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U.S. Securities and Exchange Commission

UNITED STATES OF AMERICA
Before the
SECURITIES AND EXCHANGE COMMISSION

SECURITIES EXCHANGE ACT OF 1934
Release No. 49794 / June 2, 2004

ADMINISTRATIVE PROCEEDING
File No. 3-11506


In the Matter of

LEONARD ALEXANDER RUGE,
MAC BEAGELMAN,
MICHAEL SCOTT SYMONS,
STEPHEN EVERS,
EUGENE FLAKSMAN,
DANIEL KOLCHKOV,
JEFF SANDERS AND
MARK ZABORSKY,

Respondent.


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ORDER INSTITUTING
ADMINISTRATIVE
PROCEEDINGS PURSUANT
TO SECTION 15(b) OF THE
SECURITIES EXCHANGE ACT
OF 1934, 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, and hereby are, instituted pursuant to Section 15(b) of the Securities Exchange Act of 1934 ("Exchange Act") against Leonard Alexander Ruge ("Ruge"), Mac Beagelman ("Beagelman"), Michael Scott Symons ("Symons"), Stephen Evers ("Evers"), Eugene Flaksman ("Flaksman"), Daniel Kolchkov ("Kolchkov"), Jeff Sanders ("Sanders") and Mark Zaborsky ("Zaborsky") (collectively "Respondents").

II.

In anticipation of the institution of these administrative proceedings, the Respondents have submitted Offers of Settlement (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 the findings herein, except as to the Commission's jurisdiction over them and the subject matter of these proceedings, and the findings contained in Sections III.A.2 and 4, B.2 and 5, C.2 and 4, D.2, E.2 and 4, F.2 and 4, G.2 and 5, and H.2 and 5 below, which are admitted, Respondents consent to the entry of this Order Instituting Administrative Proceedings Pursuant to Section 15(b) of the Securities Exchange Act of 1934, Making Findings, and Imposing Remedial Sanctions ("Order"), as set forth below.

III.

On the basis of this Order and the Respondents' Offers, the Commission finds that:

A. Leonard Alexander Ruge:

1. At all relevant times, Ruge was a stock promoter for International Investment Group, Ltd. ("IIGR"), a Delaware corporation whose principal offices were in New York, New York. The common stock of IIGR was publicly traded on the over-the-counter market.

2. On October 28, 2003, Ruge was permanently enjoined by the United States District Court for the Southern District of New York in SEC v. Ruge, et al., 97 Civ. 9306 (S.D.N.Y.) (DAB), from violating 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's complaint in the above-referenced action alleged, among other things, that:

    a. From June 1995 through February 1996, the Defendants engaged in a fraudulent scheme to manipulate the public trading market for securities issued by IIGR through the payment of undisclosed bribes to various registered representatives and other individuals who sold IIGR stock to retail investors. The chairman of IIGR provided blocks of IIGR shares to Ruge and other promoters at a substantial discount from the prevailing market price so that Ruge and the other promoters could sell those shares to brokers who received the bribes for retail activity. The Defendants realized approximately $500,000 in illegal profits from the fraudulent scheme.

    b. Ruge violated Section 17(a) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder in connection with the offer and sale of IIGR securities.

4. On January 15, 1998, Ruge pled guilty to two counts of conspiracy to commit wire fraud and commercial bribery in violation of 18 U.S.C. 371, two counts of wire fraud in violation of 18 U.S.C. 1343 and 1346, and two counts of commercial bribery in violation of 18 U.S.C. 1952. United States v. Leonard Alexander Ruge, 96 Cr. 1068 (S.D.N.Y.) (MBM).

5. The indictment underlying Ruge's guilty plea alleged, among other things, that from November 1995 to December 1995, Ruge made secret payments to brokers to induce the brokers to cause their customers to purchase IIGR stock, for the purpose of artificially inflating the price of IIGR's stock.

6. On the basis of his guilty pleas in United States v. Leonard Alexander Ruge, 96 Cr. 1068 (S.D.N.Y.) (MBM), and United States v. Leonard Alexander Ruge, 02 Cr. 752 (S.D.N.Y.) (MBM),1 Ruge was sentenced to 46 months of imprisonment followed by three years supervised release. As part of his criminal sentence, Ruge was ordered to pay $2,017,399.36 in restitution to investors.

B. Mac Beagelman:

1. At all relevant times, Beagelman was president and chairman of the board of IIGR.

2. On June 27, 2003, Beagelman was permanently enjoined by the United States District Court for the Southern District of New York in SEC v. Ruge, et al., from violating Section 17(a) of the Securities Act, and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder.

3. The Commission's complaint in the above-referenced action alleged, among other things, that:

    a. From June 1995 through February 1996, the Defendants engaged in a fraudulent scheme to manipulate the public trading market for securities issued by IIGR through the payment of undisclosed bribes to various registered representatives and other individuals, who sold IIGR stock to retail investors. Defendant Mac Beagelman, who was the president and chairman of the board of IIGR, provided blocks of IIGR shares to the promoters of this scheme at a substantial discount from the prevailing market price so that the promoters could sell those shares to the brokers who received bribes for retail activity. The Defendants realized approximately $500,000 in illegal profits from the fraudulent scheme.

    b. Beagelman violated Section 17(a) of the Securities Act, and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, in connection with the offer and sale of IIGR securities.

4. From approximately June 1995 through February 1996, Beagelman participated in an offering of IIGR stock, which was a "penny stock" as that term is used in Section 15(b)(6) of the Exchange Act and defined by Section 3(a)(51) of the Exchange Act and Rule 3a51-1 thereunder.

5. On December 11, 1997, Beagelman pleaded guilty to one count of conspiracy to commit securities fraud, wire fraud and commercial bribery in violation of 18 U.S.C. 371, and two counts of perjury in violation of 18 U.S.C. 1621. United States v. Mac Beagelman, 97 Cr. 1277 (S.D.N.Y.) (JSR).

6. The indictment underlying Beagelman's guilty plea alleged, among other things, that from May 1995 to February 1996, Beagelman agreed to sell shares of IIGR stock to another individual with the knowledge that that individual would offer and make secret payments to securities brokers in order to induce their customers to purchase IIGR stock and that the brokers would not and did not disclose these payments to their customers. Beagelman hoped that this conduct would artificially inflate the stock price.

7. On the basis of his guilty plea, Beagelman was sentenced to four months of imprisonment followed by three years of supervised release. As part of his criminal sentence, Beagelman was ordered to pay $1,186,048 in restitution.

C. Michael Scott Symons:

1. At all relevant times, Symons was a registered representative of Capital Growth Management, Inc., formerly known as Investech Capital Corporation ("Investech").

2. On October 28, 2003, Symons was permanently enjoined by the United States District Court for the Southern District of New York in SEC v. Ruge, et al., from violating Section 17(a) of the Securities Act, and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder.

3. The Commission's complaint in the above-referenced action alleged, among other things, that:

    a. From June 1995 through February 1996, the Defendants engaged in a fraudulent scheme to manipulate the public trading market for securities issued by IIGR through the payment of undisclosed bribes to various registered representatives and other individuals who sold IIGR stock to retail investors. The Chairman of IIGR provided blocks of IIGR shares to the promoters of this scheme at a substantial discount from the prevailing market price so that the promoters could sell those shares to Symons and other brokers who received bribes for retail activity. The Defendants realized approximately $500,000 in illegal profits from the fraudulent scheme.

    b. Symons violated Section 17(a) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, in connection with the offer and sale of IIGR securities.

4. On January 15, 1998, Symons pleaded guilty to one count of conspiracy to commit securities fraud, wire fraud and commercial bribery, in violation of 18 U.S.C. 371. United States v. Michael Scott Symons, 97 Cr. 1033 (S.D.N.Y.) (MBM).

5. The indictment underlying Symons' guilty plea alleged, among other things, that from June 1995 to April 1996, Symons agreed to buy shares of IIGR stock at a discount price, caused his customers to purchase IIGR stock, and induced other brokers to cause their customers to purchase IIGR stock with bribes, in order to artificially inflate the stock price. In exchange, Symons received secret payments that he did not disclose to his customers.

6. On the basis of his guilty plea, Symons was sentenced to three years probation. As part of his criminal sentence, Symons was ordered to pay $1,788,810.48 in restitution to his investors.

D. Stephen Evers:

1. At all relevant times, Evers was a registered representative of Meyers Pollock & Robbins, Inc. and Investech.

2. On June 26, 2003, Evers was permanently enjoined by the United States District Court for the Southern District of New York in SEC v. Ruge, et al., from violating Section 17(a) of the Securities Act, and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder.

3. The Commission's complaint in the above-referenced action alleged, among other things, that:

    a. From June 1995 through February 1996, the Defendants engaged in a fraudulent scheme to manipulate the public trading market for securities issued by IIGR through the payment of undisclosed bribes to various registered representatives who sold IIGR stock to retail investors. The chairman of IIGR provided blocks of IIGR shares to the promoters of this scheme at a substantial discount from the prevailing market price so that the promoters could sell those shares to Evers and other brokers who received bribes for retail activity. The Defendants realized approximately $500,000 in illegal profits from the fraudulent scheme.

    b. Evers violated Section 17(a) of the Securities Act, and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, in connection with the offer and sale of IIGR securities.

4. From approximately June 1995 through February 1996, Evers participated in an offering of IIGR stock, which was a "penny stock" as that term is used in Section 15(b)(6) of the Exchange Act and defined by Section 3(a)(51) of the Exchange Act and Rule 3a51-1 thereunder.

E. Eugene Flaksman:

1. At all relevant times, Flaksman was a registered representative of Investech.

2. On October 28, 2003, Flaksman was permanently enjoined by the United States District Court for the Southern District of New York in SEC v. Ruge, et al., from violating Section 17(a) of the Securities Act, and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder.

3. The Commission's complaint in the above-referenced action alleged, among other things, that:

    a. From June 1995 through February 1996, the Defendants engaged in a fraudulent scheme to manipulate the public trading market for securities issued by IIGR through the payment of undisclosed bribes to various registered representatives and other individuals who sold IIGR stock to retail investors. The Chairman of IIGR provided blocks of IIGR shares to the promoters of this scheme at a substantial discount from the prevailing market price so that the promoters could sell those shares to Flaksman and other brokers who received bribes for retail activity. The Defendants realized approximately $500,000 in illegal profits from the fraudulent scheme.

    b. Flaksman violated Section 17(a) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, in connection with the offer and sale of IIGR securities.

4. On April 1, 1999, Flaksman pled guilty to one count of conspiracy to commit securities fraud, wire fraud and commercial bribery in violation of 18 U.S.C. 371. United States v. Mark Zaborsky, et al., 98 Cr. 1037 (Eugene Flaksman) (S.D.N.Y.) (LAK).

5. The indictment underlying Flaksman's guilty plea alleged, among other things, that from February 1995 to February 1997, Flaksman agreed to cause his customers to purchase IIGR stock for the purpose of artificially inflating the stock price in exchange for bribes that he did not disclose to his customers.

6. On the basis of his guilty plea, Flaksman was sentenced to four months of imprisonment and four months of home confinement followed by three years of supervised release. As part of his criminal sentence, Flaksman was ordered to pay $18,125.67 in restitution to investors.

F. Daniel Kolchkov:

1. At all relevant times, Kolchkov was a registered representative of Investech.

2. On June 26, 2003, Kolchkov was permanently enjoined by the United States District Court for the Southern District of New York in SEC v. Ruge, et al., from violating Section 17(a) of the Securities Act, and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder.

3. The Commission's complaint in the above-referenced action alleged, among other things, that:

    a. From June 1995 through February 1996, the Defendants engaged in a fraudulent scheme to manipulate the public trading market for securities issued by IIGR through the payment of undisclosed bribes to various registered representatives, who sold IIGR stock to retail investors. The Chairman of IIGR provided blocks of IIGR shares to the promoters of this scheme at a substantial discount from the prevailing market price so that the promoters could sell those shares to Kolchkov and other brokers who received bribes for retail activity. The Defendants realized approximately $500,000 in illegal profits from the fraudulent scheme.

    b. Kolchkov violated Section 17(a) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, in connection with the offer and sale of IIGR securities.

4. On March 26, 1999, Kolchkov pled guilty to one count of conspiracy to commit securities fraud, wire fraud and commercial bribery in violation of 18 U.S.C. 371. United States v. Mark Zaborsky, et al., 98 Cr. 1037 (Daniel Kolchkov) (S.D.N.Y.) (LAK).

5. The indictment underlying Kolchkov's guilty plea alleged, among other things, that from February 1995 and February 1997, Kolchkov agreed to cause his customers to purchase IIGR stock for the purpose of artificially inflating the stock price in exchange for bribes that he did not disclose to his customers.

6. On the basis of his guilty plea, Kolchkov was sentenced to fifteen months of imprisonment followed by three years supervised release. As part of his criminal sentence, Kolchkov was ordered to pay $188,658.70 in restitution to investors.

G. Jeff Sanders:

1. At all relevant times, Sanders was a registered representative of Investech.

2. On June 27, 2003, Sanders was permanently enjoined by the United States District Court for the Southern District of New York in SEC v. Ruge, et al., from violating Section 17(a) of the Securities Act, and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder.

3. The Commission's complaint in the above-referenced action alleged, among other things, that:

    a. From June 1995 through February 1996, the Defendants engaged in a fraudulent scheme to manipulate the public trading market for securities issued by IIGR through the payment of undisclosed bribes to various registered representatives, who sold IIGR stock to retail investors. The Chairman of IIGR provided blocks of IIGR shares to the promoters of this scheme at a substantial discount from the prevailing market price so that the promoters could sell those shares to Sanders and other brokers who received bribes for retail activity. The Defendants realized approximately $500,000 in illegal profits from the fraudulent scheme.

    b. Sanders violated Section 17(a) of the Securities Act, and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, in connection with the offer and sale of IIGR securities.

4. From approximately June 1995 through February 1996, Sanders participated in an offering of IIGR stock, which was a "penny stock" as that term is used in Section 15(b)(6) of the Exchange Act and defined by Section 3(a)(51) of the Exchange Act and Rule 3a51-1 thereunder.

5. On April 25, 2000, Sanders pled guilty to one count of conspiracy to commit securities fraud in violation of 18 U.S.C. 371, and two counts of wire fraud in violation of 18 U.S.C. 1343 and 1346. United States v. Mark Zaborsky, et al., 98 Cr. 1037 (Jeff Sanders) (S.D.N.Y.) (MBM).

6. The indictment underlying Sanders' guilty plea alleged, among other things, that from February 1995 to February 1997, Sanders agreed to cause his customers to purchase IIGR stock for the purpose of artificially inflating the stock price in exchange for bribes that he did not disclose to his customers.

7. On the basis of his guilty plea, Sanders was sentenced to four years probation. As part of his criminal sentence, Sanders was ordered to pay $71,065.85 in restitution to investors.

H. Mark Zaborsky:

1. At all relevant times, Zaborsky was a registered representative of Investech.

2. On June 26, 2003, Zaborsky was permanently enjoined by the United States District Court for the Southern District of New York in SEC v. Ruge, et al., from violating Section 17(a) of the Securities Act, and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder.

3. The Commission's complaint in the above-referenced action alleged, among other things, that:

a. From June 1995 through February 1996, the Defendants engaged in a fraudulent scheme to manipulate the public trading market for securities issued by IIGR through the payment of undisclosed bribes to various registered representatives who sold IIGR stock to retail investors. The Chairman of IIGR provided blocks of IIGR shares to the promoters of this scheme at a substantial discount from the prevailing market price so that the promoters could sell those shares to Zaborsky and other brokers who received bribes for retail activity. The Defendants realized approximately $500,000 in illegal profits from the fraudulent scheme.

b. Zaborsky violated Section 17(a) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, in connection with the offer and sale of IIGR securities.

4. From approximately June 1995 through February 1996, Zaborsky participated in an offering of IIGR stock, which was a "penny stock" as that term is used in Section 15(b)(6) of the Exchange Act and defined by Section 3(a)(51) of the Exchange Act and Rule 3a51-1 thereunder.

5. On March 26, 1999, Zaborsky pled guilty to one count of conspiracy to commit securities fraud in violation of 18 U.S.C. 371. United States v. Mark Zaborsky, et al., 98 Cr. 1037 (S.D.N.Y.) (LAK).

6. The indictment underlying Zaborsky's guilty plea alleged, among other things, that at various times between February 1995 and February 1997, Zaborsky agreed to cause his customers to purchase IIGR stock for the purpose of artificially inflating the stock price in exchange for bribes that he did not disclose to his customers.

7. On the basis of his guilty plea, Zaborsky was sentenced to one year and one day of imprisonment followed by three years supervised release. As part of his criminal sentence, Zaborsky was ordered to pay $15,000 in restitution to investors.

IV.

In view 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 hereby ORDERED:

A. Pursuant to Section 15(b)(6) of the Exchange Act, that Respondent Sanders be, and hereby is, barred from association with any broker or dealer.

B. Pursuant to Section 15(b)(6) of the Exchange Act, that Respondents Ruge, Symons, Evers, Flaksman, Kolchkov and Zaborsky be, and hereby are, barred from association with any broker or dealer.

Any reapplication for association by Respondents Ruge, Symons, Evers, Flaksman, Kolchkov and Zaborsky will be subject to the applicable laws and regulations governing the reentry process, and reentry may be conditioned upon a number of factors, including, but not limited to, the satisfaction of any or all of the following: (a) any disgorgement ordered against the Respondents, whether or not the Commission has fully or partially waived payment of such disgorgement; (b) any arbitration award related to the conduct that served as the basis for the Commission order; (c) any self-regulatory organization arbitration award to a customer, whether or not related to the conduct that served as the basis for the Commission order; and (d) any restitution order by a self-regulatory organization, whether or not related to the conduct that served as the basis for the Commission order.

C. Pursuant to Section 15(b)(6) of the Exchange Act, that Respondents Beagelman, Evers, Sanders and Zaborsky be, and hereby are, barred from participating in any offering of a penny stock, including: acting as a promoter, finder, consultant, agent, or other person who engages in activities with a broker, dealer or issuer for purposes of the issuance or trading in any penny stock; or inducing or attempting to induce the purchase or sale of any penny stock.

By the Commission.

Jonathan G. Katz
Secretary

Endnotes

 

http://www.sec.gov/litigation/admin/34-49794.htm


Modified: 06/03/2004