SECURTIES AND EXCHANGE COMMISSION
LITIGATION RELEASE NO. 17312 / January 15, 2002
Securities and Exchange Commission v. Art H. Beroff, Civil Action No. 1:02CV00067
ART H. BEROFF CONSENTS TO PAY A $50,000 CIVIL PENALTY FOR CAUSING VIOLATIONS OF THE REGISTRATION PROVISIONS OF THE SECURITIES ACT
In connection with a cease-and-desist order issued by the Commission yesterday in a settled administrative proceeding against Art H. Beroff ("Beroff"), (In the Matter of Art H. Beroff, Administrative Proceeding File No. 3-10677), the Commission today filed a related action for civil penalties against Beroff in the United States District Court for the District of Columbia. In settlement of that matter, Beroff has consented to the entry of a final judgment ordering him to pay a civil penalty of $50,000.
In the cease-and-desist order, the Commission found that Beroff was a cause of violations of Section 5 of the Securities Act of 1933 ("Securities Act") by a Promoter and Beroff's father.
In its cease-and desist order, the Commission found, and in its Complaint the Commission alleges, the following:
Beroff's parents received 500,000 shares of Amalgamated Explorations, Inc. ("AXPL") stock that they had not paid for. Beroff had his parents complete subscription agreements and investment letters that the Promoter had given to him. Within weeks, at the direction of the Promoter, Beroff had his parents return 470,000 shares of AXPL to the Promoter. Beroff had his father retain 30,000 of the 500,000 AXPL shares and then later, these shares were sold in his father's account in violation of the registration provisions of the securities laws. Beroff's participation in this transaction enabled the Promoter to acquire inexpensive shares of AXPL that the Promoter and his affiliates later sold in violation of Section 5 of the Securities Act. Beroff was a cause of the Promoter's and his father's violations of Section 5 of the Securities Act.
Beroff, without admitting or denying the allegations in the Commission's Complaint or the findings in its cease-and-desist order, has agreed to settle the Commission's claims by (1) consenting to the entry of an administrative order requiring him to cease and desist from committing or causing any violation, and any future violation, of Section 5 of the Securities Act, and (2) consenting to the entry of an order of the United States District Court requiring him to pay a civil penalty of $50,000.
In a related matter, the Commission yesterday filed a civil injunctive action in the federal district court for the Southern District of California against the Promoter, among others, alleging violations of the antifraud, antitouting and registration provisions of the federal securities laws. Securities and Exchange Commission v. James E. Franklin, et al., Civil Action No. 02CV0084 IEG (RBB) (LR-17311) (January 15, 2002).