UNITED STATES OF AMERICA before the SECURITIES AND EXCHANGE COMMISSION SECURITIES EXCHANGE ACT OF 1934 Release No. 40977 / January 26, 1999 INVESTMENT ADVISERS ACT OF 1940 Release No. 1784 / January 26, 1999 INVESTMENT COMPANY ACT OF 1940 Release No. 23663 / January 26, 1999 ADMINISTRATIVE PROCEEDING File No. 3-9818 _________________________ : ORDER INSTITUTING PUBLIC : ADMINISTRATIVE PROCEEDINGS In the Matter of : PURSUANT TO SECTIONS 15(b) AND : 19(h) OF THE SECURITIES STEVEN R. SCHAEFER and : EXCHANGE ACT OF 1934, AMPG, Inc., : SECTIONS 203(e) AND (f) OF THE : INVESTMENT ADVISERS ACT OF : 1940 AND SECTION 9(b) OF THE : INVESTMENT COMPANY ACT OF Respondents. : 1940, MAKING FINDINGS AND : IMPOSING REMEDIAL SANCTIONS ________________________ : I. The Securities and Exchange Commission ("Commission") deems it appropriate and in the public interest that public administrative proceedings be instituted against Steven R. Schaefer ("Schaefer") and AMPG, Inc. ("AMPG") (collectively, the "Respondents") pursuant to Sections 15(b) and 19(h) of the Securities Exchange Act of 1934 ("Exchange Act"), Sections 203(e) and (f) of the Investment Advisers Act of 1940 ("Advisers Act") and Section 9(b) of the Investment Company Act of 1940 ("Investment Company Act"). In anticipation of the institution of these proceedings, Schaefer and AMPG have each submitted an Offer of Settlement (collectively, the "Offers") which the Commission has determined to accept. Solely for the purpose of these proceedings and any other proceedings brought by or on behalf of the Commission or to which the Commission is a party, and without admitting or denying any of the findings contained herein, except as to the jurisdiction of the Commission over them and over the subject matter of these proceedings, and the matters set forth in paragraph II. 2. below, which are admitted, Schaefer and AMPG consent to the entry of this Order Instituting Public Proceedings Pursuant to Sections 15(b) and 19(h) of the Securities Exchange Act of 1934, Sections 203(e) and (f) of the Investment Advisers Act of 1940 and Section 9(b) of the Investment Company Act of 1940, Making Findings, and Imposing Remedial Sanctions (the "Order"), by the Commission. Accordingly, IT IS HEREBY ORDERED that proceedings pursuant to Sections 15(b) and 19(h) of the Exchange Act, Sections 203(e) and (f) of the Advisers Act and Section 9(b) of the Investment Company Act be, and hereby are, instituted. II. On the basis of this Order and the Respondents’ Offers, the Commission finds that: 1. Schaefer was, during the relevant period, the president and principal of AMPG, an investment adviser incorporated in Florida and registered with the Commission from October 1996 to the present. Schaefer also operated an office of supervisory jurisdiction for, and, from June 1989 to March 1998 was a registered representative of a broker-dealer registered with the Commission. 2. On April 7, 1998, a final judgment of permanent injunction was entered against Schaefer and AMPG in the United States District Court for the Middle District of Florida, SEC v. Steven R. Schaefer, et al., Case No. 98-343-CIV-ORL-22A (M.D. Fla.). The final judgment permanently enjoins Schaefer and AMPG from further violations of Section 17(a) of the Securities Act of 1933 ("Securities Act") and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder. 3. The Commission alleged in its complaint that AMPG and Schaefer, who operates and is president and principal of AMPG, were responsible for the sale of unregistered promissory notes to his and AMPG’s clients. Schaefer’s private company issued the notes and an associate of Schaefer’s promoted them. Between February 1997 and December 1997, approximately $2.5 million in notes were sold to about 40 senior citizens. On their face, the notes show a 9% annual return, payable quarterly. The elderly clients were assured that the note proceeds, representing funds they had carefully accumulated for retirement, would be placed in safe, secured investments. Contrary to these representations, Schaefer loaned his clients’ funds to entities, including entities Schaefer owned or controlled, which had no apparent ability or intention of generating a return for his clients, or of preserving their funds for distribution upon the notes’ maturities. As a result of the fraudulent diversion of investors’ funds, the notes appear to be worthless, and the investors stand to lose approximately $2.5 million. 4. As described in Section II. 3. above, from approximately February 1997 through December 1997, Respondents willfully violated Section 17(a) of the Securities Act, in that, in the offer or sale of securities, by use of the means or instruments of transportation or communication in interstate commerce, and by the use of the mails, directly or indirectly, Respondents employed devices, schemes or artifices to defraud; obtained money or property by means of untrue statements of material facts or omitted to state material facts necessary to make the statements made, in the light of the circumstances under which they were made, not misleading; and engaged in transactions, practices or courses of business which operated as a fraud or deceit upon the purchasers of such securities. 5. As described in Section II. 3. above, from approximately February 1997 through December 1997, Respondents willfully violated Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, in that, in connection with the purchase or sale of securities, by use of the means and instruments of interstate commerce, and by the use of the mails, directly or indirectly, Respondents employed devices, schemes or artifices to defraud; made untrue statements of material facts or omitted to state material facts necessary to make the statements made, in the light of the circumstances under which they were made, not misleading; and engaged in acts, practices or courses of business which operated as a fraud or deceit upon the purchasers of such securities. III. On the basis of the foregoing, the Commission deems it appropriate and in the public interest to impose the sanctions specified in the Respondents’ Offers. ACCORDINGLY, IT IS ORDERED that: Schaefer be, and hereby is, barred from association with any broker, dealer, municipal securities dealer, investment company or investment adviser, and AMPG’s investment adviser registration be, and hereby is, revoked. By the Commission. Jonathan G. Katz Secretary