Securities Act of 1933
Release No. 7865 / June 14, 2000

Securities Exchange Act of 1934
Release No. 42940 / June 14, 2000

Admin. Proceeding File No. 3-10230

In the Matter of Allen Z. Wolfson, Michael T. Grecco, John M. Black, Jr., Spiro
Lazaretos, Robert Balsamo, Vladimir Carvallo, and Konstantinos Dino Sonitis

The Securities and Exchange Commission today instituted public administrative proceedings against the following persons:

  • Allen Z. Wolfson ("Wolfson"), age 54, is a resident of Salt Lake City, Utah;

  • Michael T. Grecco ("Grecco"), is a resident of Staten Island, New York;

  • John M. Black, Jr. ("Black"), age 42, is a resident of Jamesburg, New Jersey;

  • Spiro Lazaretos ("Lazaretos"), age 35, is a resident of Brooklyn, New York;

  • Robert Balsamo ("Balsamo"), age 27, is a resident of Northport, New York;

  • Vladimir Carvallo ("Carvallo"), age 33, is a resident of Astoria, New York;

  • Konstantinos Dino Sonitis ("Sonitis"), age 27, is a resident of Brooklyn, New York.

In the Order instituting proceedings, the Division of Enforcement alleges that, from early 1995 through September, Respondents engaged in the following unlawful conduct:

From in or about January 1999 through at least March 2000, Wolfson manipulated the public trading markets for securities issued by: Beautymerchant.com (formerly known at ATR Industries, Inc. ("ATR"); Learner's World, Inc. ("Learners"); Rollerball International, Inc. ("Rollerball"); Healthwatch, Inc. ("Healthwatch"); and HYTK Industries, Inc. ("Hytk"). In each scheme, Wolfson acquired control over a substantial amount of free-trading securities issued by the public company and, thereafter, engaged in transactions to manipulate the public market price for those securities, including paying bribes to brokers, both directly and through promoters such as Grecco, in exchange for the brokers causing their retail customers to purchase the securities.

Each of the manipulation schemes involved the following common elements: (a) Wolfson obtained control of a large block of free-trading stock, frequently issued pursuant to Rule 504 of Regulation D (the "Wolfson Shares"); (b) Wolfson caused trades to be executed on the public market to give the false appearance that there was genuine demand for the stock of the issuer; (c) Wolfson paid bribes to brokers, through various intermediaries and nominees, in exchange for the brokers creating retail demand for the Wolfson Shares; and (d) Wolfson sold the Wolfson Shares into the retail demand created by the bribed brokers. In particular, Wolfson agreed to make payments to Grecco equal to 40-70% of the gross purchases of the Wolfson Shares caused by brokers controlled by Grecco. The purpose of these kickbacks was to provide sufficient funds to Grecco to pay bribes to brokers.

Grecco participated in each of the manipulation schemes involving ATR, Learners, Rollerball, Healthwatch, and Hytk. Grecco paid bribes to brokers to cause such brokers to cause their retail customers to purchase common stock issued by ATR, Learners, Rollerball, Healthwatch, and Hytk.

Black received bribes from Wolfson and Grecco in exchange for Black causing, either directly or through other brokers controlled by Black, retail customers to purchase shares of stock issued by ATR, Learners, Rollerball, Healthwatch, and Hytk. The bribes received by Black were not disclosed to the retail customers who purchased these shares of stock.

Lazaretos received bribes from Wolfson and Grecco in exchange for Lazaretos causing, either directly or through other brokers controlled by Lazaretos, retail customers to purchase shares of stock issued by ATR, Learners, Rollerball, Healthwatch, and Hytk. The bribes received by Lazaretos were not disclosed to the retail customers who purchased these shares of stock.

Balsamo received bribes from Wolfson and Grecco in exchange for Balsamo causing, either directly or through other brokers controlled by Balsamo, retail customers to purchase shares of stock issued by Hytk. The bribes received by Balsamo were not disclosed to the retail customers who purchased these shares of stock.

Carvallo received bribes from Wolfson and Grecco in exchange for Carvallo causing, either directly or through other brokers controlled by Carvallo, retail customers to purchase shares of stock issued by Hytk. The bribes received by Carvallo were not disclosed to the retail customers who purchased these shares of stock.

Sonitis received bribes from Wolfson and Grecco in exchange for Sonitis causing, either directly or through other brokers controlled by Sonitis, retail customers to purchase shares of stock issued by Healthwatch. The bribes received by Sonitis were not disclosed to the retail customers who purchased these shares of stock.

Illicit Profits

Respondents received at least $7 million in illicit profits from the manipulation schemes described above.

Violations

The Order alleges that Respondents willfully violated Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder.

A hearing will be held before an Administrative Law Judge to determine whether the allegations against Respondents are true and, if so, what remedial action, if any, is appropriate.