UNITED STATES SECURITIES AND EXCHANGE COMMISSION

 LITIGATION RELEASE NO. 16000 / December 14, 1998

 SECURITIES AND EXCHANGE COMMISSION v. TWO-THIRDS INTERNATIONAL INC., PETER J. ZACCAGNINO III, JOHN L. KLEIN a/k/a JOHN KLEIN LOFFREDO, MERRILL H. KLEIN AND STERLING INTERNATIONAL BAHAMAS LTD., No. 98-1324-Civ. ORL-18A (USDC M.D. Fla./Orlando Division)

 The Commission announced today that the U.S. District Court for the Middle District of Clorida issued a preliminary injunction in a pending action involving the fraudulent sale and valuation of historical bonds, including bonds issued in the 19th century by now defunct railroads and allegedly backed by gold. Following a hearing, Judge G. Kendall Sharp entered the preliminary injunction, including an asset freeze, on December 14, 1998 against Two-Thirds International, Inc. ("TTI") and its president, Peter J. Zaccagnino III, of Kissimee, Florida, and Sterling International Bahamas Ltd. ("Sterling"), and its officers, John L. Klein ("J. Klein") and Merrill H. Klein ("M. Klein") of Miami, Florida. The order, which continues the Court's temporary restraining order entered on December 1, 1998, prohibits TTI and Zaccagnino from offering and selling the bonds as investment quality instruments or offering to place the bonds in prime bank-type "trading programs." Additionally, the order prohibits J. Klein, M. Klein and Sterling from preparing and disseminating fraudulent authentication and valuation documents relating to the historical bonds.

 The order entered by Judge Sharp contains preliminary findings, including that Zaccagnino and TTI represented to investors that the historical bonds at issue had value as investments and could be placed in prime bank-type trading programs, purportedly approved by the Federal Reserve Board, that would generate exorbitant rates of return. The order also found that M. Klein, J. Klein and Sterling issued valuations stating that individual historical bonds were worth between $492,000 and $10.8 billion. The order also found that, in fact, the bonds had value only as historical memorabilia and the prime bank trading programs touted by Zaccagnino and TTI were fictitious. The Court concluded that the Commission established a prima facie case that TTI, Zaccagnino, J. Klein, M. Klein and Sterling, through their false and misleading statements, violated Section 10(b) of the Securities and Exchange Act of 1934 and Rule 10b-5 thereunder and/or Section 17(a) of the Securities Act of 1933.

 The Commission's complaint alleged that Zaccagnino and TTI raised approximately $4.8 million through the sale of the bonds to scores of investor at prices up to $330,000 each, and that Zaccagnino and TTI falsely represented that the bonds were worth up to $908 million each. The complaint included allegations that J. Klein and M. Klein misrepresented their qualifications as appraisers as well as the nature of the process used to "authenticate" the bonds prior to valuation, and that, for their services, J. Klein, M. Klein and Sterling were paid $1,500 per valuation and received a total of approximately $400,000 between April and October 1998.

 In the preliminary injunction, Judge Sharp continued the asset freeze and other provisions of the previously issued temporary restraining order as to the two named relief defendants, Best Systems, Inc. and Wonder Glass Products, Inc. The Commission's complaint alleged that the two entities received a total of more than $1.5 million in investor proceeds from the fraud.

 This is the fourth civil injunctive action filed by the Commission's Central Regional Office to halt the fraudulent sales of historical bonds of United States railroads and other entities. SEC v. Daniel E. Schneider et al., Civ. No. 98-CV-14-D (D. Wyo.; preliminary injunction issued Feb. 13, 1998); SEC v. Albert E. Carter et al., No. 98CV-0440B (D. Utah; complaint filed June 18, 1998); SEC v. Gerald A. Dobbins et al., No. 98-229 (C.D. Cal.; preliminary injunction issued May 19, 1998).

 Various law enforcement agencies worked closely with the Commission in obtaining emergency relief in this matter. The Commission wishes to thank both the Bureau of the Public Debt of Department of Treasury, and the Division of Banking Supervision and Regulation of the Board of Governors of the Federal Reserve System for their assistance in this matter.