U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 19782 / July 31, 2006
SEC v. Leslie Mersky, et al., Civil Action No. 93-CV-5200 (E.D. Pa.)
Civil and Administrative Proceedings Resolved as to Leslie Mersky in Connection With a Scheme To Sell Worthless Securities
Mersky to Pay $543,689, Barred from Participating in the Offering of any Penny Stock, and Barred from Association With any Broker or Dealer
The Securities and Exchange Commission ("Commission") announced today that it has resolved certain administrative and district court proceedings with Leslie Mersky ("Mersky"). On July 25, 2006, the Honorable Berle M. Schiller, United States District Court Judge, signed a Final Judgment permanently enjoining Mersky from, among other things, violations of antifraud and registration provisions of the federal securities laws ("Final Judgment"). Securities and Exchange Commission v. Mersky, et al., Civil Action No. 93-5200 (E.D. Pa.). Mersky consented to the Final Judgment without admitting or denying the allegations of the Commission's complaint, except as to jurisdiction.
In the civil injunctive action filed by the Commission in 1993, the Commission alleges that Mersky was an officer and a principal of Amglo Industries ("Amglo") and its subsidiary, Amglobal Corporation ("Amglobal"), and that he controlled brokerage accounts that actively traded in the securities of both companies. The complaint further alleges that, from 1988 through 1989, Mersky and others participated in a scheme to sell worthless securities of Amglo and Amglobal. According to the complaint, the price of these securities was artificially inflated through manipulative and fraudulent activities of Mersky and others. Among other things, the complaint alleges that Mersky caused Amglo to engage in a series of stock-for-stock exchanges wherein it acquired various shell companies as subsidiaries. Mersky and others falsely portrayed the shell companies as having legitimate business activities and substantial assets, creating the appearance that Amglo was a profitable, growing enterprise when it was not. The complaint alleges that the scheme to defraud collapsed in the summer of 1989, after Mersky and others distributed approximately $3.4 million of worthless securities to unwitting investors through the over-the-counter market. In January 1994, the Commission's civil action was stayed upon the request of the office of the United States Attorney for the Eastern District of Pennsylvania.
The Final Judgment, permanently enjoins Mersky from violating Sections 5(a), 5(c), and 17(a) of the Securities Act of 1933, Section 10(b) of Securities Exchange Act of 1934 ("Exchange Act") and Rule 10b-5 thereunder, Section 15(a)(1) of the Exchange Act, and Rules 101 and 102 of Regulation M of the Exchange Act. He also is barred from participating in the offering of any penny stock. The Final Judgment orders Mersky to pay disgorgement together with prejudgment interest in the amount of $543,689. The Commission did not seek a civil penalty because the alleged wrongdoing preceded the effective date of the Securities Enforcement Remedies and Penny Stock Reform Act of 1990. (Pub. L. No. 101-429, 104 Stat. 931 (1990))
The Commission also announced today that it issued an Order Instituting Administrative Proceedings Pursuant to Section 15(b) of the Securities Exchange Act of 1934, Making Findings, and Imposing Remedial Sanctions barring Mersky from association with any broker or dealer. This order is based on the permanent injunction contained in the Final Judgment.
The civil action continues with respect to additional defendants.