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U.S. Securities and Exchange Commission

Cobalt Multifamily Investors I, LLC, et al.

On March 28, 2006, the SEC obtained an order temporarily restraining Cobalt Multifamily Investors I, LLC, Cobalt Multifamily Co. I, LLC, Cobalt Funding, LLC, Mark A. Shapiro, Irving J. Stitsky and William B. Foster from continuing to engage in an alleged fraudulent unregistered offering of securities. According to the complaint, since approximately July 2004, the Cobalt entities raised at least $16 million from at least 150 investors on the basis of false and misleading offering and marketing materials, and through boiler room sales tactics overseen by Stitsky, a convicted felon and a multiple recidivist.

The SEC also alleged that the defendants, among other things, operated the Cobalt entities as a Ponzi scheme, using funds of later investors to pay earlier investors a promised 8% annual return, and misappropriated investor funds.

For more information about the SECís action, you can read Litigation Release No. 19626 (Mar. 29, 2006).

The Court also appointed Anthony Paduano as Receiver. For the latest information about the Receivership, you can visit the Receiverís website. The Receiver has spent the last two years marshalling the assets of the Cobalt entities, which now total more than $1 million.

The SEC has proposed for Court approval a Plan for Distribution of Receivership Assets. You can review the Proposed Plan and the Court Order setting a timetable for Eligible Claimants to file objections on the SEC website as well as on the Receiverís website.

http://www.sec.gov/divisions/enforce/claims/cobaltmulti.htm


Modified: 07/03/2008