SECURITIES AND EXCHANGE COMMISSION

 LITIGATION RELEASE NO. 14828 / February 28, 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 February 26, 1996, the Honorable Reginald C. Lindsay of the U.S. District Court for the District of Massachusetts entered a civil contempt order against Renate Haag ("Haag") of Langen, Germany and Malibu, California, doing business as Haag + Partner.  The Court found Haag in contempt for failing to comply with the temporary restraining order entered against her on October 26, 1995.  Specifically, Haag failed a) to file a sworn accounting with the Court and the Commission identifying investors in her investment scheme and the monies received from the investors, and b) to repatriate investor funds.  If Haag fails to comply with the order by March 12, 1996, she was ordered to pay $5,000 per day until she fully complies with the order. 

     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.  On January 30, 1996, the Court entered a preliminary injunction against Haag.

     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, 14711 and 14804.