 UNITED
STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
Litigation Release No. 17109 /August 28, 2001
SECURITIES
AND EXCHANGE COMMISSION v. LEWIS ALLEN RIVLIN,
EDWIN EARL HULING III, AND ALFRED HUASCAR VELARDE,
AS DEFENDANTS; AND Z-FINANCE, S.A., ANTHONY P.
ZIOUDAS, HEDLEY FINANCE LTD., CHRISTIAN DANTE,
AND CHRYSANTHOS CHRYSOSTOMOU, AS RELIEF DEFENDANTS,
Civil Action No. 99-1455 (RCL) (U.S. District
Court for the District of Columbia)
Court
Orders Washington Attorney Lewis Rivlin
To Pay Over $6.5 Million For Securities Fraud
The
Securities and Exchange Commission announced today
that on August 23, 2001, the Honorable Royce C.
Lamberth of the United States District Court for
the District of Columbia found Washington D.C.
attorney Lewis A. Rivlin liable for securities
fraud and ordered him to pay over $6.5 million
in disgorgement and prejudgment interest. Based
primarily on evidence adduced at a five day bench
trial in October 2000, the Court found that Rivlin
violated the federal securities laws in 1997-98
when he offered securities involving a non-existent
high-yield bank debenture "trading program"
to investors and sold $6.239 million of the worthless
securities to four investor groups, including
an Ecuadorian charity for underprivileged girls.
According
to Rivlin, the "trading program" was
based on the ability of certain individuals, known
as "commitment holders," to buy medium
term notes or debentures from the top 25 European
banks at a deep discount -- 70% of face value
-- and then resell the instruments to major investment
firms like Merrill Lynch at only a small discount,
perhaps 96% of face value, on some kind of secret
trading market. The Court found, however, that
Rivlin's "trading program" was "a
complete scam," and that none of the investor
funds Rivlin obtained was ever used in any "trading
program."
The
Court further found that "`trading programs'
do not exist," that "it is simply ludicrous
to think that any sophisticated financial institution
would sell something worth $100 for $70,"
that "there is no secret secondary market,"
and that "trading programs" are "a
variation on the `prime bank' schemes of the early
1990's, which have been the subject of numerous
public advisories" by federal agencies including
the SEC and the Federal Reserve Board.
The
Court noted that according to a credible and convincing
expert witness from the Federal Reserve Board
who testified at the trial, there are a number
of hallmarks or characteristics of financial instrument
fraud, including
-
the
use of the term "prime bank" or
an equivalent like top 50 world banks, top
25 European banks or top 100 Latin American
banks;
-
the
promise of unrealistic rates of return with
little or no risk;
-
overly
complex, nonsensical "gobbledygook";
-
an
emphasis on secrecy;
-
a
guarantee that the investors' principal is
absolutely safe because it is going into an
attorney's or some other special account,
or secured by a bond or other guarantee;
-
use
of jargon from a bucket of 30 or so bogus
terms and phrases, such as "international
banking day" and "commitment holder";
and
-
alleged
involvement in a charitable endeavor or world
humanitarian effort.
The
Court permanently enjoined Rivlin from committing
fraud in violation of Section 17(a) of the Securities
Act of 1933 and Section 10(b) of the Securities
Exchange Act of 1934 and Rule 10b-5 promulgated
thereunder, and from acting as an unregistered
broker or dealer in violation of Section 15(a)(1)
of the Exchange Act. It also prohibited Rivlin
"from any involvement in, or conduct facilitating
or relating in any way to, any program purporting
to involve trading or related activities in bank
debentures or other bank instruments." Finally,
the Court ordered Rivlin to pay $5.166 million
in disgorgement plus approximately $1.391 million
in prejudgment interest. The Court explained that
the disgorgement amount represents the $6.239
million invested by the four investor groups in
the "trading program," less amounts
recovered to date on behalf of investors, including
$873,000 the SEC obtained from relief defendants
in Greece. Of that amount, $650,000 was returned
to the Ecuadorian girls' school.
For
more information about this matter, see Litigation
Release Nos. 16934 (March 15, 2001); 16779 (Oct.
25, 2000); 16668 (Aug. 30, 2000); 16593 (June
15, 2000); 16389 (Dec. 13, 1999) and 16179 (June
8, 1999).
from:
http://www.sec.gov/litigation/litreleases/lr17109.htm
UNITED
STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
Litigation Release No. 16934 / March 16, 2001
SECURITIES
AND EXCHANGE COMMISSION v. LEWIS ALLEN RIVLIN,
EDWIN EARL HULING III, AND ALFRED HUASCAR VELARDE,
AS DEFENDANTS; AND Z-FINANCE, S.A., ANTHONY P.
ZIOUDAS, HEDLEY FINANCE LTD., CHRISTIAN DANTE,
AND CHRYSANTHOS CHRYSOSTOMOU, AS RELIEF DEFENDANTS,
Civil Action No. 99-1455 (RCL) (U.S. District
Court for the District of Columbia)
The
Securities and Exchange Commission today announced
that on March 13, 2001, the Honorable Royce C.
Lamberth of the United States District Court for
the District of Columbia issued an Order Directing
the Distribution of Disgorgement Proceeds ("Distribution
Order") in an international prime bank fraud
case involving Lewis A. Rivlin, a Washington D.C.
attorney. The Distribution Order directs the Clerk
of the Court to pay $873,000 to the Fundacion
Perez Pallarez, an Ecuadorian charity for underprivileged
girls, and a group of related individuals. This
money was repatriated from a Greek bank account
belonging to one of the relief defendants and
represents a portion of the funds stolen from
investors (see also Litigation Releases Nos. 16,779
(Oct. 25, 2000); 16,593 (June 15, 2000); 16,389
(Dec. 13, 1999) and 16,179 (June 8, 1999)).
from:
http://www.sec.gov/litigation/litreleases/lr16934.htm
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