SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 16460 / March 1, 2000
Securities and Exchange Commission v. Milan Capital Group, Inc., Investment Offices d/b/a AC Financial, Inc., Ira A. Monas, Michael Irwin Lamhut, Jason M. Cope, Rita A. Monas, Jennifer Monas, Sands Point International Corp., Douglas H. Monas, Michael's Capital Consultants, Inc., and HWK Consultants, Inc., 00 Civ. 108 (DC) (S.D.N.Y.) (February 29, 2000)
SEC Charges Prison Inmate with IPO Scam that Defrauded Over 190 Investors of $8.7 Million
Yesterday, in federal district court in Manhattan, the Securities and Exchange Commission charged Ira A. Monas-who is currently incarcerated in an upstate New York prison for grand larceny3/4with defrauding over 190 investors of approximately $8.7 million in a scam involving several highly publicized initial public offerings ("IPOs") of securities. The Commission also charged in the scam two entities controlled by Monas-Milan Capital Group, Inc. and the broker-dealer Investment Offices (which operated under the name AC Financial, Inc.)-along with Michael Irwin Lamhut, the operations manager of Milan Capital, and Jason M. Cope, the branch manager of AC Financial's Pittsburgh, Pennsylvania office.
The amended complaint alleges that: In the fall of 1999, Monas, along with the other defendants, offered and purportedly sold to investors shares in four "hot" IPOs, meaning that the securities offerings were oversubscribed and difficult to purchase. The defendants collected $8.7 million from approximately 190 investors, who were told that the defendants had access to the market for these highly-publicized IPOs and could purchase shares in the IPOs at the initial offering prices. These representations were false. The defendants neither had access to the exclusive IPO market nor purchased IPO shares for the investors. Instead, the defendants stole the investors' money and, to create the illusion of legitimate stock purchases, gave the investors phony trade confirmations and account statements. The defendants also returned relatively small sums of money to some victims who were defrauded in the early stages of the scheme, and falsely represented these monies as repayment of principal and profits on the sham IPO investments.
Yesterday's action expands the case initially brought by the Commission, on January 7, 2000, which alleged that Milan Capital had violated broker-dealer registration provisions by offering for sale and purportedly selling IPO securities, while failing to be registered as a broker-dealer with the Commission. In that action, among other things, Judge Denise Cote of the U.S. District Court for the Southern District of New York: (1) froze all funds and other assets held in Milan Capital's name, including $3.7 million held in a bank account; and (2) preliminarily enjoined Milan Capital from acting as an unregistered broker-dealer. On January 21, 2000, the Court appointed a receiver for Milan Capital. The receiver is charged with, among other things, (1) identifying and securing Milan Capital's assets and property, (2) ascertaining the disposition of investors' funds, and (3) ensuring the fair treatment of all investors who dealt with Milan Capital.
Named as defendants are: