 UNITED
STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
Litigation Release No. 17317 / January 15, 2002
SECURITIES
AND EXCHANGE COMMISSION V. LOUIS M. LAZORWITZ,
J. CHARLES REIVES, TRI-STAR INVESTMENT GROUP,
L.L.C. A/K/A TRI-STAR INVESTMENT GROUP, Defendants,
AND LAZOR, LTD., Relief Defendant, Civil Action
No. 1:02-CV-0112 (N.D. Ga.)
SEC
SUES PROMOTERS OF NATIONWIDE SECURITIES FRAUD
The
Securities and Exchange Commission announced today
that it has filed a complaint against Louis M.
Lazorwitz, J. Charles Reives, and Tri-Star Investment
Group, L.L.C. a/k/a Tri-Star Investment Group,
as defendants, and Lazor, Ltd. as a relief defendant,
alleging a multimillion-dollar, nationwide, prime
bank type and other securities fraud. The complaint
charges that Lazorwitz, a Texas resident, and
Reives, a North Carolina resident, promoted the
fraudulent scheme as Tri-Star's general partners.
The complaint also charges that relief defendant
Lazor, Ltd. received ill-gotten assets from the
fraud without any legitimate claim to those assets.
The
Commission's complaint alleges that Lazorwitz
and Reives used Tri-Star to offer and sell unregistered
securities in Tri-Star to over 900 investors in
at least 35 states, and to raise over $15 million
and that Tri-Star, through Lazorwitz and Reives,
initially represented that Tri-Star would invest
in bank debentures and later claimed that it might
invest in other international trade opportunities.
The complaint also alleges that Lazorwitz and
Reives promoted Tri-Star directly and through
independent agents around the United States known
as Facilitators and led investors to expect profits
of 20% per month in so-called 13-month trading
programs, after an initial 90-day waiting period.
According
to the Commission's complaint, Tri-Star, Lazorwitz,
and Reives made material misrepresentations and
omissions of fact to investors concerning, among
other things, the use of investor funds, the expected
returns, and investment risks. For example, the
complaint alleges that Tri-Star, through Lazorwitz
and Reives, misrepresented that investor funds
would be used for lucrative trade opportunities
when, in fact, Tri-Star "invested" relatively
little of the funds collected, and never earned
significant profits. It also alleges that they
falsely represented to investors that the investors'
funds would be collateralized by an insured certificate
of deposit, that they caused false account statements
to be issued to the investors and that they failed
to disclose to investors that Tri-Star used investor
funds to pay alleged profits and commissions to
investors and Facilitators. The complaint further
alleges that Lazorwitz and Reives misappropriated
investor funds for their personal benefit.
The
Commission's complaint charges Lazorwitz, Reives,
and Tri-Star with violations of Sections 5(a),
5(c) and 17(a) of the Securities Act of 1933 ("Securities
Act") and Section 10(b) of the Securities
Exchange Act of 1934 ("Exchange Act"),
and Rule 10b-5 thereunder. The complaint also
charges Lazorwitz and Reives with violations of
Sections 206(1) and 206(2) of the Investment Advisers
Act of 1940, and with violations of the broker-dealer
registration provisions of Section 15(a) of the
Exchange Act.
http://www.sec.gov/litigation/litreleases/lr17317.htm
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