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U.S. Securities and Exchange Commission


LITIGATION RELEASE NO. 16358 / November 17, 1999

Securities and Exchange Commission v. Credit Bancorp, Ltd., Credit Bancorp, Inc., Richard J. Blech, Thomas M. Rittweger and Douglas C. Brandon, Civil Action No. 99 Civ. 11395 (RWS) (USDC SDNY).

The Commission has obtained an order temporarily restraining Credit Bancorp, Ltd., Credit Bancorp, Inc. (collectively "Credit Bancorp"), Richard J. Blech, Thomas M. Rittweger and Douglas C. Brandon from making fraudulent offers, sales and purchases of securities in connection with an investment program. The court also froze the assets of Credit Bancorp, Blech and Rittweger. The complaint alleges the defendants have obtained investments of at least $120 million in marketable securities from individuals holding large blocks of stock which they cannot sell due to their positions with the issuers. Credit Bancorp has allegedly promised investors returns of 4% to 14% a year while the investors retain ownership of their securities, making the investment risk free. The defendants allegedly are representing that the promised returns will be generated by placing the securities in trust accounts established at major financial institutions in the name of Credit Bancorp; major European banks will then provide credit lines based on the value of the securities in the trust accounts, and the credit lines will be used to invest in a trading program which will generate the promised returns.

The complaint alleges that, in fact, the securities are not placed in trust accounts. Instead they are placed in cash or margin accounts maintained and controlled by Credit Bancorp. It is further alleged the securities are then margined or sold outright, with the proceeds being wired to bank accounts in the United States and overseas or being used to purchase securities such as S&P 500 Index options. The Order was entered November 17, 1999, by the Honorable Robert W. Sweet, United States District Judge for the Southern District of New York.

The complaint charged the defendants with violating 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. A hearing has been scheduled for November 18, 1999.