U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 20424 / January 8, 2008
Securities and Exchange Commission v. Lazare Industries, Inc., et al, Civil Action No. 3:CV-96-0705 (M.D. Pa.)
Final Judgment Entered Against Lazare Industries, Richard Harley, and Jacqueline Kube In Connection With a Scheme to Sell Worthless Stock in a Company Touting a Phony Aids Treatment
The Securities and Exchange Commission ("Commission") announced today that, on January 4, 2008, the Honorable Thomas I. Vanaskie entered a Final Judgment and Order against Lazare Industries, Inc. ("Lazare"), its principal, Richard J. Harley ("Harley'), and relief defendant Jacqueline Kube ("Kube"). The Final Judgment and Order directs Lazare, Harley, and Kube, jointly and severally, to pay $975,911 in disgorgement and interest. It further orders Lazare and Harley to pay third-tier penalties of $1 million and $500,000, respectively.
In the civil injunctive action filed by the Commission in April 1996, the Commission alleged that Harley and Lazare engaged in a scheme to defraud more than seventy investors by making fraudulent representations and omissions in connection with the offer and sale of at least $1.4 million of subscriptions for the unregistered stock of Lazare. The Commission also named Jaqueline Kube, Richard Harley's common law wife, as a relief defendant. The alleged misrepresentations and omissions concerned an ozone/oxygen therapy offered by Lazare and Harley which they claimed, among other things, (1) had undergone extensive testing; (2) had been proven to be effective in the treatment of, among other viruses, AIDS; and (3) had been patented. None of these claims was true.
Simultaneous with the filing of the Complaint, the Commission sought and obtained a temporary restraining order against the defendants. On May 20, 1996, the Court entered a Permanent Injunction by Consent and Continued Asset Freeze (the "Permanent Injunction") which permanently enjoined Lazare and Harley 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, but left open the issues of disgorgement and civil penalty. The action was then stayed pending the outcome of related criminal proceedings.
After a hearing on January 4, 2008, the Court entered the Final Judgment and Order resolving these final issues.