Nine people in Bermuda are among 47 being asked to provide evidence in the ongoing civil action brought by the United States Securities and Exchange Commission (SEC) against Lines Overseas Management (LOM) for securities fraud.

According to court documents filed in the US District Court for the Southern District of New York on August 20, the SEC is seeking depositions from the following people in Bermuda: Michael Heslop, a resident of Middle Road, Devonshire; Kevin Gunther, of Shaw Wood Road, Pembroke; Cueva Holder, of Wilderness Lane, Smith's; Richard King, of Pine Tree Lane, Somerset; Graham Redford, of Cobb's Hill Road, Warwick; Stuart Smith, of Middle Road, Southampton; Kevin Way, Susan Wilson, of Dundonald Street, Hamilton; and Kevin Winter, of Jubilee Road, Devonshire. All but Smith are also required to produce documents.

The remaining companies and individuals asked to give evidence in the court documents — which were filed on the deadline the court had set for requests for foreign discovery — are in Canada and the United Kingdom. In addition to the above-named individuals, the SEC is seeking evidence from three others while the LOM parties have asked for depositions and/or documents from 35 companies and individuals in Canada and the UK.

Yesterday a representative for LOM said the requests for evidence were standard for a case of this nature.

"LOM is unable to comment while litigation is pending, however, we note that this is not a new or unexpected development, but rather the standard next step in the discovery process which precedes all civil litigation," said Craig Petty, an LOM compliance officer.

The requests for evidence were highlighted in the most recent issue of KYC News' online Offshore Alert newsletter.

The SEC is taking civil action against the Bermuda, Bahamas and Cayman operations of LOM, as well as LOM president Scott Lines and former president Brian Lines among others.

The SEC alleges the parties took part in two fraudulent schemes to manipulate the stock prices of microcap companies Sedona Software Solutions and SHEP Technologies.

According to Offshore Alert those called to give evidence include "a stock analyst, newsletter writers, people who allegedly held shares in a nominee capacity for the Lines brothers, former employees of LOM, and officers and directors of two OTC BB-listed companies whose shares LOM allegedly manipulated, namely Sedona Software Solutions, Inc. and SHEP Technologies, Inc."

The witnesses were identified in separate motions for the issuance of letters rogatory that were filed by the SEC and the LOM parties at the US District Court for the Southern District of New York.

In a summary of the case in its motion for the issuance of letters rogatory, the SEC stated: "The Commission filed this action on December 18, 2007, in the United States District Court for the Southern District of New York against LOM (Holdings) Ltd., Lines Overseas Management Ltd., LOM Capital Ltd., LOM Securities (Bermuda) Ltd., all Bermuda corporations, LOM Securities (Cayman) Ltd., LOM Securities (Bahamas) Ltd., Brian N. Lines, a Bermuda resident, Scott G.S. Lines, a Bermuda resident, Anthony W. Wile, a British Columbian resident, Wayne E. Wile, Robert J. Chapman, William Todd Peever, a British Columbian resident, Phillip James Curtis, a British Columbian resident, and Ryan G. Leeds.

"The Commission's complaint involves two separate, but similar, fraudulent schemes to manipulate the stock prices of publicly-traded shell companies quoted on the OTC Bulletin Board: Sedona Software Solutions, Inc. and SHEP Technologies, Inc. Both schemes took place from 2002 through mid-2003 and involved the substantial participation of a Bermuda-based securities firm, defendant LOM (Holdings) Ltd. and several of its subsidiaries (collectively, "LOM" or the "LOM Entities"), and two of LOM's then managing principals, defendants (and brothers) Brian Lines and Scott Lines."

LOM is contesting all charges which the company has called "legally and factually unsound". LOM has said the SEC's civil injunctive action is part of a "long-standing pattern of harassment against LOM and its officers".

Two of the other defendants named in the SEC complaint — Phillip James Curtis and William Todd Peever — consented to judgments being entered against them on August 25, 2008, Offshore Alert reported.

"In doing so, neither admitted nor denied the allegations against them," the newsletter said. "They have both, inter alia, agreed to be permanently barred 'from participating in any offering of penny stock', an order of disgorgement of ill-gotten gains and a civil penalty to be determined at a later date, and to be deposed by the SEC for the investigation into the remaining defendants. It is specifically stated in their agreements that the settlement only covers the SEC's civil action and not any potential criminal action."