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U.S. Securities and Exchange Commission

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK


Securities and Exchange Commission,

Plaintiff,   

(TPG)______

- against -

OCC HOLDINGS, LTD., MB HOLDINGS USA, INC., EQUITY SERVICE ASSOCIATES, INC., ALAN LABINERI, KHURRAM TANWIR, JOSEPH FAVATA, AHMED AWAN, and YAKOV KOPPEL,

Defendants.   

- and -

OFF WORLD STRATEGIC HOLDINGS and MB HOLDINGS USA DIVISION A INC.,

Relief Defendants.   


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04 Civ. 1122

COMPLAINT

Plaintiff Securities and Exchange Commission for its complaint against defendants OCC Holdings, Ltd., f/k/a OnCallContractor.com, Inc. ("OnCall"), MB Holdings USA, Inc. ("MB Holdings"), Equity Service Associates, Inc., Alan Labineri, Khurram Tanwir, Joseph Favata, Ahmed Awan, and Yakov Koppel (collectively, the "Defendants"), and relief defendants Off World Strategic Holdings and MB Holdings USA Division A Inc., alleges as follows:

PRELIMINARY STATMENT

1. This action arises out of three ongoing offering frauds. Since approximately December 2001, the Defendants have raised more than $2 million from investors through three schemes: (1) selling purported private placement shares of OnCall; (2) selling promissory notes issued by MB Holdings and other entities; and (3) selling restricted shares of Savvydata, Inc., an unrelated, privately owned company. The offerings are all being orchestrated by, and/or for the benefit of, Alan Labineri and/or Khurram Tanwir, who have been conducting fraudulent offerings together since at least 1999. In connection with the offerings, Defendants have made false and misleading promises of imminent initial public offerings ("IPOs") and/or substantial increases in the stock price; have misappropriated and used investor funds for personal expenses; and failed to disclose their disciplinary history. Their purported business addresses are merely mail drops and call centers.

2. Through this conduct, the Defendants have engaged and are continuing to engage, directly or indirectly, in transactions, acts, practices or courses of business which constitute violations of Section 17(a) of the Securities Act, 15 U.S.C. 77q(a), Section 10(b) of the Exchange Act, 15 U.S.C. 78j(b), and Rule 10b-5 thereunder, 17 C.F.R. 240.10b-5. The relief defendants each received, without consideration, proceeds of the fraudulent sale of securities alleged herein.

3. By this action, the Commission seeks: (a) permanent injunctive relief, including a penny stock bar; (b) disgorgement and prejudgement interest; (c) civil penalties; (d) emergency relief, including (i) orders temporarily and preliminarily enjoining defendants MB Holdings, Equity Service, Labineri, Tanwir, Favata and Koppel from further violations of the federal securities laws and from participating in a penny stock offering, (ii) an asset freeze, and (iii) orders permitting expedited discovery and prohibiting the destruction of documents; and (e) such other and further relief as the Court deems appropriate.

JURISDICTION AND VENUE

4. The Commission brings this action pursuant to authority conferred by Section 20(b) of the Securities Act, 15 U.S.C. 77t(a), and Section 21(d) of the Exchange Act, 15 U.S.C. 78u(d), seeking to temporarily restrain, preliminarily enjoin, and permanently enjoin Defendants from engaging in the wrongful conduct alleged in this complaint.

5. This Court has subject matter jurisdiction over this action pursuant to Section 22(a) of the Securities Act, 15 U.S.C. 77v(a), and Sections 21(d), 21(e) and 27 of the Exchange Act, 15 U.S.C. 78u(d), 77u(e) and 78aa. Defendants, directly or indirectly, singly or in concert, have made use of the means or instrumentalities of transportation or communication in, or the instrumentalities of, interstate commerce, or of the mails, in connection with the transactions, acts, practices, and courses of business alleged in this complaint.

THE DEFENDANTS

6. OnCall was incorporated under the laws of the State of New York in March 2000. OnCall formally changed its name from OnCallContractor.com, Inc. to OCC Holdings in January 2003. Defendant Joseph Favata founded OnCall and has served as its president and chairman since its inception. OnCall purports to have offices at 244 Madison Ave., Suite 404, New York, New York, and 1716 Stonecrest Drive, Blakeslee, Pennsylvania.

7. MB Holdings was incorporated under the laws of the State of New York in April 2000. Defendant Khurram Tanwir is the president of MB Holdings. MB Holdings purports to have an office at 82 Wall Street, Suite 1105, New York, New York. MB Holdings sells securities of other issuers, as well as its own securities, but is not registered as a broker-dealer.

8. Equity Service was incorporated under the laws of the State of New York in January 2003. Defendant Alan Labineri is its president. Equity Service purports to have an office at 847 2nd Avenue, Suite 364, New York, New York.

9. Alan Labineri, age 44, is the president of Equity Service and Off World. Labineri's last known address was in Brooklyn, New York. Labineri founded and was principal of Richland Consult Associates, Inc. and its successor Grant, Singer & Hamilton Holdings, Inc. (together, "Grant Singer"), which operated as broker-dealers, but were not registered as such. Labineri also controls Millenium Entertainment Group and IncredibleArt.com, Inc.

10. Khurram Tanwir, a/k/a "Corey Taylor," age 26, resides in Manhattan. Tanwir is the president of MB Holdings and a consultant to OnCall. Tanwir previously worked for Grant Singer and as a registered representative of several registered broker-dealers, including Bernard, Lee & Edwards Securities, Inc. Currently, Tanwir purports to be operating a hedge fund.

11. Joseph Favata, age 43, resides in Albrightsville, Pennsylvania. Favata founded and is the president, chairman and majority owner of OnCall. From 1993 through April 2001, Favata also worked as a registered representative of several broker-dealers, including Bernard Lee. Before becoming a registered representative, Favata worked in the construction industry. Both OnCall and its predecessor, Favnet, purportedly provide construction-related services over the Internet.

12. Ahmed Awan, age 31, resides in Brooklyn, New York. Awan worked with Tanwir as a registered representative of Bernard Lee and other registered broker-dealers, and has also worked for MB Holdings.

13. Yakov Koppel, 31, resides in Monroe, New York. Since 1993, Koppel has been affiliated as a securities representative with approximately thirteen registered broker-dealers.

RELIEF DEFENDANTS

14. Off World was incorporated in 1999 under the laws of the State of New York. Labineri is its president. Off World purports to have an office at 245 8th Avenue, Suite 325, New York, New York.

15. MB Holdings USA Division A Inc. was incorporated in July 2003 under the laws of the State of New York. Tanwir is its president. MB Holdings USA Division A Inc. purports to have an office at 82 Wall Street, Suite 1105, New York, New York.

FACTS

Background

Bernard Lee and Grant Singer

16. The conduct at issue has its origins in a series of offering frauds conducted by representatives of Bernard Lee, a now defunct registered broker-dealer, and Grant Singer, an unregistered broker-dealer controlled by Labineri. Tanwir, Favata and Awan all worked as brokers for Bernard Lee; Tanwir also worked for Grant Singer.

17. From approximately late 1998 into 2001, representatives of Bernard Lee and Grant Singer, working out of office space they shared in Manhattan, ran a "boiler-room," selling promissory notes and purported private placement shares of numerous companies, including OnCall, Favnet, Millenium Entertainment Group, and IncredibleArt, by means of false and misleading representations and high pressure sales tactics.

18. The Bernard Lee-Grant Singer modus operandi was to draw investors in by offering high-yield promissory notes. The notes, which offered interest rates between 12% and 15%, were touted as safe investments, 100% guaranteed. To gain the investors' trust, the issuing company typically made initial interest payments. After the investors received the initial interest payments, Bernard Lee and Grant Singer representatives persuaded them to convert their remaining interest in the notes into stock of the issuing company, often by assuring the investor of future offerings that would permit investors to sell their shares at a significant profit. After conversion, the issuing company had no obligation to repay investors on the promissory notes. None of the other issuing companies has conducted an offering that has permitted investors to sell their shares at a profit.

The Defendants' Disciplinary Histories

19. Beginning in 2001, the Maryland State Securities Commissioner conducted an investigation into the offerings conducted by Bernard Lee and Grant Singer. The investigation culminated in the entry of orders against many of the individuals and entities involved in the schemes including, but not limited to, Labineri, Favata, Tanwir, Bernard Lee, Grant Singer, Favnet and OnCall.

20. By order dated October 2001, the Maryland Commissioner permanently barred Favata, Labineri, Favnet, OnCall, Grant Singer and others from the securities advisory business in Maryland, and ordered them to cease and desist from further violations of Maryland securities laws and to pay monetary penalties. The Maryland Commissioner found, among other things, that (1) the offerings conducted by Bernard Lee and Grant Singer Hamilton representatives, including the OnCall, Favnet, IncredibleArt and Millenium Entertainment offerings, were fraudulent; (2) funds invested in those offerings had been co-mingled and misappropriated; (3) Bernard Lee brokers, including Favata and Tanwir, had materially misled investors; and (4) after investors had purchased investments, Bernard Lee brokers lulled them into believing their investments were profitable, and encouraged them either to hold onto the investments or roll them into other fraudulent offerings.

21. By order dated December 31, 2002, the Maryland Commissioner permanently barred Tanwir from the securities and investment advisory business in Maryland, ordered him to cease and desist from further violations of the Maryland State securities laws, assessed monetary penalties and revoked his broker-dealer agent registration in Maryland. The order included the finding that Tanwir had engaged in "dishonest and unethical practices in the securities business in Maryland."

22. In January 2003, the NASD barred Favata from association with any NASD member firm in any capacity, based on his activities while associated with Bernard Lee.

MB Holdings Steps in and the Fraud Continues

23. The Bernard Lee-Grant Singer boiler-room closed in 2001, but defendants Labineri, Tanwir, Favata and others continued to defraud investors, using the same schemes and even some of the same issuers.

24. From November 2001 through the first half of 2002, Tanwir, Awan and Koppel all worked as registered representatives of a registered broker-dealer located in lower Manhattan ("Broker X"). While at Broker X, Tanwir, Awan and Koppel, working with defendants Labineri and Favata, replicated the Bernard Lee-Grant Singer formula - they used their affiliation with a registered broker-dealer and their ability to sell publicly traded stocks to develop a relationship with investors and gain the investors' trust. They then offered investors purported private placement shares, including shares of OnCall, and fraudulent promissory notes, through MB Holdings.

25. Tanwir and Awan left Broker X in mid-2002, but they, along with Labineri, Favata and others, have continued to sell purported private placement shares of OnCall and fraudulent promissory notes. In addition, beginning in 2003, Labineri and Tanwir began a third scheme, involving the sale of restricted shares of Savvydata, an unrelated, Florida-based company.

26. To facilitate the schemes, Defendants have used mail drops and telephone forwarding services ("call centers"). Although each of the entities involved in the schemes - MB Holdings, OnCall, Equity Service, IncredibleArt, Off World and Millenium Entertainment - lists a Manhattan address on its letterhead, none of the companies has an actual office at the listed address. By using mail drops and call centers, Defendants have been able to deceive investors into believing that the companies involved are legitimate companies with legitimate operations and actual offices in prime locations, while concealing Defendants' true locations. In addition, some or all of the Defendants have used aliases to conceal their true identities.

THE ONGOING FRAUDULENT OFFERINGS

The OnCall Offerings

27. Since December 2001, OnCall has conducted several purported private placements of its shares. Some of the offerings have been conducted solely through oral solicitations; others have involved the distribution of a private offering memorandum. In inducing investors to purchase OnCall stock, defendants OnCall, MB Holdings, Labineri, Tanwir, Favata and Koppel, directly or indirectly, have made false and misleading representations about future offerings, increases in stock price, use of offering proceeds and OnCall's facilities and operations. In addition, those defendants have failed to disclose information regarding Favata and OnCall's disciplinary history.

The 2002 OnCall Offering - Labineri, Tanwir, Favata and Koppel

28. From approximately December 2001 through May 2002, OnCall raised approximately $564,000 through a purported private placement of its shares. The offering was not registered with the Commission. Labineri and Tanwir orchestrated the offering and directed the sales efforts. Koppel and others, including a person who identified himself to investors as John Leventhal, solicited investors by telephone.

29. In soliciting investors, Koppel, Leventhal and others falsely assured investors that OnCall would soon conduct another offering that would allow them to sell their shares at a significant profit. For example:

  1. In or around January 2002, Koppel induced an investor to purchase 10,000 shares of OnCall at $2 per share by assuring the investor that a second offering, priced at $4 per share, would take place immediately. Koppel told the investor that the offer was a special offer, being extended only to "friends and family." Approximately seven to ten days after the investor purchased the OnCall shares, Koppel called the investor, congratulated him and told him that the second offering had taken place and the investor had doubled his money.
     
  2. In March 2002, Leventhal convinced an investor to purchase 25,000 shares of OnCall at $2 per share by assuring him that OnCall would conduct an offering by June or July 2002 that would permit the investor to sell his shares at $4 per share.
     
  3. In April 2002, Leventhal assured another investor that if he purchased shares at $2 per share, he would be able to sell the shares at $4 per share within two weeks. The investor, who was 73 years old at the time, told Leventhal he did not have the money immediately available and asked for specific assurance that he would be able to sell his shares. Leventhal assured the investor that he would be able to sell the shares and told him that he had to act quickly. The investor purchased 20,000 shares at $2 per share.

30. The representations described in paragraph 29 were false and without any basis in fact. OnCall has not conducted any additional offerings - public or private - that have allowed investors to sell their shares, let alone for a profit. Nor has OnCall made any IPO-related filings with the Commission. In fact, at the time Koppel, Leventhal and others were assuring investors of future offerings and significant profits, OnCall had limited assets and was being used to enrich the Defendants. From December 2001 through May 2002, approximately $564,000 in investor funds was deposited into two OnCall bank accounts. By the end of June 2002, virtually all those funds were gone.

31. Investors who participated in the 2002 OnCall offering, including those discussed at paragraph 29, were not informed of the prior regulatory actions related to OnCall. Those investors were not informed of the October 2001 Maryland State Securities Commissioner order against Favata, OnCall, Favnet, and Labineri or the Maryland Commissioner findings of fraudulent conduct in connection with offerings by OnCall and Favnet.

32. A substantial portion of the offering proceeds went to Labineri. At least $220,000 of offering proceeds was transferred to Off World, Millenium Entertainment and Grant Singer Hamilton, all of which Labineri appears to have controlled, and none of which appear to have performed business functions related to OnCall's purported line of business. Approximately $76,100 in offering proceeds was transferred directly to Off World. Most, if not all, of the funds transferred to Off World were used to pay Labineri's personal expenses, including stays at expensive hotels in Manhattan, extensive travel, trips to casinos, fine dining, purchases at high-end stores such as Versace and Saks Fifth Avenue, as well as purchases from liquor stores, florists, gas stations and many other vendors of everyday personal items and services. Approximately $140,000 in proceeds was transferred to Millenium Entertainment and subsequently transferred to other entities, including Off World. In addition to the $220,000 that was transferred to Labineri's companies, during the course of the offering, Labineri was sometimes paid a purported salary by OnCall.

33. MB Holdings served as the purported placement agent on certain sales and, in at least one instance, received payment for the purchase of OnCall shares. Tanwir, who controlled MB Holdings, directly participated in the offering by supervising solicitations and soliciting investors. In addition, in at least one instance, Tanwir forwarded an OnCall purchase agreement, on MB Holdings letterhead, to an investor and instructed the investor on how to pay for the shares.

34. Favata, who was OnCall's president and had signatory authority over OnCall's bank accounts, participated in the fraud by, among other things, permitting his name, OnCall's name and OnCall's bank accounts to be used to raise money from investors that was substantially used to enrich Labineri, Tanwir and others.

35. Labineri, Tanwir, and Favata knew or were reckless in not knowing that the assurances regarding future offerings and price increases were false and lacked a reasonable basis in fact at the time they were made. Labineri, Tanwir and Favata knew, or were reckless in not knowing that OnCall had limited assets and that a significant portion of the offering proceeds was being transferred from OnCall's account to companies controlled by Labineri. Koppel knew, or was reckless in not knowing, that his assurance that a future offering would take place immediately was false. Labineri, Tanwir, Favata and Koppel knew, or were reckless in not knowing, about the October 2001 findings of the Maryland Securities Commissioner.

The 2003-2004 OnCall Offerings

36. During the first eight months of 2003, Tanwir and others sold shares of OnCall by means of false and misleading oral misrepresentations. Tanwir and representatives of OnCall, including a person who identified himself as David Lewis, the head of investor relations for OnCall, solicited investors to purchase shares of OnCall through promises of a future public offering. For example:

  1. In or around February 2003, Tanwir assured an investor that OnCall would conduct an IPO by May 2004. The investor purchased 100,000 shares at $1.00 per share.
     
  2. In 2003, Tanwir convinced an investor who held a $25,000 OnCall promissory note to convert his interest in the note to shares of OnCall. Tanwir offered the shares at $1.00 per share, and told the investor that the stock price would increase to $2.50 per share when OnCall completed an upcoming deal. The investor agreed to convert his note into OnCall stock.
     
  3. In July 2003, Lewis assured an investor who already owned shares of OnCall that OnCall would conduct an IPO in February 2004, after which the stock would trade at $4 per share. The investor purchased 20,000 shares at $1 per share.

37. The representations by Lewis and Tanwir regarding future offerings were false and without any reasonable basis in fact. OnCall has made no IPO-related filings and has few, if any, assets or operations. Thus, there was no basis for the representations about an IPO or the predicted rise in the stock price.

38. The investors discussed in paragraph 36 were not informed of the prior regulatory actions against and concerning OnCall, Favnet, Tanwir and Favata.

39. In or around August 2003, OnCall commenced a more formal offering of its shares and began to distribute a private offering memorandum, dated August 1, 2003 (the "PPM").1 The PPM states that the company seeks to raise up to $2,000,000 through the sale of 100 units at a price of $20,000 per unit. Each unit consists of 5,000 shares of common stock. The offering is not registered with the Commission. The PPM contains no end date for the offering.

40. The PPM describes OnCall as a private real estate investment and re-development company that intends to acquire single-family homes, either to manage as rental properties or to renovate and sell. The PPM identifies Favata as the sole officer and director of the company, and indicates that the company will focus on property located in Eastern Pennsylvania, where Favata resides.

41. The PPM is false and misleading in several respects. Among other things, it fails to disclose the disciplinary actions against OnCall and Favata, and contains misrepresentations about the use of the offering proceeds and OnCall's facilities. For example:

  1. The PPM represents that the proceeds from the offering will be used to obtain and improve properties (65%), for working capital (32.5%), and to develop the OnCall Contractor division of the company (2.5%), and that until they are so allocated, the proceeds "will be invested in certificates of deposit, short-term obligations of the United States Government, short-term commercial paper, money-market funds or other interest-bearing obligations, or temporarily maintained in non-interest bearing checking accounts." Contrary to those representations, most if not all of the funds raised since August 1, 2003 were transferred almost immediately to entities controlled by Labineri and used to pay his personal expenses.
     
  2. The PPM fails to disclose that OnCall had conducted numerous offerings over the preceding three years and had transferred hundreds of thousands of dollars of investors' money raised in prior offerings to companies controlled by Labineri.
     
  3. The PPM fails to disclose that the State of Maryland had found prior OnCall offerings to be fraudulent, and entered orders against OnCall and Favata, and that the NASD had barred Favata from associating with an NASD-member broker-dealer based on his involvement in prior offerings.
     
  4. The PPM contains false representations about OnCall's facilities, thus fostering the illusion that it is a legitimate company. In a section entitled "Facilities/Property" the PPM states:
  5. Pursuant to an agreement between On Call Contractors, an affiliated entity, and OCC Holdings, we use the offices of On Call Contractors from which to operate the business of OCC Holdings. This office space is 2,000 s/f and located at 244 Madison Avenue, Suite 404, New York, NY 10026. The space is leased for a period of 60 months (with approximately 35 months remaining as of the dates of this Memorandum). Our telephone number is (888) 302-3120.

    These representations are false. There is no office at 244 Madison Avenue, Suite 404; that is the address of a mail drop.

42. Lewis made additional misrepresentations to prospective investors in telephone solicitations he made following the distribution of the PPM. During the fourth quarter of 2003 and January 2004, Lewis assured several investors that OnCall would conduct an IPO during the first quarter of 2004 and that OnCall had made the necessary filings with the Commission. These assurances were false and without any basis in fact.

Fraudulent Sales of Promissory Notes by MB Holdings - Tanwir, Awan and Koppel

43. From 2001 through the present, MB Holdings has raised hundreds of thousands of dollars through the fraudulent sale of promissory notes issued by MB Holdings and other companies, including OnCall and IncredibleArt. MB Holdings' sale of high-yield promissory notes is a continuation of the scheme used during the Bernard Lee-Grant Singer period. MB Holdings representatives have convinced investors to purchase notes by falsely assuring them that the notes are risk-free. After the investors received some interest payments, representatives of MB Holdings persuaded them to convert their interest in the notes to purported private placement shares of other companies, including OnCall. After conversion, the issuing company had no obligation to repay investors on the promissory notes. When investors have declined to convert their interest in promissory notes into purported private placement shares, the issuers have defaulted on the notes.

44. In soliciting investments in the promissory notes, defendants MB Holdings, Tanwir, Awan and Koppel, directly or indirectly, have made false and misleading representations about the safety of the investments and failed to disclose the issuer's and purported guarantor's disciplinary history.

45. During the first six months of 2002, Tanwir, Awan and Koppel sold promissory notes issued by MB Holdings and IncredibleArt by falsely assuring investors that the promissory notes were risk-free because they were guaranteed by Grant Singer. For example:

  1. In or around February 2002, Koppel sold an investor a $25,000 MB Holdings promissory note by assuring that the note was risk-free because it was 100% guaranteed by Grant Singer. The note was signed by Tanwir on behalf of MB Holdings and purportedly signed by Nathan Singer, president of Grant Singer, on Grant Singer's behalf.
     
  2. In late February 2003, Awan sold a $25,000 IncredibleArt note to the same investor by assuring him that the note was a special opportunity being offered to only "friends and family" and was risk-free because it was 100% guaranteed by Grant Singer. The note was purportedly signed by Alex Sakin, president of Incredible Art, and Nathan Singer, on behalf of Grant Singer.
     
  3. In or around February 2002, Tanwir solicited another investor to purchase an MB Holdings promissory note, and assured the investor that the note was risk-free, because it was guaranteed by Grant Singer. The investor purchased a $25,000 note, which was signed by Tanwir on behalf of MB Holdings and purportedly signed by Nathan Singer on behalf of Grant Singer.

46. Koppel, Tanwir and Awan's representations that the MB Holdings and IncredibleArt promissory notes were risk-free because they were guaranteed by Grant Singer were false and misleading. Grant Singer had neither the intention nor the ability to honor the guarantees. Grant Singer was used by Labineri and Tanwir to perpetuate fraud, and by January 2002, had limited assets. In addition, Nathan Singer, the purported president of Grant Singer, was a fiction.

47. In addition to making material misrepresentations about the safety of the promissory notes, Tanwir, Awan and Koppel failed to disclose to investors that Grant Singer, Labineri and Incredible Art had been found by the Maryland Securities Commissioner to have engaged in prior fraudulent offerings.

48. At the time Tanwir, Awan and Koppel sold the promissory notes to the investors described in paragraph 45, above, they knew, or were reckless in not knowing, that their assurances regarding the safety of the investment were false. Tanwir had worked for Grant Singer and Awan had worked for Bernard Lee during the Bernard Lee-Grant Singer offerings. By February 2002, Koppel had been working closely with Tanwir and Awan for several months, and had already made false representations to investors about other offerings involving Tanwir, including OnCall. Tanwir, Awan, and Koppel knew, or were reckless in not knowing, that Grant Singer had neither the ability nor the intention to honor the guarantees and that Nathan Singer was a fiction. Tanwir, Awan and Koppel knew or were reckless in not knowing about the regulatory proceedings against Tanwir and Grant Singer.

49. MB Holdings and IncredibleArt defaulted on the notes referred to in paragraph 45 and the investors have been unable to reach Grant Singer, the purported guarantor on the notes.

50. Representatives of MB Holdings, including Tanwir, have continued to sell fraudulent promissory notes, though with a different guarantor. In November 2003, an MB Holdings representative who identified himself as Corey Taylor solicited an investor to purchase a $25,000 OnCall note, guaranteed by MB Holdings. In December 2003, Taylor solicited an investor to purchase an MB Holdings promissory note for $25,000. Taylor did not disclose to either investor that Tanwir, OnCall and Favata had been the subject of regulatory proceedings and found to have engaged in fraudulent offerings.

51. The funds invested in the promissory notes discussed in paragraphs 50, above, were deposited in a bank account in the name of "MB Holdings USA Division A Inc." in December 2003. That account was opened by Tanwir in November 2003, after an MB Holdings noteholder had obtained a judgment against MB Holdings and an order of attachment freezing two MB Holdings bank accounts.

Fraudulent Sale of Savvydata Stock - Labineri and Tanwir

52. Beginning in or around February 2003, Labineri and Tanwir began to solicit investors to purchase restricted shares of Savvydata, an unrelated privately-owned company. Labineri and Tanwir purport to be selling shares that a former officer of Savvydata has agreed to sell to Equity Service, a company Labineri formed in January 2003. Labineri and Tanwir solicited investors to purchase the restricted shares without the knowledge or consent of Savvydata, which still controls the shares.

53. In soliciting investors to purchase shares of Savvydata, Labineri and Tanwir have made false and misleading representations, including false promises of a future IPO and significant profits. For example:

  1. In the spring of 2003, Labineri solicited an investor to purchase 20,000 shares of Savvydata at $2.50 per share. Labineri assured the investor that Savvydata would conduct an IPO within approximately one year and that the share price would double. Labineri told the investor that Savvydata and Equity Service were in discussions with "Salomon Brothers" regarding the IPO. Labineri offered to apply the investor's interest in a $25,000 IncredibleArt note that she had purchased from Labineri and Tanwir towards her investment in Savvydata. The investor accepted Labineri's offer and remitted $25,000 to Equity Service for the purchase of 20,000 shares at $2.50 a share.
     
  2. During the first half of 2003, Tanwir solicited another investor to purchase shares of Savvydata at $2.50 per share. Tanwir assured the investor that Savvydata would go public in 2004 and that the stock price would increase to at least $10.00 per share. The investor agreed to purchase 140,000 shares at $2.50 per share in several transactions, and paid Equity Service for the shares. The investor made his final purchase in October 2003, wire transferring $100,000 to Equity Service's bank account on or around October 14, 2003.

54. Labineri and Tanwir's assurances of a future Savvydata IPO were false and without any reasonable basis in fact. Savvydata did not consult with any investment banking firms in 2003 regarding an IPO and, as of January 29, 2004, had no plans to conduct an IPO.

55. In soliciting investors, Labineri and Tanwir also made material misrepresentations and omissions relating to the transferability of the shares. Labineri and Tanwir led investors to believe that Equity Service was in a position to sell the shares. Moreover, after remitting payment for their shares, investors who purchased shares through Labineri and Tanwir received letters from Equity Service that stated: "The certificates for this investment will be delivered to you directly through our transfer agent. You should be aware that this process may take some time, as it is done on a semi-annual basis." Some investors who purchased shares through Labineri and Tanwir, also received a form "update" letter, dated September 30, 2003, that, among other things, contained the same statement attributing the delay in share distribution to the transfer agent.

56. The representations about Equity Services' ownership of, and ability to sell, the shares were false and misleading. As of the time Labineri and Tanwir offered shares to investors and accepted payment for them, ownership of the shares had not been transferred to Equity Service. In fact, the former officer did not request that Savvydata transfer ownership of the shares to Equity Service until September 2003, months after Equity Service had offered and purportedly sold hundreds of thousands of shares. The statement in Equity Service's letters blaming the transfer agent for the delay in distributing the shares was also false and misleading. The reason for the delay in the issuance of share certificates had nothing to do with the transfer agent.

57. The investors referred to in paragraph 53 paid a total of $375,000 to Equity Service for shares of Savvydata stock, including $100,000 after the receipt of the letters described in paragraph 55, above. None of the investors has received the stock they paid for and as of January 29, 2004, Savvydata had not transferred ownership of any of the former officer's shares to Equity Service or agreed to do so.

58. Labineri and Tanwir knew, or were reckless in not knowing, as of the time they offered Savvydata shares to investors, that ownership of the shares had not been transferred to Equity Service and the transferability of the shares was in doubt.

FIRST CLAIM FOR RELIEF
Violations of Section 17(a) of the Securities Act, Section 10(b) of the Exchange Act and Rule 10b-5

[All Defendants]

59. The Commission repeats and realleges the allegations contained in paragraphs 1 through 58 by reference as if fully set forth herein.

60. The stock and promissory notes discussed at paragraphs 1 through 58 are securities within the meaning of Sections 2(1) of the Securities Act, 15 U.S.C. 77(b)(1), and Section 3(a)(10) of the Exchange Act, 15 U.S.C. 78(c)(a)(10).

61. Defendants, directly and indirectly, singly and in concert, by the use of the means or instruments of transportation or communication in, and the means or instrumentalities of, interstate commerce, or by the use of the mails, in the offer or sale, and in connection with the purchase or sale, of securities, have: (a) employed devices, schemes or artifices to defraud; (b) obtained money or property by means of, or otherwise made untrue statements of material fact, or omitted to state material facts necessary to make the statements, in light of the circumstances under which they were made, not misleading; and (c) engaged in transactions, acts, practices and courses of business which operated or would operate as a fraud or deceit upon purchasers of securities or other persons.

62. As part of and in furtherance of this violative conduct, OnCall, MB Holdings, Labineri, Tanwir, Koppel and Favata, in and in connection with the offer and sale of OnCall stock, directly or indirectly, made false and misleading statements and omitted to state facts necessary to make statements not misleading, as alleged above in paragraphs 27 through 42.

63. As part of and in furtherance of this violative conduct, MB Holdings, Tanwir, Awan and Koppel, in and in connection with the sale of promissory notes, directly or indirectly, made false and misleading statements and omitted to state facts necessary to make statements not misleading, as alleged above in paragraphs 43 through 51.

64. As part of and in furtherance of this violative conduct, MB Holdings, Equity Service, Labineri and Tanwir, in and in connection with the offer and sale of Savvydata stock, directly or indirectly, made false and misleading statements and omitted to state facts necessary to make statements not misleading, as alleged above in paragraphs 52 through 58.

65. The false and misleading statements and omitted facts described above were material.

66. OnCall, MB Holdings, Equity Service, Labineri, Tanwir, Favata, Awan and Koppel knew, or were reckless in not knowing, that these misrepresentations and omissions were materially false or misleading.

67. By reason of the foregoing, OnCall, MB Holdings, Equity Service, Labineri, Tanwir, Favata, Awan and Koppel have violated, are violating, are about to violate, and, unless restrained and enjoined, will continue violating, Section 17(a) of the Securities Act, 15 U.S.C. 77q(a), Section 10(b) of the Exchange Act, 15 U.S.C. 78j(b), and Rule 10b-5 thereunder, 17 C.F.R. 240.10b-5.

SECOND CLAIM FOR RELIEF

[Relief Defendants]

68. The Commission repeats and realleges the allegations contained in paragraphs 1 through 58 by reference as if fully set forth herein.

69. By the reason of the acts, omissions, practices and courses of business set forth in this complaint, the sale of OnCall stock by certain of the defendants violated Section 17(a) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder. Some or all of the proceeds of such illegal sales, or other proceeds of the fraudulent and illegal securities sales alleged above, remain in an account or accounts in the name of Off World or are otherwise in Off World's possession and control.

70. By the reason of the acts, omission, practices and courses of business set forth in this complaint, the sale of promissory notes and other securities by representatives of MB Holdings and other defendants violated Section 17(a) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder. Some or all of the proceeds of such illegal sales, or other proceeds of the fraudulent and illegal secruities sales alleged above, remain in an account or accounts of MB Holdings USA Division A Inc. or are otherwise in MB Holdings USA Division A Inc.'s possession and control.

71. Relief defendants Off World and MB Holdings USA Division A Inc. each received, without consideration, proceeds of the fraudulent sale of securities alleged above. Each of these relief defendants profited from such receipt or from the fraudulent and illegal sale of securities alleged above by obtaining illegal proceeds under circumstances in which it is not just, equitable or conscionable for them to retain the illegal proceeds. Consequently, each of these entities has been named as a relief defendant for the amount of sales proceeds by which each has been unjustly enriched as a result of the fraudulent schemes or illegal sales transactions.

PRAYER FOR RELIEF

WHEREFORE, Plaintiff Commission respectfully requests that this Court grant relief as follows:

1. Enter a Final Judgment: (a) permanently restraining and enjoining each of the Defendants from, directly or indirectly, violating Section 17(a) of the Securities Act, 15 U.S.C. 77q(a), Section 10(b) of the Exchange Act, 15 U.S.C. 78j(b), and Rule 10b-5 thereunder, 17 C.F.R. 240.10b-5; (b) permanently restraining and enjoining defendants MB Holdings, Equity Service, Labineri, Tanwir, Favata and Koppel and each of them from participating in any future penny stock offering, pursuant to Section 20(g) of the Securities Act, 15 U.S.C. 77t(g), and Section 21(d)(6) of the Exchange Act, 15 U.S.C. 78u(d)(6); (c) directing Defendants and relief defendants to disgorge Defendants' ill-gotten gains from the illegal conduct alleged herein and prejudgment interest thereon; imposing civil monetary penalties against each of the Defendants pursuant to Section 20(d) of the Securities Act, 15 U.S.C. 77t(d), and Section 21(d) of the Exchange Act, 15 U.S.C. 78u(d).

2. Grant the following emergency relief: (a) an order temporarily and preliminarily enjoining each of the Defendants from, directly or indirectly, violating Section 17(a) of the Securities Act, 15 U.S.C. 77q(a), Section 10(b) of the Exchange Act, 15 U.S.C. 78j(b), and Rule 10b-5 thereunder, 17 C.F.R. 240.10b-5; (b) an order temporarily and preliminarily enjoining defendants MB Holdings, Equity Service, Labineri, Tanwir, Favata and Koppel and each of them from participating in any future penny stock offering, pursuant to Section 20(g) of the Securities Act, 15 U.S.C. 77t(g), and Section 21(d)(6) of the Exchange Act, 15 U.S.C. 78u(d)(6); (c) an order directing that all assets of defendants OnCall, MB Holdings, Equity Service, Labineri, Tanwir and Favata, and relief defendants be frozen; (d) an order directing each of the Defendants and relief defendants to provide an accounting; (e) an order permitting expedited discovery; and (f) an order enjoining and restraining each of the Defendants, and any person or entity acting at their direction or on their behalf, from destroying, altering, concealing, or otherwise interfering with the Commission's access to relevant documents, books and records.

3. Such other and further relief as the Court deems appropriate.

Dated: New York, New York
February __, 2004

Respectfully Submitted,

___________________________
Mark K. Schonfeld (MS-2798)
Associate Regional Director
Attorney For Plaintiff

Securities and Exchange Commission
233 Broadway
New York, New York 10279
(646) 428-1722

Of Counsel:

Leslie Kazon
James McGovern
Lucas M. Fitzgerald


Endnotes


http://www.sec.gov/litigation/complaints/comp18500.htm


Modified: 12/12/2004