SECURITIES AND EXCHANGE COMMISSION

Litigation Release No. 16456 / February 24, 2000

Securities and Exchange Commission v. Vladislav Steven Zubkis, et al., 98 Civ. 8086 (JGK), U.S.D.C., S.D.N.Y.

The Securities and Exchange Commission ("Commission") announced that in a decision dated February 21, 2000, the Honorable John G. Koeltl of the United States District Court for the Southern District of New York has held that Vladislav Steven Zubkis ("Zubkis") violated the antifraud provisions, as well as other provisions, of the federal securities laws. Zubkis, age 40, resides in Bonita, California, near San Diego. Zubkis controlled International Brands, Inc., which was formerly known as Stella Bella Corporation U.S.A. ("Stella Bella").

The court, in granting the Commission´s motion for partial summary judgment, found that Zubkis:

• Sold millions of dollars worth of unregistered securities to investors in violation of Sections 5(a) and 5(c) of the Securities Act of 1933. (These securities were the common stock of Stella Bella, and "ATriple Crown Units" of Z3 Capital Corporation ("Z3")) .

• Knowingly made material misrepresentations and failed to disclose material information to investors in connection with the sale of Stella Bella securities in violation of Section 17(a) of the Securities Act and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. For instance, Zubkis made baseless predictions regarding the future price of Stella Bella common stock, baseless revenue projections for Stella Bella, and false representations regarding contracts that Stella Bella had allegedly obtained.

• Caused Z3, which operated as a securities broker, and its employees or agents, to make material misrepresentations to investors in connection with the sale of Stella Bella securities in violation of Section 15(c)(1) of the Exchange Act.

• Directly and through Z3 operated as an unregistered securities broker in violation of Section 15(a) of the Exchange Act.

Judge Koeltl permanently enjoined Zubkis from further violations of these provisions of the federal securities laws, finding that "there is a strong basis for concluding that Mr. Zubkis, unless enjoined from doing so, will again violate federal securities laws." Judge Koeltl further found Zubkis substantially unfit to serve as an officer or director of a public company and permanently prohibited him from serving as such pursuant to Section 20(e) of the Securities Act and Section 21(d)(2) of the Exchange Act. Finally, Judge Koeltl ruled that further proceedings would be needed to determine the amount of ill-gotten gains that Zubkis should be required to disgorge.

(See Litigation Release No. 15552, November 5, 1997, and Litigation Release 16099, March 30, 1999 for more details.)