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SECURITIES AND EXCHANGE COMMISSION

Litigation Release No. 16653 \ August 16, 2000

SECURITIES AND EXCHANGE COMMISSION v. PRECIOUS STONES TRADING WORLDWIDE, INC., RUSLAN RAPOPORT, EDWARD LANDENBAUM, AND IGOR LANDENBAUM, 00 Civ. 6097 (NRB) (S.D.N.Y.)

The Commission announced that it filed a Complaint today in the United States District Court for the Southern District of New York, charging three individuals and one entity with having defrauded at least 208 investors of approximately $5.5 million through the sale of unregistered common stock of Precious Stones Trading Worldwide, Inc. ("Precious Stones") -- a company purportedly engaged in the business of buying and selling rare art, coins, and gemstones from Eastern Europe, Russia and South America. The Commission alleges that the individuals charged in the Complaint diverted the proceeds raised from the fraudulent scheme to themselves and to pay personal expenses. Named in the Complaint are:

Precious Stones, a Delaware corporation located in New York, New York;

Ruslan Rapoport, a 26 year old resident of Manhattan, who held himself out as the promoter, beneficial owner, president, director and executive officer of Precious Stones;

Edward Landenbaum ("E. Landenbaum"), a 28 year old resident of Brooklyn, New York; and

Igor Landenbaum a/k/a Michael Landenbaum ("I. Landenbaum"), a 38 year old resident of Brooklyn, New York.

The Complaint alleges as follows: From October 1997 to April 2000, Rapoport, E. Landenbaum, and I. Landenbaum, through Precious Stones (collectively, the "Defendants"), conducted a fraudulent, unregistered offering of Precious Stones stock. Among other things, Defendants falsely represented to investors that Precious Stones would commence an initial public offering ("IPO") in the near future and that the proceeds of the sale of Precious Stones stock would be used to finance Precious Stones' alleged business. In fact, Precious Stones was not engaged in any business except defrauding investors, there was no real possibility that Precious Stones would successfully conduct an IPO and Defendants diverted the bulk of the proceeds raised from the offering to themselves and to pay personal expenses.

The Commission alleges that, through this conduct, Defendants violated the antifraud provisions set forth in Section 17(a) of the Securities Act of 1933 ("Securities Act") and Section 10(b) of the Securities Exchange Act of 1934 ("Exchange Act") and Rule 10b-5, and the registration provisions set forth in Sections 5(a) and 5(c) of the Securities Act. In addition, the Commission alleges that Rapoport, E. Landenbaum, and I. Landenbaum violated Section 15(a) of the Exchange Act by unlawfully selling unregistered Precious Stones stock while not registered as brokers.

The Commission seeks a final judgment permanently enjoining the Defendants from violating Sections 5 and 17(a) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, ordering them to disgorge their ill-gotten gains plus prejudgment interest, and assessing civil penalties. The Commission also seeks a final judgment permanently enjoining Rapoport, E. Landenbaum, and I. Landenbaum from violating Section 15(a) of the Exchange Act.

The Commission thanks the United States Attorney's Office for the Southern District of New York ("USAO") for its cooperation in this matter. The USAO today also announced the indictments of Rapoport, E. Landenbaum and I. Landenbaum in connection with the abovementioned conduct.

http://www.sec.gov/litigation/litreleases/lr16653.htm


Modified:08/16/2000