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SECURITIES
AND EXCHANGE COMMISSION
BOSTON, MASSACHUSETTS
LITIGATION RELEASE NO. 14804 / January 30, 1996
SECURITIES AND EXCHANGE COMMISSION v. GENE BLOCK, INDIVIDUALLY
AND
D/B/A BLOCK CONSULTING SERVICES, RENATE HAAG,
INDIVIDUALLY
AND D/B/A HAAG + PARTNER, AND ROBERT T. RILEY, JR.,
INDIVIDUALLY
AND
D/B/A THE ROBERTS GROUP (United States District
Court for the
District of Massachusetts, Civil Action No. 95-11748RCL).
The
Commission announced that on January 30, 1996,
the Honorable
Reginald C. Lindsay of the U.S. District Court
for the
District of Massachusetts granted the Commission's application
for
a preliminary injunction against Renate Haag ("Haag")
of Langen, Germany and Malibu, California, doing business
as Haag +
Partner.
The Court also scheduled a contempt hearing
against
Haag on February 26, 1996
for failing to comply with a temporary
restraining
order that was entered against her on October
26, 1995. Specifically,
she has failed to file a sworn accounting,
repatriate investor funds and identify all investors.
Under
the terms of the preliminary injunction, Haag
is preliminarily
enjoined from continuing her fraudulent offering
of securities. The
Court's order also continues a freeze on Haag's
assets, requires Haag to file a sworn accounting, orders
the repatriation
of investor funds and grants other relief.
The
relief
was entered in connection with an enforcement
action alleging that Haag was engaging in an ongoing, fraudulent
securities offering of so-called "prime bank instruments"
in violation
of the antifraud and registration provisions of
the federal securities laws.
Specifically,
the Commission alleges that since at least
October 1994, Haag has been the central figure in a fraudulent
scheme that has induced members of the public to invest
over $1
million
in her programs by promising, in some cases, returns
as high as 200%-420% annually. In addition to Haag, Gene Block of Durham, North Carolina ("Block"), doing business
as Block
Consulting Services, and Robert
T. Riley, Jr. of St. Louis,
Missouri
("Riley"), doing business as The Roberts
Group, were
offering and selling the unregistered and fraudulent
Haag +
Partner programs through various
methods, including
advertisements
on the Internet.
Previously, on August 8, 1995,
the Court entered a temporary
restraining order and asset freeze on the Commission's ex parte motion against Block.
On September 14, 1995, Block consented to the entry of a preliminary
injunction.
The
Commission further alleges that as an inducement
to potential investors, the Defendants have represented that
investors' funds would be invested in risk-free, high-yield
investment programs.
The Defendants have falsely represented that the initial investment is guaranteed against loss because
a "Prime Bank Guarantee"
will be used as security for the transaction. In
fact, there are no legitimate financial
instruments
known as "Prime Bank Guarantees."
The Defendants
have
also fraudulently represented that investors'
funds are
doubled by buying and selling "Bank Instruments."
However, the
Defendants have failed to disclose the nature of the
"Bank
Instruments,"
how the trading will generate such unrealistic returns, or the risk that the returns will not be achieved.
None
of the Defendants or their businesses are registered
with the
Commission as a broker-dealer,
nor are they associated with any broker-dealer registered with the Commission.
The
Commission alleges that the Defendants have violated
the antifraud and registration provisions of the federal securities
laws.
The Commission seeks the following relief:
(i) a
permanent injunction prohibiting the Defendants from
further
violations of the antifraud
and broker-dealer registration
provisions
of the federal securities laws; (ii) disgorgement
of the Defendants' ill-gotten gains plus prejudgment interest
thereon; and (iii) civil monetary
penalties in an amount to be
determined
by the Court.
For
further information, see Litigation Release Nos.
14598 and 14711.
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