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UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Litigation Release No. 14701 / October 26, 1995
     
U.S.A. v. John Lauer, N.D. Ill., No. 94 CR 614, filed October 17,
1995)    

     The Commission and the U.S. Attorney's Office for the
Northern District of Illinois announced that on October 17, 1995,
a criminal Information was filed in the United States District
Court for the Northern District of Illinois charging John Lauer
(Lauer) with obstructing a Commission investigation regarding the
purported trading of "Prime Bank Instruments" by Konex Holding
Corp.  In addition, the Information charges Lauer with mail and
wire fraud for his participation in multiple frauds against the
Chicago Housing Authority (CHA), including his investment of
$12.5 million of CHA funds in a purported "Prime Bank Instrument"
trading program called the Konex Roll Program (Roll Program). 
The charges relating to the Roll Program arise from the same
facts alleged in a Commission action against Lauer and others in
June 1994 for violations of Section 17(a) of the Securities Act
of 1933 and Section 10(b) of the Securities Exchange Act of 1934
and Rule 10b-5 thereunder.   

     The Commission filed its Complaint against Lauer, Joseph
Polichemi (Polichemi), Lyle Neal (Neal), and their respective
companies, Clifton Capital Investors L.P. (CCI), Copol
Investments Limited (Copol) and Konex Holding Corp. (Konex) on
June 21, 1995 in the United States District Court for the
Northern District of Illinois.  The Commission's Complaint
alleged that from January 1993 to the present, Konex, Neal's
company, raised at least $12.5 million from the CHA through the
offer and sale of investments in the Roll Program.  In fact, the
purported Roll Program, which was designed to pool investor funds
to purchase and trade in "Prime Bank Instruments," was nothing
more than a scam to defraud investors.  Thus, the Complaint
alleged that Polichemi and Neal, through their respective
companies, Copol and Konex, made false and misleading statements
regarding the use of CHA proceeds and the risks and returns
associated with the investment.

     The Complaint further alleged that Lauer, CHA's Director of
Risk Management and Benefits, among other things, failed to
disclose to the CHA the role of his private company, CCI, in the
administration of CHA's investment, his receipt of "compensation"
in an amount exceeding $4 million and his resulting conflict of
interest.  Moreover, the Complaint alleged that Lauer made false
and misleading statements to prospective investors concerning the
rate of return CHA earned and the circumstances under which the
CHA invested in the Roll Program.   

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     On June 21, 1994, the Honorable Wayne Andersen entered an
order temporarily restraining and enjoining the defendants from
future violations of the antifraud provisions of the federal
securities laws and, among other things, froze their assets.  On
July 29, 1994, the Court entered an Order of Permanent Injunction
and Other Equitable Relief by Default against Polichemi, Neal,
Copol and Konex.  On August 25, 1994, the Court entered an Order
of Preliminary Injunction and Other Relief against Lauer and CCI.

The action remains pending as to Lauer and CCI.