U.S. SECURITIES AND EXCHANGE COMMISSION

Litigaton Release No. 18452 / November 12, 2003

Securities and Exchange Commission v. InverWorld, Inc. et al., Civ. No. SA-99-CA-0822 (W.D.Tex).

The Securities and Exchange Commission announced that it has settled its civil fraud action against George F. Fahey, former president of San Antonio-based InverWorld, Inc. and InverWorld Securities, Inc. On August 4, 1999, the SEC charged Fahey and Jose P. Zollino, InverWorld's former chairman, with losing in excess of $400 million of client funds in unauthorized, highly leveraged securities investments and practically worthless securities issued by foreign shell companies. The SEC civil action was stayed pending a criminal investigation into the same conduct by the United States Attorney for the Western District of Texas (San Antonio Division).

On December 14, 2001, Fahey pleaded guilty to two counts of investment adviser fraud and conspiracy to launder money. In March 2003, the court sentenced Fahey to 84 months imprisonment and ordered him to pay criminal restitution of $139 million. On May 13, 2002, Zollino pleaded guilty to two counts of conspiracy to commit fraud and launder money. In October 2002, Zollino was sentenced to 144 months imprisonment and ordered to pay $341 million in criminal restitution.

Fahey, without admitting or denying the allegations of the Commission's complaint, has consented to the entry of a final judgment that permanently enjoins him from violating the antifraud provisions of the federal securities laws. In light of his jail sentence and criminal restitution order, which is in an amount greater than the Commission's disgorgement claim, the Commission will forego its claims for disgorgement and a civil penalty. The judgment enjoins Fahey from violating 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 aiding and abetting violations of Sections 206(1) and 206(2) of the Investment Advisers Act of 1940.

Fahey, in a related administrative proceeding, has agreed to consent to a Commission order barring him from association with any broker-dealer or investment advisor.

Additional information can be found in Litigation Release No. 16242 (August 4, 1999); No. 16974 (April 25, 2001); and No. 17533 (May 24, 2002).