Securities and Exchange Commission
Litigation Release No. 17728 / September 16, 2002
SEC v. Louis M. Lazorwitz, J. Charles Reives, and Tri-Star Investment Group, L.L.C. a/k/a Tri-Star Investment Group, Defendants, and Lazor, Ltd., Relief Defendant, Civil Action File No. 1:02-CV-0112 (N.D. Ga. August 7, 2002)
The Securities and Exchange Commission ("Commission") announced today that on August 7, 2002, the Honorable Horace T. Ward of the United States District Court for the Northern District of Georgia entered an order of permanent injunction and other relief against J. Charles Reives ("Reives") as a result of his sales of securities in conjunction with the general partnership Tri-Star Investment Group, L.L.C. a/k/a Tri-Star Investment Group ("Tri-Star"), a co-defendant in the case. Reives was ordered to pay disgorgement, prejudgment interest and a civil penalty in amounts to be resolved upon motion of the Commission at a later date. Reives consented to the entry of the order without admitting or denying the allegations of the Commission's complaint. Defendants Louis M. Lazorwitz ("Lazorwitz") and Tri-Star were permanently enjoined and ordered to pay disgorgement, prejudgment interest and civil penalties by prior orders of the Court, and relief defendant Lazor, Ltd. has previously been ordered to disgorge its ill-gotten gain. Lazorwitz, Tri-Star and Lazor, Ltd. were not affected by the entry of this order.
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 order permanently enjoined Reives from further violations of Sections 5(a), 5(c) and 17(a) of the Securities Act of 1933, Sections 10(b) and 15(a) of the Securities Exchange Act of 1934, and Rule 10b-5 thereunder and Sections 206(1) and 206(2) of the Investment Advisers Act of 1940.