UNITED STATES OF AMERICA
SECURITIES AND EXCHANGE COMMISSION
SECURITIES EXCHANGE ACT OF 1934
Release No. 50186 / August 12, 2004
Admin. Proc. File No. 3-11587
ADMINISTRATIVE PROCEEDINGS INSTITUTED AGAINST EIGHT INDIVIDUALS IN APPONLINE FRAUD
The Securities and Exchange Commission announced today that it has issued an Order Instituting Administrative Proceedings and Notice of Hearing Pursuant to Section 15(b) of the Securities Exchange Act of 1934 ("Exchange Act") against Ashley Nemiroff ("Nemiroff"), Rocco Siclari ("Siclari"), George A. Carhart ("Carhart"), Carl D'Elia ("D'Elia"), Howard C. Zelin ("Zelin"), Craig A. Brandwein ("Brandwein"), and Donald R. Catapano ("Catapano") (the "Respondents").
In the Order, the Division of Enforcement alleges that between September 2002 and March 2003, the United States District Court for the Eastern District of New York entered partial consent judgments against the Respondents enjoining them from future violations of Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder (the "antifraud provisions"). SEC v. Paul Skulsky, et al., 02 Civ. 1524 (DRH) (E.D.N.Y.). In the underlying injunctive action, the Commission's complaint alleged that Paul Skulsky, an undisclosed control person of AppOnline.com ("AppOnline"), a now defunct Melville, New York mortgage banking firm, sought to manipulate the public market for AppOnline securities. As part of the scheme, during 1997 and 1998, Skulsky paid kickbacks in the form of AppOnline stock and cash to the Respondents so that the Respondents would sell, or direct other registered representatives to sell, AppOnline stock to their retail customers. Specifically, Skulsky agreed to pay the Respondents kickbacks of between 45-50% to sell AppOnline stock, and the registered representatives then failed to disclose these payments to their customers.
The Order further alleges that the Respondents have been criminally charged for AppOnline-related conduct. Between September 2001 and March 2004, the Respondents all entered guilty pleas to these charges. U.S. v. D'Elia, et al., 02 Cr. 00127 (DRH) (E.D.N.Y.) and U.S. v. Zelin, 00 Cr. 1267 (LAK)(S.D.N.Y.).
A hearing before an administrative law judge will be scheduled to determine whether the allegations in the order are true, to provide the Respondents an opportunity to dispute these allegations, and to determine what remedial action, if any, is appropriate in the public interest. The Order directed the Administrative Law Judge to issue an initial decision within 210 days from the date of service of the Order.
See also the Order in this matter