United States Securities and Exchange Commission
Litigation Release No. 16405 /January 10, 2000
Securities and Exchange Commission v. Milan Capital Group, Inc., Ira A. Monas and Rita A. Monas, 00 Civ. 108 (DC) (S.D.N.Y.) (January 7, 2000)
SEC Freezes Assets of Unregistered Broker-Dealer Milan Capital Group, Inc.
To Protect Investor Funds
SEC, in Emergency Federal Court Action, Obtains Order
Freezing More than $3.7 Million
Today, the Securities and Exchange Commission announced that the U.S. District Court for the Southern District of New York entered a Temporary Restraining Order prohibiting a Melville, New York company, Milan Capital Group, Inc., from offering or selling securities while failing to be registered with the Commission as a broker-dealer. The emergency federal court action also freezes more than $3.7 million held by Milan and provides other emergency relief. In addition to Milan, the action names as relief defendants Milan's president, Ira A. Monas who is currently incarcerated in an upstate New York prison for grand larceny and Milan's secretary, Rita A. Monas.
The Commission's complaint alleges the following: Since October 1999, Milan has offered and purportedly sold securities in several highly-publicized initial public offerings (IPOs) to dozens of investors in several states. Milan has received funds from these investors based on representations that Milan would use the funds to purchase shares in IPOs. Milan lacked access to, and failed to obtain, any IPO shares for these investors. In addition, Milan commingled investors' funds in its own bank account, using the funds to pay Milan's operational expenses and disbursing funds to persons and entities other than the investors. Milan is not, and has never been, registered with the Commission as a broker-dealer and, therefore, is prohibited by federal law from selling, offering to sell, or inducing the sale of securities. By engaging in the above conduct, Milan violated the broker-dealer registration requirements of Section 15(a) of the Securities Exchange Act of 1934.
As relief, the Commission seeks (1) a permanent injunction against future violations of the broker-dealer registration provisions of the Exchange Act; (2) disgorgement of all proceeds Milan received from its activities as an unregistered broker-dealer, plus prejudgment interest; (3) a verified accounting of Milan's receipt and disbursement of investor funds; and (4) the imposition of civil money penalties.
The Commission is continuing its investigation in this matter.