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SECURITIES
AND EXCHANGE COMMISSION
LITIGATION RELEASE NO. 14711 / November 2, 1995
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 November 2, 1995,
the Honorable
Reginald C. Lindsay of the U.S. District Court
for the
District of Massachusetts unsealed an order entered
by the Court
on
October 26, 1995, temporarily restraining Renate
Haag ("Haag")
of Langen, Germany and Malibu, California, doing business
as Haag
+
Partner, from continuing her fraudulent offering
of securities.
The Court's order also freezes Haag's assets, requires Haag
to file a sworn accounting, orders the
repatriation of investor
funds
and grants other emergency relief.
The relief was entered
on
the Commission's ex parte motion 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.
The Court has scheduled a hearing on
the
Commission's application for a preliminary injunction
against
Haag for November 6, 1995.
For
further information, see Litigation Release No.
14598.
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