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U.S. Securities and Exchange Commission

Litigation Release No. 17797 / October 22, 2002

Securities and Exchange Commission v. J. Scott Eskind, United States District Court for the Northern District of Georgia, Civil Action No. 1:97-CV-1790-CAM

On October 3, 2002, the Securities and Exchange Commission filed an Application for Order to Show Cause why defendant J. Scott Eskind (Eskind) should not be held in civil contempt for his violation of the Court's January 12, 1998 permanent injunction order enjoining him from violations of Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and Section 206 of the Investment Advisers Act of 1940. On October 10, 2002, the Honorable Charles A. Moye, United States District Judge for the Northern District of Georgia, entered an Order requiring Eskind to show cause why he should not be held in civil contempt for his violation of the Court's January 12, 1998 order.

The Commission's application alleged that, subsequent to being enjoined, and continuing until the present, Eskind raised at least $3 million through sales of limited partnership units in Capital Management Fund, Limited Partnership (Capital). Capital purportedly does business by trading in securities through initial or secondary public
offerings. The sales materials misrepresented to investors Eskind's broker-dealer experience, and did not disclose his 1991 New York Stock Exchange suspension, the Commission's 1997 civil action or an order issued by the Commission in 2000, barring him from association with an investment adviser. The application alleged that investors were told that IRA accounts had been opened for them at a trust company which serves as an IRA custodian. Investors received statements from Lorus Investments, Inc. (Lorus), an entity controlled by Eskind, indicating their funds in those accounts. In fact, no such accounts were opened. The sales materials also falsely stated that a major law firm provides legal representation for Lorus.

Eskind's conduct is also the subject of a civil action, SEC v. Eskind, et al., Civil Action No. 1:02-CV-2429-MHS, filed by the Commission on September 3, 2002 and currently pending before another judge of the Court.

See also: L. R. 15395 (June 25, 1997); and L. R. 15618 (January 14, 1998); and L. R. 17725 (September 13, 2002).

 

http://www.sec.gov/litigation/litreleases/lr17797.htm


Modified: 10/22/2002