allegations against them,
consistent with Rules 12(b)(6) and 9(b) of the Federal Rules of Civil Procedure.

         The plaintiff,  the United States  Securities  and Exchange  Commission
("the  Commission"),  submits this memorandum of law to establish why this Court
has  jurisdiction  over Gomez and why the motions to dismiss the Complaint filed
by all of the Gomez defendants should be denied.1

 I.       PROCEDURAL HISTORY
         The  Complaint  is the  result  of an  extensive  investigation  by the
Commission  which lasted over three years.  The Commission staff was required to
track the tangled interplay among the defendants with little assistance from the
major individual  schemers.  All of the principals of defendants Stratcomm Media
Ltd.  ("Stratcomm"),  Corporate  Relations Group, Inc. ('CRG') and Gulf Atlantic
Publishing,  Inc. ("Gulf Atlantic") asserted their  constitutional  right not to
testify  when they  were  subpoenaed  during  the  investigation.  Investigative
subpoenas are  unenforceable  in Costa Rica,  but the  Commission  Solicited the
cooperation  of Gomez,  Fondo  and  Oportunidad  by asking  Gomez to submit to a
telephone  interview and to produce documents.  Gomez rejected the request.  The
--------------------
     1  Gomez  filed  a  memorandum  to  dismiss   separately   from  Fondo  and
Oportunidad,  although  once past his  challenge to personal  jurisdiction,  the
arguments and even the sentences in the two memoranda are nearly identical. This
memorandum is in  opposition  to both of the memoranda of the Gomez  defendants.
The Gomez  defendants also purported to adopt any arguments of other  defendants
moving to dismiss (Memoranda in Support of Motions, fn. 1 at p. 1). 'To the same
extent,the  plaintiff  incorporates herein its memoranda opposing the motions to
dismiss of other defendants.  Plaintiff is filing a separate memorandum opposing
the motions to dismiss filed by CRG, Stratcomm,  Gulf Atlantic,  Veitia, Spratt,
Skalko and Pow Wow, and a third memorandum opposing the constitutional arguments
raised in a memorandum filed by Veitia and Stratcomm.

<PAGE>

Gomez  defendants  made no effort to assist  the  investigation  and  offered no
information.  Nor did any of these CRG or Gomez defendants take advantage of the
Commission's  "Wells"  process by submitting  explanations of their behavior for
consideration  by the  Commission  when  determining  whether to  authorize  the
instant Complaint.

         Not  surprisingly,  the  failure of these  defendants  to  provide  the
Commission with any  explanation of their roles in the unlawful  conduct alleged
in the Complaint is never  mentioned in 144 pages of memoranda  filed in support
of their motions to dismiss.  Yet, central to their  contentions is a claim that
the Commission has not adequately identified the precise role of each schemer in
the fraud.  Despite the defendants'  refusal to testify,  the Complaint  plainly
identifies each defendant as having a significant  role in the scheme to defraud
and puts him on fair notice for  purposes of defending  himself.  The absence of
additional  detail is entirely  attributable to the defendants'  refusal to come
forward and provide  truthful sworn testimony  about the business  operations of
CRG, Stratcomm., Gulf Atlantic, Fondo and Oportunidad.2 II. FACTS ALLEGED IN THE
COMPLAINT

         The  Complaint  describes  a scheme to  violate  the  registration  and
antifraud  provisions  of  the  federal  securities  laws  in  which,  for  many
transactions,  the Gomez  defendants were  indispensable.  Gomez, who controlled
both Fondo and  Oportunidad  (Complaint,  P. 4)3,  worked  with  defendants  who
controlled or were essential to the operations of defendants Stratcomm and
----------------

     2 We pause only to note the irony of the defendants claiming they need more
detail  while at the same  time  bemoaning  the  length  of the  Complaint  -- a
complaint which encompasses  fraudulent  schemes involving at least 15 different
issuers. Had the defendants engaged in less fraudulent  activity,  the Complaint
would have been shorter.

     3  Hereinafter,  paragraph  symbols  alone shall refer to paragraphs of the
Complaint

                                        3

<PAGE>

Gulf  Atlantic  defendants  Roberto E.  Veitia  ("Veitia"),  James W. Spratt III
("Spratt") and James A- Skalko ("Skalko") (collectively,  "the CRG- defendants")
The scheme  involved use of Fondo and  Oportunidad  to disguise CRG's control or
ownership of securities,  many of which were issued  pursuant to Regulation S on
the basis that they were owned and  controlled  by the Costa  Rican  defendants.
(E.g., P. 30, 33, 37, 41). The Gomez defendants,  along with the CRG defendants,
realized substantial gains as CRG touted the stocks to investors while Gomez and
CRG were selling the same issues on the market.

         A.        Transactions in Tracker Securities

         In  September  1994,  Veitia  and Fondo  (controlled  by Gomez,  P. 4)4
arranged  for Fondo to appear to  purchase  785,000  shares of stock in  Tracker
Corporation  of America  ("Tracker")  in a  Regulation S  transaction  (which is
supposed to be restricted to offshore investors) at a substantial  discount from
the market price. Part of the agreement was for Fondo to pay Tracker's  $450,000
bill to CRG. (P. 47). Leonard Aronoff ("Aronoff'),  who was both CRG's corporate
counsel  and  "attorney-in-fact"  for Fondo and  Oportunidad,  opened  U.S.  and
Canadian  bank and brokerage  accounts for the Gomez  defendants to use to trade
U.S.  securities,   beginning  with  the  Tracker  transactions.  (P.  49).  The
securities were deposited in Fondo brokerage accounts in Fannie's name. However,
Fondo paid nothing for the Tracker  stock.  Instead,  the purchase was funded by
defendants Arnold Zousmer,  Charles J. Lidman and three of their associates in a
manner  arranged by CRG (P. 48), and by the proceeds of sales of the stock.  (P.
53). Roughly 40 days later,

-------------------
     4 Paragraph 4 of the Complaint warrants some emphasis since Gomez failed to
mention it in his motion or memorandum for the proposition that Gomez controlled
Fondo and  Oportunidad.  Instead,  the paragraph is mentioned  once only for the
proposition that Fondo worked at CRG's direction. (Gomez Mem., p. 5).

                                        4

<PAGE>

Aronoff  caused  516,400  shares of the stock to be registered in CRG's name and
58,560  shares in the  names of the five  U.S.  investors  who  funded  Fannie's
seeming  purchase.  Some of CRG's  shares were later  deposited  with Spratt and
Skalko. (P. P. 50-52).  CRG, Spratt and Skalko realized profits of approximately
$1.8 million by selling unregistered stock in the United States (P. 55), profits
which could not have been realized  without the active  cooperation of Fondo and
Gomez in allowing  Fondo to be used as a cover for ownership of Tracker stock by
U.S. defendants.

         The  Complaint  also  alleges  that Fondo  again  "fronted"  for CRG by
appearing to purchase Form S-8 Tracker stock,  which is stock used to compensate
employees, among others. Tracker purported to sell Fondo 170,000 of these shares
for $1 per share,  but 11 days later, CRG and its associates  compensated  Fondo
for the  purchase.  A few days  later,  Fondo sold the stock and  delivered  the
proceeds  nearly  $420,000  -- back to CRG and its  associates.  (P. P.  56-59).
Again,  Fannie's willing  participation was essential so that CRG could disguise
its  ownership of Tracker stock in order  eventually to take  advantage of CRG's
promotional activities and sell the securities.

         B.        Transactions in Delta Securities

         Fondo and  Oportunidad  shared in $2.5 million  realized  selling Delta
Petroleum Corp. ("Delta")  securities.  (P. 66). In September 1995, Delta issued
CRG  256,000  shares of Delta  stock which was  restricted,  limiting  resale to
certain specified conditions under Rule 144 of the Securities Act for two years.
Two  months  later,  CRG  "sold"  117,000  shares of the  stock to Fondo,  as an
offshore purchaser. The purpose of this transaction was to appear to convert the
Delta stock to Regulation S stock,  which  eliminated the more  restrictive Rule
144  holding  period.  In a blatant  example  of the  fraudulent  nature of this
scheme,  and in violation of the specific  provisions  of  Regulation S, CRG and
Aronoff  provided  Delta with a $702,000  canceled  check 5 from Fondo to CRG as
evidence the sale of stock to Fondo was lawful.  However,  on the same day Fondo

                                       1
<PAGE>

wrote a check to CRG, CRG wrote a check to Fondo for the  identical  amount.  In
other words,  the purported  Regulation S sale was a sham.  (P. P. 67-69).  This
sham transaction was essentially duplicated a few weeks later so that all of the
remaining Rule 144 stock sold to CRG by Delta could be converted to Regulation S
stock and sold in the market more quickly. In this instance,  however,  even the
formalities of stock ownership were not followed,  as the stock was converted to
free-trading  in CRG's name, not Fannie's  without a peep of protest from Fondo.
(P. P. 75-76).

         Oportunidad  was used,  as a front for CRG in early 1996 when, at CRG's
suggestion,  Delta sold Oportunidad  115,000 shares of stock,  purportedly under
Regulation  S. This  stock,  too,  was  converted  to CRG's  use to cover  short
positions  in Delta which CRG took while  promoting  Delta in its  publications.
Oportunidad  collected  over  $703,000  from the sale of the stock,  including a
profit of nearly $154,000.  These proceeds were used to purchase $1.6 million of
Delta convertible stock, in which Fondo and Oportunidad realized profits of over
$800,000. (P. P. 177-83). One may fairly infer that the profits from these sales
likely were a payoff to the Gomez  defendants  for joining the CRG defendants in
violating  the  securities  laws  in  the  sale  of  Tracker,  Delta  and  other
securities.

         C.       Transactions in Ammonia Hold Securities

         CRG promoted  Ammonia Hold from February 1996 through at least December
1996.  During that time,  CRG acquired and then sold over one million  shares of
Ammonia  Hold  securities  in a  series  of  transactions  utilizing  Fondo  and
Oportunidad  to unlawfully  avoid  registration  requirements  of the securities
laws. CRG, Spratt, Skalko, Fondo and Oportunidad

                                        6

<PAGE>

jointly  realized profits of more than $4.7 million trading Ammonia Hold. (P. P.
87). CRG utilized Fondo in several unlawful  Regulation S transactions to secure
more than 300,000 shares of purportedly  free-trading stock as payment under the
marketing  contract it signed with Ammonia Hold. (P. P. 88-90,  91-94). CRG also
used  Fondo as a front to buy  nearly  500,000  shares of stock at an 85 percent
discount to the market price,  in purported  reliance on Regulations D and S (P.
P. 95-99),  and another 100,000 heavily  discounted shares in purported reliance
on Regulation S. (P. P. 100-102).  These  complicated and unlawful  schemes were
designed to provide  defendants with freely tradable Ammonia Hold stock.  Fondo,
CRG,  Spratt and Skalko all realized  substantial  profits from the sale of such
stock, taking advantage of CRG's touting and the scalping scheme.

         D.        Transactions in IMTECH Securities

         The  role  of  the  Gomez  defendants  in the  scheme  to  violate  the
securities laws in the sale of the stock of Information Management  Technologies
Corp. ("IMTECH") was similar to their role in the Delta scheme: Appear to be the
purchaser  of  securities  as  offshore  entities  to meet the  requirements  of
Regulation S, and avoid Commission registration requirements, while CRG actually
paid for the stock.

         On September  26,  1995,  five days after  retaining  CRG as its public
relations agent,  IMTECH agreed to sell Fondo a debenture  convertible to IMTECH
stock at a  substantial  discount to the market  price.  Spratt  began  shorting
IMTECH stock in  anticipation  of covering the short with the cheap IMTECH stock
which Fondo would obtain by  converting  the  debenture.  CRG and  defendant New
Concepts, both domestic entities,  covered Fannie's costs of the debentures. (P.
P. 109-11).  In December,  Fondo exercised its right to convert the debenture to
stock pursuant to Regulation S, obtaining the stock at a 63 percent  discount to
the market price.

                                        7

<PAGE>

Spratt continued building the CRG/New Concepts short position.  In mid-February,
IMTECH and Aronoff had the  Regulation S  restriction  lifted from the stock and
nearly all of it was "sold" to Spratt to cover the short position in the CRG/New
Concepts  account.  CRG and New  Concepts  split  approximately  $430,000 in the
IMTECH transaction. (P. P. 112-15).

         Virtually  the same scheme was  employed  again  beginning  in December
1995, only the IMTECH stock was bought directly  pursuant to Regulation S in the
name of Oportunidad,  rather than through a debenture sold to Fondo.  Again, CRG
and New  Concepts  covered  the cost of  acquisition  of the stock.  Again,  the
restrictive  legend was cancelled two months later and the stock used to cover a
short position  created by Spratt on behalf of CRG and New Concepts.  This time,
CRG and New Concepts  split profits of over  $446,000.  (11116-20).  Again,  the
Gomez  defendants were integral to CRG and New Concepts being able to sell short
IMTECH  securities  while  promoting the company,  confident  they had the stock
(which should have been registered, but was not) in hand to cover the short when
it became prudent to do so.

         E.        Transactions in Foreland Securities

         In  April  1996,  Foreland  Corporation  ("Foreland")  retained  CRG to
perform  promotional  activities,  which it did  from  approximately  June  1996
through at least  December  1996.  During the period in which CRG was  promoting
Foreland,  CRG, Fondo and Spratt realized a combined profit of over $1.5 million
selling Foreland securities. (1125).

         Fondo  acquired  650  convertible  preferred  shares with  Regulation S
restrictions  from  Foreland,  half of  which it soon  converted  into 15 1,73 5
purportedly  unrestricted shares, most of which Spratt used to cover an existing
short  position  in  Foreland  common  stock  and  Skalko  used to cover a short
position maintained by Pow Wow. After Foreland's registration statement was

                                        8

                                       2
<PAGE>

declared  effective,  Fondo  converted its  remaining  325 share of  convertible
preferred  stock into  another 15 1,73 5 shares of common  stock,  most of which
Spratt  used again to cover a short  position.  By acting as a front for the CRG
defendants,  who therefore,  had a ready supply of securities they controlled to
cover their short  positions  while  promoting  Foreland,  Fondo  realized a net
profit of approximately $585,000. (P. P. 127-130).

         F.       Global Intellicom. Jreck Subs and Sobik's Subs Transactions
The Gomez  defendants,  operating at the direction of the CRG  defendants,  also
purchased  securities of Global Intellicom,  Inc. ("Global  Intellicom"),  Jreck
Subs, Inc. ("Jreck") and Sobik's Subs, Inc.  ("Sobik's") in order to provide the
defendants  more profits from CRG's scalping scheme than CRG realized in its own
name. Thus, the defendants  realized a net profit of over $500,000 from the sale
of Global  Intellicom  through  Oportunidad  and Fondo (P. 147),  netted  nearly
$740,000  selling Jreck stock through Fondo (P. 164), and  Oportunidad  realized
over $1.2  million in profits  from  selling  233,000  shares of free or steeply
discounted  Sobik's stock which Oportunidad was provided by Skalko's  investment
entity, defendant Pow Wow. (P. 170). In each of these instances, the stocks were
sold in the name of the Gomez defendants while the CRG defendants were promoting
the  stocks  in  CRG  publications.  The  highly  coordinated  nature  of  these
transactions,  as well as the  apparently  free  transfer  of  Sobik's  stock to
Oportunidad, permit the inference that these activities were coordinated as part
of the overall  scalping scheme to promote  securities  through CRG publications
while selling stock through New Concepts, CRG, Fondo and Oportunidad.

                                        9

<PAGE>

III       THIS COURT PLAINLY HAS PERSONAL JURISDICTION OVER GOMEZ
Only Gomez, among the Gomez defendants, asserts an absence of "minimum contacts"
with the forum - in this case,  the United States to warrant  jurisdiction  over
him under the Fifth  Amendment  to the  United  States  Constitution.  The short
answer to this  contention  is that Gomez,  through  the Costa  Rican  corporate
defendants  which he  controlled,  bought and sold  securities  of United States
companies on  exchanges  in the United  States,  maintained  brokerage  and bank
accounts in the United States,  and reasonably  expected to enjoy the protection
of U.S. laws in these securities and banking transactions.  These "contacts" are
more than ample to sustain the jurisdiction of this Court.  "Traditional notions
of fair play and  substantial  justice" would be offended by not requiring Gomez
to stand before the bar of this Court to defend himself against allegations that
this very conduct undermined the securities laws of this country.

         A.        The Applicable Standards

The applicable standards in establishing whether the court has jurisdiction over
a defendant  consistent  with Due Process  are whether (a) the  nonresident  has
"purposefully  directed" his activities so as to establish minimum contacts with
the forum;  (b) whether the  litigation  arises from those  activities;  and (c)
whether the exercise of jurisdiction would offend  "traditional  notions of fair
play and substantial justice." Burger King Corp. v. Rudzewicz, 471 U.S. 462, 472
(1985); SEC v. Carrillo, 115 F.3d 1540, 1542 (11th Cir. 1997); Sculptchair. Inc.
v Century Arts, Ltd., 94F.3d623,  63 (11th Cir.1996). In essence, the inquiry is
whether  the  defendant's  contacts  with the  forum  are such  that he  "should
reasonably  anticipate  being haled into court there. ' Sculptchair , 94 F.3d at
63 1, citing Francosteel Corp. v. M/V Charm, 19 F.3d

                                       10

<PAGE>

624, 627 (11th Cir.  1994).  In  addressing  these  issues,  the court "must
construe  all  reasonable  inferences  in favor of the plaintiff." Carrillo,
115 F.3d at 1542.
         The applicable  forum for minimum  contacts  purposes in a case brought
under the federal  securities laws is the United States.  Carrillo,  115 F.3d at
1544.

         B.   Gomez' Conduct Requires the Exercise of this Court's Jurisdiction
The  allegations of the Complaint,  and all reasonable  inferences  which may be
construed  therefrom,  plainly  establish  the  jurisdiction  of this Court over
Gomez.5 As described in Section II above, Gomez controlled Fondo and Oportunidad
which, in turn, opened and maintained bank and brokerage  accounts in the United
States,  acquired  securities  directly  from U.S.  corporations  in the  United
States,  retained  Aronoff as an agent in the United  States,  and  enjoyed  the
benefits  of U.S.  securities  laws and U.S.  exchanges  by buying  and  selling
securities in the United States. Gomez, as the person alleged to have controlled
Fondo and  Oportunidad,  is  subject  to this  Court's  jurisdiction  because he
directed these activities in the United States.6

         Gomez  intentionally  caused these  activities  to be undertaken in the
United  States.  They  could  not have  been  undertaken  elsewhere,  since  the
activities involved  securities traded on U.S.  exchanges.  There is no question
that these  activities  "involved some purposeful  availment of the privilege of
conducting  activities  within the forum,  thereby  invoking  the  benefits  and
protections Of its laws."  Sculptchair , 94 F.3d at 63 1. Nor can Gomez complain
that after  enjoying  the profits  and  privileges  of buying and  selling  U.S.
securities on U.S. exchanges he could not reasonably anticipate being hated into
a U.S. court to answer charges based on that buying and selling. Id.

------------
     5 None of the Gomez  defendants  has come forward with  affidavits or other
evidence to contest Jurisdiction.  The defendants'  jurisdictional arguments are
based  entirely  on the  adequacy  of the  Complaint.  Affidavits  and any other
extra-complaint  evidence  should have been offered by the  defendants  in their
moving  papers,  when the  plaintiff  could  respond,  and  should be ignored if
offered as part of the defendants' reply.

     6 Corporate  insiders such as Gomez are liable for the unlawful  activities
undertaken  by the  corporate  entity.  See  Plaintiff's  Mem. in  Opposition to
Motions of CRG, Stratcomm,  Gulf Atlantic,  Veitia,  Spratt, Skalko and Pow-Wow,
pp. 9-12, and incorporated herein by reference.

                                       11
<PAGE>

         Far fewer "minimum  contacts"  sustained  jurisdiction  against a Costa
Rican corporation and two of its officers who were charged with fraudulent sales
of unregistered  securities of the Costa Rican company in the United States. SEC
v. Carrillo, 115 F.3 d 1540 (11th Cir. 1997). The only "contacts" alleged by the
Commission  were  that  the  defendants  placed  advertisements   promoting  the
securities  in the  in-flight  magazines of two airlines  that served the United
States  (one of them a Costa  Rican  airline)  and  arranged  for two  favorable
articles  about  the  securities  to be  written  in the Costa  Rican  airline's
magazine.  The District Court also found that the defendants mailed information,
including  prospectuses and offering materials,  to persons in the United States
who initially bought the defendant's securities in Costa Rica, and that payments
for later  investments were deposited in accounts at the Miami branch of a Costa
Rican  bank.  At least  one stock  certificate  was  mailed to a U.S.  investor.
Carrillo,  115 F. 3d at  1544.  These  relatively  limited  contacts  were  held
sufficient  to establish  jurisdiction  because they were  "related to, and gave
rise to,  the  causes of action for  fraudulent  offer and sale of  unregistered
securities  because  they were the means by which the  alleged  offers and sales
were carried out." Id. at 1545.

     Maintenance of U.S. bank and brokerage  accounts  employed in the allegedly
fraudulent  transactions  also were  deemed  "availment  and  invocation  of the
benefits of the forum's laws." Carillo, 115 F.3d at 1546, citing Chase & Sanborn
Corp. v. Granfinanciera, S.A., 835 F.2d 1341,

                                       12

<PAGE>

     1345-47 & n. 10 (11th Cir. 198 8)7; Perkins v. Benguet  Consolidated Mining
Co., 342 U.S. 437, 448 (1952)  (maintaining  bank accounts in the forum); In the
Matter of Enforcement of an SEC Subpoena v. Knowles, 87 F.3d 413, 419 (10th Cir.
1996).8
         The  conduct  in  Carrillo  involved  Costa  Rican   securities,   with
apparently  only sporadic and limited  sale's in the United  States.  Gomez,  by
contrast,  ordered  extensive buying and selling of multiple U.S.  securities in
the United States,  often purchased directly from U.S. companies,  over a period
of at least two  years.  These  transactions  were on U.S.  exchanges,  executed
through  U.S,  brokers,  and the  proceeds  were  deposited  in U.S.  banks.  In
addition,  the Complaint  alleges that the companies Gomez controlled  enjoyed a
profitable,  although unlawful,  relationship with CRG a company whose principal
headquarters  are in the Middle  District of Florida.  All of the unlawful  acts
alleged in the Complaint arose directly from these multiple U.S. contacts.

         The  Eleventh  Circuit also  disposed of  arguments  by the  individual
defendants  in Carrillo that there was no  jurisdiction  over them.  They,  like
Gomez,  argued that "mere  employees"  are not  subject to suit  merely  because
jurisdiction  lies against the  corporation  that  employs them citing,  as does
Gomez,  Calder v. Jones,  465 U.S. 783 (1984).  Also,  as in  Carrillo,  Gomez's
argument  "overlooks  the  clear  import of the  Supreme  Court's  decision..  "
Carrillo,  115 F.3d at 1547. In Carrillo,  as here,  "construing  all reasonable
inferences in favor of the SEC," reveals that Gomez "effectively  controlled the
operations of the corporation." Id. To paraphrase Calder, 465

---------------
     7 "[Defendants]  conducted  numerous  international  business  transactions
utilizing their bank accounts in Miami, New York, Chicago and San Francisco. . .
Sufficient  contacts  exist in this case with the entire  United States and with
the forum state."

     8  "Those  contacts   admitted  by  Knowles  involve  an  ongoing  business
relationship  and a  brokerage  account.  They are  sufficient  to  support  the
exercise  of  specific   personal   jurisdiction   because  the  underlying  SEC
investigation concerns these admitted contacts."

                                       13
<PAGE>

U.S.  at 790,  in this  case,  Gomez  is a  primary  participant  in an  alleged
wrongdoing  directed at U.S.  residents,  and jurisdiction over him is proper on
that  basis.  As in  Knowles,  the  contacts  by Gomez with the  United  States,
individually  and as he  directed  the  activities  of his  companies,  "involve
activities  that  are  the  very  source  of  the  SEC's  interest  in  the  two
corporations." Personal jurisdiction over Gomez "would extend at least as far as
matters relating to the activities of the two corporations in the forum in which
he was a primary  participant." 87 F.3d at 418. See also Perez-Rubio v. Wyckoff,
718 F. Supp. 217, 230 (S.D. N.Y. 1989) (Because off-shore individuals knew their
conduct in connection with company  operations  would have effects in the United
States, personal jurisdiction was proper).
         There is no case for the proposition that exercise of jurisdiction over
Gomez would offend  traditional  notions of fair play and  substantial  justice.
Gomez injected his companies into the stream of securities trading in the United
States. He was a central player in a major fraud involving  millions of dollars,
many of which went to Gomez through the companies he controlled.  "Modem methods
of transportation and communication"  have substantially  ameliorated the burden
on Gomez to litigate in the United States,  Carrillo,  115 F.3d at 1547, quoting
Sculptchair  , 94 F.3d at 632. The  Eleventh  Circuit  also has  recognized  the
forum's  "obvious  interest  in  stamping  out the  type of  nefarious  economic
chicanery alleged." Carrillo,  115 F.3d at 1547 quoting Sculptchair , 94 F.3d at
632. Additionally,  the Commission has a strong interest in litigating this case
in this forum because it has no other means of obtaining  relief  against Gomez.
Carrillo, 115 F. 3d at 1547.

         Gomez' claim that jurisdiction over him is unconstitutional is based on
an obvious  fallacy.  He relies for his proposition  solely on the paragraphs of
the Complaint which specifically mention

                                       14

<PAGE>

Gomez  by  name,  and  ignores  both the many  other  paragraphs  that  identify
activities by Fondo and Oportunidad  and paragraph  four,  which plainly alleges
that Gomez controlled both Fondo and Oportunidad.  Neither Fondo nor Oportunidad
contests this Court's  jurisdiction,  and Gomez has not offered any evidence, in
the form of affidavits,  for example,  to overcome the  allegations of paragraph
four in the Complaint that he controlled Fondo and Oportunidad.9

         Under the authorities of this Circuit, this Court plainly has
jurisdiction over Gomez.

IV       THE COMPLAINT PROPERLY ALLEGES A SCHEME TO DEFRAUD
         BY THE GOMEZ DEFENDANTS

         The Gomez  defendants  move to dismiss the Complaint  pursuant to Rules
12(b)(6)  (failure  to state a claim)  and 9(b)  (failure  to plead  fraud  with
particularity). Neither argument is meritorious.

         A.        The Applicable Legal Standards
                  1.       Rule 12(b)(6)

     A motion  filed  under Fed. R. Civ.  Proc.  12(b)(6)  challenges  the legal
sufficiency of the  allegations of the complaint.  "[A] complaint  should not be
dismissed  for failure to state a claim unless it appears  beyond doubt that the
plaintiff  can prove no set of facts in support of his claim which would entitle
him to relief " Conley v.  Gibson  355 U.S.  41  (1957);  Harper v.  Blockbuster
Entertainment Corp., 139 F.3d 1385, 1387 (11th Cir. 1998) cert. denied, _U.S. _,
119 S.Ct. 509 (1998). In deciding a motion to dismiss, the Court must accept the
plaintiffs factual

---------------
     9 Gomez'  contention at p. 5 of his memorandum that "the SEC does not claim
that Mr. Gomez directed,  controlled,  or knowingly  participated in the alleged
fraudulent  scheme" is dead wrong.  The Complaint  alleges that Gomez controlled
Fondo and Oportunidad  and describes an active role by both companies.  Although
Veitia  masterminded  the scheme,  there is no law, and none cited by Gomez, for
the proposition that active  accomplices are not liable for fraud merely because
they carry out a scheme devised by another. See pp. 17-20 herein.

                                       15

<PAGE>

allegations  as true and construe the  complaint in the light most  favorable to
the plaintiff.  Scheuer v. Rhodes, 416 U.S. 232 (1974);  Miller v. U.S. Dept. of
Agric.  Farm Services  Agency,  143 F.3d 1413, 1414 (11th Cir.  1998);  Howry v.
Nisus,  Inc., 910 F. Supp. 576 (M.D. Fla. 1995).  The court may examine only the
four comers of the  complaint  in deciding a motion to dismiss.  Raber v. Osprey
Alaska,  Inc., 187 F.R.D. 675 (M.D. Fla. 1999), citing Rickman v. Precisionaire,
Inc.,  902 F. Supp.  232 (M.D.  Fla.  1995).  The test a complaint  must meet to
survive a motion to dismiss is exceedingly  low. In re Southeast  Banking Corp.,
69 F.3d 1539,  1551 (11th Cir.  1995).  Rule  12(b)(6)  motions  are viewed with
disfavor and rarely  granted.  Future Tech  International,  Inc. v. Tae E Media,
Ltd., 944 F. Supp. 1538 (S.D. Fla. 1996).

                  2.        Rule 9(b)

     Fed. R. Civ. Proc.  8(a) embodies the principle of notice  pleading,  which
requires only that a complaint include "a short and plain statement of the claim
showing  that the  pleader  is  entitled  to relief " Fed.  R. Civ.  Proc.  9(b)
provides  that "in all  averments  of fraud ... the  circumstances  constituting
fraud. shall be stated with particularity." The two rules must be read together.
"Rule 9(b) must not be read to abrogate  Rule 8. [A] court  considering a motion
to dismiss  for  failure  to plead  fraud with  particularity  should  always be
careful to  harmonize  the  directives  of Rule 9(b) with the broader  policy of
notice pleading."  Friedlander v. Nuns, 755 F.2d 810, 813 n. 3 (11th Cir. 1985).
Therefore,  a complaint need allege fraud only with particularity  sufficient to
permit "the person  charged with fraud.  [to] have a reasonable  opportunity  to
answer the complaint and adequate  information  to frame a response." In re U.S.
Oil and Gas  Litigation  1988 WL  28544  (S.D.  Fla.  1988);  SEC v.  Physicians
Guardian Unit, 1999 WL 997317 (M.D. Fla. 1999). The complaint must include "some
delineation of the underlying acts and transactions
                                       16
<PAGE>

which are asserted to constitute  fraud." Future Tech, 944 F. Supp. 1538 quoting
Merrill Lynch v. Del Valle, 528 F. Supp. 147 (S.D. Fla. 198 1), but "pleading of
detailed evidentiary matter" is not necessary.  In re First Merchants Acceptance
Corp. Securities Litigation, 1998 WL 781118 (N.D. Ill. 1998).

     The degree of specificity  required by Rule 9(b) will vary according to the
background of the parties and the  information  available to them at the time of
pleading. In re Sahlen & Associates,  Inc. Securities Litigation, , 773 F. Supp.
3 42 (S.D. Fla. 199 1), quoting Summer v. Land & Leisure, Inc., 571 F. Supp. 380
(S.D. Fla. 1983).  Less  specificity is required when the alleged fraud occurred
over an  extended  period of time and  involved  numerous  overt  acts.  Anthony
Distributors,  Inc. v. Miller Brewing Co., 904 F. Supp.  1363 (M.D.  Fla. 1995);
Bill Buck Chevrolet v. GTE Florida,  Inc., 54 F.Supp.2d 1127 (M.D.  Fla.  1999).
When, as here, the chief defendants decline to testify on constitutional grounds
or, in the case of Gomez,  decline to provide  testimony or documents  when they
are beyond the plaintiffs  subpoena power, the leniency granted the plaintiff is
even broader.  Indeed,  pleadings on  information  and belief are permitted when
"the  necessary  information  ties  within  defendants'  control."  Kowal v. MCI
Communications Corporation, 16 F. 3d 1271, 1279 (D.C. Cir. 1994).

         B.  The Complaint States a Cause of Action Against the Gomez Defendants

     The Gomez  defendants  all argue  that the  Commission  has failed to state
facts  sufficient  to  allege  that  they  engaged  in a scheme  to  defraud  in
connection with the purchase or sale of securities in violation of the antifraud
provisions of the securities laws. (Gomez Mem. p. 10;

                                       17

<PAGE>

Fondo and Oportunidad  Mem. p. 3).10 This  proposition is based on the false and
unsupported  contention that because the Commission called Fondo and Oportunidad
"nominees"  of CRG,  these  defendants  could not also be buyers or  sellers  of
securities.  This false proposition then forms the basis of another:  That since
neither Fondo nor Oportunidad  (nor Gomez,  because Gomez never recognizes he is
alleged  to be in control of Fondo and  Oportunidad)  were  buyers or sellers of
securities,  neither  could  make a false  statement  or  material  omission  in
connection  with the  purchase or sale of a security or  otherwise  be a primary
violator of the securities laws.

         Of course,  a review of the Complaint  establishes  that the Commission
has alleged that Fondo and Oportunidad,  under Gomez's control,  bought and sold
securities in their own names,  albeit as part of the fraudulent scheme directed
by CRG. Fondo and Oportunidad are not alleged to be fictional or paper entities,
but real companies  controlled by Gomez.  There is no suggestion  that Fondo and
Oportunidad  failed to take  title to the  securities  bought  and sold in their
name,  only that, as part of the scheme,  they acted at the direction of Veitia,
Spratt,  Skalko and CRG.  The Supreme  Court has long made clear in applying the
antifraud and registration  provisions of the securities laws "that transactions
other  than  traditional  sales of  securities  are  within  the  scope"  of the
definitions of buy, sell and offer in the securities  laws.  See, e.g.,  Section
2(a)(3) of the  Securities Act [15 U.S.C.  77b(a)(3)];  Pinter v. Dahl, 406 U.S.
622, 643 (1988), citing United States v. Naftalin,  441 U.S. 768, 773 (1979). In
this case,  Fondo and Oportunidad  retained title to the securities in brokerage
accounts  in  their  names  until  they  were  sold,  a  traditional,   but  not
indispensable, element of "purchase" and "sale." Id.

------------
     10 Beginning at these pages, the Gomez and Fondo/Oportunidad memoranda make
identical arguments.

                                       18
<PAGE>

As is  most  dramatically  described  in the  cases  of  Delta  and  IMTECH  but
replicated in other  transactions,  Fondo and Oportunidad  permitted CRG and its
associated  defendants  to pay for and direct  trading  in stocks  bought by the
Costa Rican  companies,  and  coordinated  their purchases and sales to maximize
mutual profit from the scalping scheme.  Any fair reading of the Complaint,  let
alone one affording all  inferences in favor of the  plaintiff,  as is required,
makes plain that the scheme described is one in which Fondo, Oportunidad and, as
the defendant  directly  controlling them,  Gomez, were active  participants who
willfully bought and sold stock to forward the unlawful scheme. In the course of
making these purchases and sales of securities, Fondo and Oportunidad omitted to
disclose to sellers, including issuers, and to buyers their participation in the
fraudulent scheme.  Among the omissions were that (a) Fondo and Oportunidad were
acting on behalf of CRG, a  domestic  U.S.  company;  (b) that,  therefore,  the
securities Fondo and Oportunidad purchased should not have been restricted under
Regulation S, but should have been registered with the Commission or not sold at
all; and (c) that these  purchases and sales of  unregistered  (and  registered)
securities  were part of a coordinated  effort in conjunction  with CRG in which
securities were promoted to the public by CRG while the CRG and Gomez defendants
sold the promoted  securities and shared the profits.  The Gomez defendants also
affirmatively  misrepresented  to issuers that they were offshore  purchasers of
securities entitled to the benefits of Regulation S when in fact CRG either paid
for the  securities  or  coordinated  the timing of their  purchase  and sale to
maximize profits on the scalping scheme.

         Ail of the above is sufficiently described in the Complaint.  The Gomez
defendants  are alleged to have engaged in a  fraudulent  scheme with respect to
the  offer,  purchase  and  sale of eight  specific  securities  (1200)  and the
unlawful sale of unregistered securities of six issuers

                                       19
<PAGE>

(P. 214). There is no  impermissible  "bunching" of the defendants as claimed in
the Gomez  defendants'  memorandum.  Rather,  appropriate  distinctions are made
based on the facts  alleged.  Thus,  the CRG defendants are alleged to be liable
for fraud in connection with the purchase or sale of 14 securities (P. 199), but
defendants Michael Parnell, Ammonia Hold, Inc. and Jack R. Rodriguez are alleged
to be liable in connection with only one. (P. P. 206, 202).

         The Complaint  alleges that the Gomez defendants are primary  violators
of the  securities  laws  and  describes  willful  acts  undertaken  by  them in
furtherance of the fraud.  This is not a case of aiding and abetting a principal
wrongdoer,  as was addressed in Central Bank of Denver, N.A. v. First Interstate
Bank of Denver,  N.A.,  511 U.S. 164,  177-78 (1994),  cited by the  defendants.
Rather, the Gomez defendants  willfully violated the securities laws directly in
the  purchase  and  sale of  securities  through  their  own  accounts,  even if
coordinated  and  directed  with or by  other  defendants.  The fact  that  some
defendants acted "in concert with and at the direction of' codefendants does not
shield them from liability as principal  violators of the securities laws. In re
Blech  Securities  Litigation,  961 F. Supp.  569, 581 (S.D.  N.Y. 1997). As the
Supreme Court  recognized in Central  Bank,  "secondary  actors" in a securities
fraud may be held liable as a primary  violator  if they  employ a  manipulative
device or make a material  misstatement  or  omission  on which a  purchaser  or
seller of  securities  relies.  The court noted that "in any complex  securities
fraud, moreover,  there are likely to be multiple violators. " Central Bank, 511
U.S. at 19 1. The Complaint alleges such activity by the Gomez defendants,  even
if they were working under the coordination of CRG.

                                       20

<PAGE>

         C.        The Complaint Alleges Facts Sufficient to Plead Scienter

         The actions alleged in the Complaint - misrepresenting  to issuers that
Fondo and  Oportunidad  were the true  buyers  of  unregistered  securities  and
coordinating  sales  with the CRG  defendants  to share  with them the  scalping
profits -- are willful acts that evidence the defendants'  extreme  recklessness
and conscious  disregard of bedrock  securities  laws. These facts establish the
requisite  scienter for securities  fraud.  See Bryant v. Avado Brands Inc., 187
F.3d 1271,  1286 (11th  Cir.  1999) (a  securities  fraud  plaintiff  must plead
scienter  with facts  that give rise to a strong  inference  that the  defendant
acted in a severely reckless fashion);  Beck v. Manufacturers Hanover Trust Co.,
820 F.2d 46, 50 (2d Cir.  1987) (A plaintiff  need only  identify  circumstances
that  indicate  conscious  behavior by the  defendants  to satisfy the  pleading
requirements of scienter).

     Certainly, the allegations constitute  circumstantial evidence of scienter,
and it is well settled that  scienter may be inferred from  circumstances.  "The
proof of  scienter  required  in  [securities]  fraud cases is often a matter of
inference  from  circumstantial   evidence.   [W]e  have  noted  elsewhere  that
circumstantial  evidence  can be more  than  sufficient."  Herman &  MacLean  v.
Huddleston,  459 U.S. 375, 390-91 n.30 (1983).  See SEC v. Adler, 137 F.3d 1325,
1340 (11' Cir.  1998)  (evidence  of  suspicious  timing of  communications  and
trading may support an  inference  of  scienter).  Moreover,  Rule 9(b) does not
require that  scienter be pled with  particularity.  Stem v.  Leucadia  National
Corp.,  844 F.2d 997,  1003-04  (2d Cir.),  cert.  denied,  488 U.S.  852 (1988)
(knowledge and intent may be alleged  generally;  great specificity not required
in pleading  scienter).  "A strong  inference of scienter can be  established by
showing conscious  misbehavior or recklessness on the part of the defendant." In
re Blech Securities Litigation, , 961 F. Supp. 569, 581 (S.D. N.Y. 1997), citing
Shields v. Citytrust Bancorp., Inc., 25

                                       21
<PAGE>

F. 3d 1124,  1128 (2d Cir.  1994) (sham  transactions  "in  concert  with and
under the  direction  of'  another  defendant  held to sufficiently allege
scienter).

         The  Complaint  adequately  alleges  scienter  by  describing  willful,
reckless  conduct  not  just  once,  but  in  connection  with  eight  different
securities over a two year period. Scienter is adequately alleged eight-fold. 11

         D. Market Impact Is Not Required Where Market Manipulation is Not
            Alleged

     The Gomez  defendants  assert  that the  Commission  must allege a specific
market impact by the defendants' wrongful conduct. The defendants are wrong. The
cases they cite for the  proposition,  United States v.  Charnay,  537 F. 2d 341
(9th Cir.),  cert.  denied,  429 U.S.  1000 (1976),  and In re Blech  Securities
Litigation, 928 F. Supp. 1279 (S.D.N.Y. 1996), each involved complaints alleging
the defendants unlawfully manipulated a market for securities.  The courts there
held that market manipulation requires market impact. The instant Complaint does
not allege that any defendant  was actually able to manipulate  the market price
of any security,  and  manipulation  is not part of the alleged fraud. In a case
such  as this  one,  in  which  the  fraudulent  scheme  is  based  on  material
misrepresentations  or omissions,  the Commission "is not required to prove that
any   investor   actually   relied  on  the   misrepresentations   or  that  the
misrepresentations  caused any investor to lose money." SEC v. Blavin,  760 F.2d
706, 711 (6 th Cir. 1985);  -SEC V. Rana Research,  Inc., 8 F. 3 d 13 5 8, 13 64
(9th Cir. 1993).
-----------------
     11 The  Gomez  defendants  assert  repeatedly  that the  Complaint  alleges
"passive"  roles.  In fact,  while  the  Complaint  alleges  they  worked at the
direction of the CRG defendants,  they were active in the fraud, as by appearing
to be  purchasers  of  unregistered  stock  while  accepting  payment  from CRG,
instructing  brokers to buy and sell stock in coordination with CRG, and serving
as the bank for CRG trading  profits  from time to time in  anticipation  of the
next fraudulent scheme, as was the case in Delta securities. (P. P. 80).

                                       22
<PAGE>

          E.       The Complaint Pleads Fraud With Particularity

         The Complaint  alleges  violations  of the antifraud  provisions by the
Gomez  defendants in the purchase or sale of eight  securities.  With respect to
each security, the participation of Fondo and/or Oportunidad - both of which are
alleged to be controlled by Gomez - are described with reasonable particularity.
Certainly,  the allegations are sufficient to put the Gomez defendants on notice
as to what  conduct is being  alleged  against  them,  which is the standard for
application of the particularity standard of Rule 9(b).

         The  contention  that "there are simply no  allegations  that Fondo and
Oportunidad knew of the touting scheme or that their transactions were a part of
it" is  controverted  by a fair reading of the  Complaint,  which  alleges eight
transactions  in which Fondo or Oportunidad  bought and sold securities on their
own behalf or that of CRG timed  specifically  to take  advantage of CRG's stock
promotions and scalping.  In nearly every instance,  Fondo and Oportunidad  were
introduced  to the issuers  through CRG. None of the Gomez  defendants  has come
forward  with  affidavits  or  admissible  evidence to contest  knowledge of the
fraud, which is both specifically alleged and fairly inferred in the Complaint.

         The  Complaint  never  alleges  that CRG  Veitia,  Spratt or Skalko are
liable for the acts of the Gomez  defendants as "control  persons" under Section
20 of the Exchange Act [15 U.S.C.  ss. 78t].  Gomez  controlled  Oportunidad and
Fondo. The Gomez defendants acted willfully to associate with CRG and coordinate
the fraud at CRG's overall direction',  as the Complaint alleges. Since "control
person"  liability is not alleged,  it is irrelevant that the Complaint does not
claim that Fondo or Oportunidad  were  established or owned by CRG or that Fondo
or  Oportunidad  are not alleged to have been created  solely for the purpose of
effecting Regulation S transactions.

                                       23

<PAGE>

The Gomez  defendants are direct violators of the securities laws, as alleged in
the Complaint,  as are the CRG  defendants.  Neither is alleged to be a "control
person" of the other.12

     The specific allegations against the Gomez defendants are in stark contrast
to the pleadings  described in the cases cited by the defendant in which motions
to  dismiss  under Rule 9(b) were  granted.  "Plaintiffs  have  pleaded no facts
linking Jofen  directly to any individual  'fraudulent'  trades on behalf of the
Edward Blech Trust and in furtherance of the alleged scheme," the Court declared
in In re Blech  Securities  Litigation,  961 F. Supp. 569, 581 (S.D. N.Y. 1997).
"The Complaint also fails to allege any particular  facts  indicating the direct
participation of Wen, or the trust of which he was the trustee...  in the scheme
to  defraud."  Id. The  "complaint  is bereft of any detail  concerning  who was
involved  in each  allegedly  fraudulent  activity,  how the  alleged  fraud was
perpetrated,  or when the allegedly  fraudulent  statements were made." Sears v.
Liken, 912 F. 2d 889, 893 (7th Cir. 1990).  "The Amended  Complaint is devoid of
specific  allegations with respect to the separate  Defendants."  Brooks v. Blue
Cross and Blue Shield of Florida, Inc., 116 F. 3d 1364, 1381 (11th Cir. 1997).

         The  same  plainly  cannot  be said  of the  instant  Complaint,  which
describes in fair detail the participation of the Gomez defendants in fraudulent
practices with respect to eight securities.  This action is more in keeping with
the pleadings against another defendant in Blech which were

-----------------
     12  Stratcomm  and Veitia  are  alleged  to be liable  for  securities  law
violations both directly and as control persons of CRG.

                                       24

<PAGE>

deemed sufficient.13

          F.      Violations of Registration Provisions Are Sufficiently Alleged

     The attack on allegations that the Gomez  defendants  violated Section 5 of
the  Securities Act by selling  unregistered  securities is a confused mess. The
defendants  state the  elements of the offense  with  reasonable  accuracy,  and
acknowledge that scienter is not among those elements. (Gomez Mem., p. 16; Fondo
and  Oportunidad  Mem.,  pp.  10-  11).  They  then  proceed  to  contend  that,
nevertheless, scienter is required because the defendants employed the offer and
sale of unregistered stock as part of their scheme to defraud.
     Of  course,  the offer and sale of  unregistered  stock  stands  alone as a
violation   of  the   securities   laws,   without   regard  to  the   companion
misrepresentations  and omissions about the  relationship  between the Gomez and
the CRG defendants  which were  instrumental to the fraudulent  scheme involving
the scalping of unregistered and registered  securities.  The leading case cited
by the  Gomez  defendants  eviscerates  their  contrary  contentions.  In SEC v.
Softpoint,  Inc., 958 F. Supp. 846, 859-61 (S.D.N.Y.  1997), aff'd, d, 159 F. 3d
1348 (2d Cir. 1998),  the defendant was found to have violated Section 5 without
reference to issues of scienter, despite the fact that he sold

---------------
     13 "The Second Amended Complaint, as it relates to Madonia, does not suffer
from the same problems that plague the complaint against Jofen.  While the trust
controlled  by Jofen and those  controlled  by Madonia  are  included in general
references to the 'Blech  Trusts' in some of (the]  paragraphs of the Complaint,
the Complaint does set forth particular acts of the Madonia trusts that indicate
direct  participation  in  a  scheme  to  manipulate  the  price  of  The  Blech
securities.  These allegations  against Madonia are not merely 'lumped' together
with the general  allegations  against the 'Blech  Trusts,'  and thus the policy
concerns  that  counsel  dismissal  of the  claims  against  Wen do not apply to
Madonia." Blech, 961 F.Supp. at 581,

                                       25

<PAGE>

unregistered, non-exempt securities as part of a larger fraudulent scheme.14 The
remaining  district court cases cited by the defendants are simply irrelevant to
any issue because they did not involve violations of Section 5 of the Securities
Act. In United States v. Mulheren, 938 F. 2d 364, 368 (2d Cir. 199 1), the Court
reversed a criminal  conviction for violating  Rule label,  an offense for which
scienter is  required,  holding that  scienter had not been proven.  No sales of
unregistered  securities  were  involved  in the  case.  The same is true of the
conduct  and ruling in  Dietrich  v.  Bauer,  1999 WE 12643 8 at * 13  (S.D.N.Y.
1999).  The last authority  cited by the  defendants,  In the Matter of Candie's
Inc.,  SEC Rel. No.  33-7263,  1996 WL 75741  (S.E.C.) at *4,  merely  describes
conduct  similar to that of the Gomez  defendants  and explains in  announcing a
settlement with the respondents that such conduct violates Section 5.
         To the extent that the  misrepresentations and omissions related to the
offer and sale of unregistered securities are part and parcel of the defendants'
fraudulent conduct,  scienter has been sufficiently  alleged, as described above
in  Section  IV.C.  In any  event,  violations  of  Section 5 as  alleged in the
Complaint do not require  scienter,  as the  defendants  acknowledge,  and stand
separately from the fraud allegations.

CONCLUSION

         For the reasons stated above,  as well as those in companion  memoranda
filed this date opposing other motions to dismiss the Complaint,  the motions of
the Gomez defendants to

--------
        14 Later in the opinion, the court described the fraudulent scheme as
one "facilitating the sale of unregistered shares." Softpoint, , 961 F. Supp.
at 863.

<PAGE>

dismiss should be denied.

                                        Respectfully submitted

                                        ____________________________________
                                        James A. Kidney (Trial Counsel)
                                        Jeffrey P. Weiss
                                        William McGovern

                                        Attorneys for Plaintiff
                                        U.S. Securities and Exchange Commission
                                        Mail Stop 8-8
                                        450 Fifth Street,N.W.
                                        Washington , D.C. 20549-0808
                                        (202)942-4797  (Kidney)
                                        (202)942-9581  (Kidney fax)

Date: January 28,2000                   kidneyj@sec.gov

<PAGE>Exhibit 10.8.1

February 10, 2000

John W. Boyd, Jr., President
B&R Employment Inc.
207 Lewis Lane
Hockessin, Delaware 19707

Re: Stratus Services Group, Inc.

Dear Jack:

We have agreed to the following amendment to the Debit-Equity Conversion
Agreement dated November 4, 1999:

      1.    Only $700,000 of the amounts owed by Stratus Services Group, Inc. to
            B&R Employment, Inc. will be converted to equity. The balance of the
            amount owed will remain debt and will be paid in full (including all
            accrued but unpaid interest) upon Stratus' receipt of the IPO
            proceeds, which is anticipated to be March 23, 2000. The payment
            will be made via wire transfer to the account you designate.

      2.    You have agreed that the Debt-Equity Conversion Agreement shall be
            extended through and including March 31, 2000.

      3.    All other terms and conditions, including incentives or other
            agreements with regard to the Debit-Equity Conversion, will remain
            in full force and effect.

Please indicate your acceptance to this agreement by signing where indicated
below.

Very truly yours,

/s/ Joseph J. Raymond

Joseph J. Raymond

JJR:lcg

Accepted and agreed to this _____ day of February, 2000

B&R EMPLOYMENT, INC.

By: /s/ John W. Boyd, Jr.
   ----------------------
  JOHN W. BOYD, JR., President

/s/John W. Boyd, Jr.
--------------------
JOHN W. BOYD, JR., Individually

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00003-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00003-of-00352.parquet"}]]