U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 16845 /December 28, 2000
SECURITIES AND EXCHANGE COMMISSION v. HOME SHOPPING PARTNERS, TELSYS COMMUNICATIONS, INC., and ELEAZER I. HERACLEOPOLIS, Civil Action Civil Action No. ED CV 00-439 (VAP) (CWx) (C.D. Cal.)
COMMISSION OBTAINS SUMMARY JUDGMENT AGAINST DEFENDANTS IN OFFERING FRAUD TARGETING ELDERLY
On December 22, 2000, the Honorable Virginia A Phillips, United States District Judge for the Central District of California, granted the Commission's motion for summary judgment against defendants Telsys Communications, Inc. ("Telsys"), Home Shopping Partners ("HSP") and Eleazar I. Heracleopolis ("Heracleopolis") for violating the antifraud, securities registration and broker-dealer registration provisions of the securities laws (Sections 5(a), 5(c) and 17(a) of the Securities Act of 1933, Sections 10b-5 and 15(a) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder). The Court permanently enjoined the defendants from committing future violations of the securities laws, and ordered defendant Heracleopolis to disgorge $502,812.67 in misappropriated investor funds, plus prejudgment interest, and to pay a third tier civil penalty of $110,000.
It was undisputed that defendants Telsys, HSP and Heracleopolis raised $1,142,629 from the sale of HSP general partnership interests to at least 37 investors in several states, from at least August 1996 through April 1998. Proceeds from the securities offering were to be used by Telsys to develop and operate an internet "shopping mall" for HSP. In fact, Heracleopolis used most of the money to pay salaries for himself and his wife, make cash gifts to his mother, discharge personal liabilities owed to the Internal Revenue Service and other creditors, purchase and operate a Laundromat, and pay undisclosed commissions to sales representatives. Consequently, only a fraction of the moneys raised were available to establish a viable business. Heracleopolis also selected the elderly as targets for his scam, and used deceptive means to lure investors.