U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 17516 / May 14, 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.)
FEDERAL COURT ENJOINS PROMOTERS OF NATIONWIDE SECURITIES FRAUD
The Securities and Exchange Commission ("Commission") announced today that on May 6, 2002, the Honorable Horace T. Ward of the United States District Court for the Northern District of Georgia entered orders of permanent injunction and other relief against Louis M. Lazorwitz ("Lazorwitz"), and a general partnership Tri-Star Investment Group, L.L.C. a/k/a Tri-Star Investment Group ("Tri-Star"). Lazorwitz and Tri-Star were ordered to pay disgorgement, prejudgment interest and civil penalties in amounts to be resolved upon motion of the Commission at a later date. Relief defendant Lazor, Ltd. was ordered to pay disgorgement in an amount to be resolved upon motion of the Commission at a later date. Lazorwitz, Tri-Star and Lazor, Ltd. consented to the entry of the orders without admitting or denying the allegations of the Commission's complaint. Defendant J. Charles Reives ("Reives") was not affected by the entry of these orders.
The Commission's complaint alleged a multimillion-dollar, nationwide, prime bank type and other securities fraud. Lazorwitz, a Texas resident, and Reives, a North Carolina resident, were alleged to have promoted the fraudulent scheme as Tri-Star's general partners, in which they used the general partnership to offer and sell unregistered securities in Tri-Star to over 900 investors in at least 35 states, and raised 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 alleged 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. The complaint also charged that relief defendant Lazor, Ltd. received ill-gotten gains from the fraud without any legitimate claim to those assets. 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. The complaint further alleged that Lazorwitz and Reives misappropriated investor funds for their personal benefit.
Judge Ward's orders permanently enjoined Lazorwitz and Tri-Star from further 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, and additionally enjoined Lazorwitz from further violations of Sections 206(1) and 206(2) of the Investment Advisers Act of 1940, and from further violations of the broker-dealer registration provisions of Section 15(a) of the Exchange Act.
See also: L.R. 17317 (January 16, 2002)