U.S. SECURITIES & EXCHANGE COMMISSION
Litigation Release No. 18046 / March 21, 2003
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 IMPOSES FINAL JUDGMENT SETTING DISGORGEMENT, PREJUDGMENT INTEREST AND THIRD TIER CIVIL PENALTIES IN NATIONWIDE SECURITIES FRAUD
The Securities and Exchange Commission ("Commission") announced today that on March 18, 2003, the Honorable Horace T. Ward of the United States District Court for the Northern District of Georgia entered a final judgment ordering defendants Louis M. Lazorwitz ("Lazorwitz"), J. Charles Reives ("Reives") and Tri-Star Investment Group, L.L.C. a/k/a Tri-Star Investment Group ("Tri-Star") to jointly and severally pay disgorgement of $15 million, along with prejudgment interest thereon, to the registry of the Court within 30 days of the entry of the order. The Court also ordered relief defendant Lazor, Ltd. to pay disgorgement in the amount of $660,000, and further ordered the three defendants to pay third-tier civil penalties of $110,000 (Lazorwitz), $110,000 (Reives) and $550,000 (Tri-Star). Additionally, the Court made findings which concluded that the conduct of the defendants involved fraud, deceit, manipulation or deliberate or reckless disregard of a regulatory requirement and that their violations directly or indirectly resulted in substantial losses or created a significant risk of substantial losses to other persons. Lazorwitz, Reives and Tri-Star have been permanently enjoined from further securities laws violations, by earlier orders of the Court.
The Court concluded in its order that a multimillion-dollar, nationwide securities fraud had been conducted by Lazorwitz and Reives who 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 at least $15 million. 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. Lazorwitz and Reives misappropriated investor funds for their personal benefit. 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. 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 Court concluded that relief defendant Lazor, Ltd. received $660,000 in ill-gotten gains from the fraud without any legitimate claim to those assets.