U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 16858 / January 9, 2001
SECURITIES AND EXCHANGE COMMISSION v TELSYS COMMUNICATIONS, INC., HOME SHOPPING PARTNERS and ELEAZAR I. HERACLEOPOLIS., Civil Action No. 00-439 (VAP)(CWx)
The Securities and Exchange Commission announced that on December 22, 2000, U.S. District Judge Virginia A. Phillips granted the Commission's Motion for Summary Judgment and entered Final Judgments of Permanent Injunction against Defendants Telsys Communications, Inc. ("Telsys"), Home Shopping Partners ("HSP"), and Eleazar I. Heracleopolis ("Heracleopolis"). The Court also ordered Heracleopolis to pay disgorgement, prejudgment interest and a civil penalty. The case involved an offering fraud in which the defendants raised money for an alleged Internet home shopping website.
The Complaint filed by the Commission on May 27, 1999, alleged that the defendants offered and sold unregistered units of participation in HSP, a partnership controlled by Heracleopolis. The defendants targeted the elderly and retired women and falsely represented to these investors that a large return would be promptly paid on their investment. The funds were to be used to develop an Internet website. The Defendants raised over $1,142,629 from at least 37 investors nationwide. No finds were ever returned or paid to any investors. A large percentage of the investor funds was simply diverted by Heracleopolis to his own uses and that of his family. In addition, substantial undisclosed commissions were paid to salespersons. Heracleopolis also used investor funds to purchase a laundromat for himself through a corporation wholly controlled by him.
The Final Judgments enjoin Telsys, HSP and Heracleopolis from violations of the registration and antifraud provisions, Sections 5(a), 5(c) and 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The Final Judgment also enjoins Telsys and Heracleopolis from violations of the broker dealer registration provisions, Section 15(a)(1) of the Exchange Act. In addition, the Final Judgment orders Heracleopolis to pay disgorgement in the amount of $502,812.67 plus prejudgment interest in the amount of $38,630.40 and a $110,000 civil money penalty.