U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 17317 / January 15, 2002
SECURITIES AND EXCHANGE COMMISSION V. LOUIS M. LAZORWITZ, J. CHARLES REIVES, TRI-STAR INVESTMENT GROUP, L.L.C. A/K/A TRI-STAR INVESTMENT GROUP, Defendants, AND LAZOR, LTD., Relief Defendant, Civil Action No. 1:02-CV-0112 (N.D. Ga.)
SEC SUES PROMOTERS OF NATIONWIDE SECURITIES FRAUD
The Securities and Exchange Commission announced today that it has filed a complaint against Louis M. Lazorwitz, J. Charles Reives, and Tri-Star Investment Group, L.L.C. a/k/a Tri-Star Investment Group, as defendants, and Lazor, Ltd. as a relief defendant, alleging a multimillion-dollar, nationwide, prime bank type and other securities fraud. The complaint charges that Lazorwitz, a Texas resident, and Reives, a North Carolina resident, promoted the fraudulent scheme as Tri-Star's general partners. The complaint also charges that relief defendant Lazor, Ltd. received ill-gotten assets from the fraud without any legitimate claim to those assets.
The Commission's complaint alleges that Lazorwitz and Reives used Tri-Star to offer and sell unregistered securities in Tri-Star to over 900 investors in at least 35 states, and to raise over $15 million and that Tri-Star, through Lazorwitz and Reives, initially represented that Tri-Star would invest in bank debentures and later claimed that it might invest in other international trade opportunities. The complaint also alleges that Lazorwitz and Reives promoted Tri-Star directly and through independent agents around the United States known as Facilitators and led investors to expect profits of 20% per month in so-called 13-month trading programs, after an initial 90-day waiting period.
According to the Commission's complaint, Tri-Star, Lazorwitz, and Reives made material misrepresentations and omissions of fact to investors concerning, among other things, the use of investor funds, the expected returns, and investment risks. For example, the complaint alleges that Tri-Star, through Lazorwitz and Reives, misrepresented that investor funds would be used for lucrative trade opportunities when, in fact, Tri-Star "invested" relatively little of the funds collected, and never earned significant profits. It also alleges that they falsely represented to investors that the investors' funds would be collateralized by an insured certificate of deposit, that they caused false account statements to be issued to the investors and that they failed to disclose to investors that Tri-Star used investor funds to pay alleged profits and commissions to investors and Facilitators. The complaint further alleges that Lazorwitz and Reives misappropriated investor funds for their personal benefit.
The Commission's complaint charges Lazorwitz, Reives, and Tri-Star with violations of Sections 5(a), 5(c) and 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 thereunder. The complaint also charges Lazorwitz and Reives with violations of Sections 206(1) and 206(2) of the Investment Advisers Act of 1940, and with violations of the broker-dealer registration provisions of Section 15(a) of the Exchange Act.