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SECURITIES AND EXCHANGE COMMISSION

Litigation Release No. 16775 / October 19, 2000

SECURITIES AND EXCHANGE COMMISSION v. MEMBERS SERVICE CORPORATION, et al., 97 CV 01146 (HHK) (D.D.C.)

The Securities and Exchange Commission announced today that on October 4, 2000, the United States District Court for the District of Columbia entered final judgments as to defendants Philip Sung, Joseph Lanza and Jayne Lanza.

The Commission's Complaint (LR 15371) alleged that defendant Sung was one of the principal architects of a fraudulent scheme to manipulate the price of the stock of Members Service Corporation. Mr. Sung is a fugitive who is believed to have fled to Asia to avoid prosecution. The Final Judgment as to defendant Philip Sung, which was entered by default, permanently enjoins Sung from violating Sections 5(a), 5(c) and 17(a) of the Securities Act of 1933, Sections 10(b) and 13(d) of the Securities Exchange Act of 1934 and rules 10b-5 and 13d-1 thereunder. In addition, the Final Judgment orders Sung to pay disgorgement in the amount of $2,637,338, plus prejudgment interest of $1,953,106 and imposes a civil penalty of $100,000.

Defendant Joseph Lanza is a stock promoter and resident of Rancho Mirage, California. Joseph Lanza is alleged to have made false and misleading statements in the course of recommending the purchase of Members stock. Without admitting or denying the substantive allegations of the Complaint, Joseph Lanza consented to the entry of a Final Judgment which permanently enjoins him from violating Sections 5(a), 5(c) and 17(a) of the Securities Act and Section 10(b) and rule 10b-5 of the Exchange Act, and which orders him to disgorge $265,214 plus prejudgment interest of $239,085 and which waives payment of the disgorgement and prejudgment interest and imposes no civil monetary penalty based upon his sworn representations concerning his financial condition.

The Commission's Complaint alleges that Joseph Lanza funneled the majority of the funds he received from his participation in the defendants' fraudulent scheme to his wife, relief defendant Jayne Lanza. Without admitting or denying the substantive allegations of the Complaint, Jayne Lanza consented to the entry of a Final Judgment ordering her to pay $250,000 into the Registry of the Court as settlement of the Commission's monetary claims against her. Relief Defendant Jane Lanza was not alleged to have violated any laws.

Entry of these final judgments concludes the litigation of this matter. The Commission's Complaint alleged that Sung and other defendants obtained over one million shares of unregistered stock of Members in sham transactions that violated Regulation S, manipulated the price of Members' stock and sold the unregistered stock into the manipulated market for illegal profits of over $5 million.

http://www.sec.gov/litigation/litreleases/lr16775.htm


Modified:10/23/2000