U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 18573 / February 11, 2004
Securities and Exchange Commission v. OCC Holdings, Ltd., MB Holdings USA, Inc., Equity Service Associates, Inc., Alan Labineri, Khurram Tanwir, Joseph Favata, Ahmed Awan and Yakov Koppel, and Relief Defendants Off World Strategic Holdings and MB Holdings USA Division A Inc., 04 Civ. 1122 (S.D.N.Y.) (TPG )
SEC Files Emergency Action To Halt Three Offering Frauds
On February 11, 2004, the Commission filed an emergency enforcement action to halt three offering frauds being conducted by representatives of three entities: (1) Equity Service Associates, Inc.; (2) MB Holdings USA, Inc.; and (3) OCC Holdings, Ltd, a/k/a OnCallContractors.com ("OnCall"). Along with its Complaint, the Commission filed an application for emergency relief, including temporary restraining orders, orders freezing the defendants' and relief defendants' assets, and expedited discovery.
The Commission's Complaint, filed in the United States District Court for the Southern District of New York, alleges that since December 2001, the defendants fraudulently raised more than $2 million from investors through three offerings: (1) the sale of purported private placement shares of OnCall; (2) the sale of promissory notes issued by MB Holdings and other entities; and (3) the purported sale of restricted shares of an unrelated, privately owned company. The offerings are all allegedly being orchestrated by, and/or for the benefit of, Labineri and/or Tanwir, who have allegedly been conducting fraudulent offerings together since at least 1999. According to the Complaint, in conducting the offerings, the defendants have made false and misleading promises of imminent initial public offerings ("IPOs") and/or substantial increases in the stock price; have misappropriated and used investor funds for personal expenses; and failed to disclose their disciplinary history. Their purported business addresses are merely mail drops and call centers.
Specifically, the Complaint alleges that the conduct has its origins in a series of offering frauds conducted by representatives of Bernard Lee, a now defunct registered broker-dealer, and Grant Singer, an unregistered broker-dealer controlled by Labineri. Tanwir, Favata and Awan all worked as brokers for Bernard Lee; Tanwir also worked for Grant Singer. Labineri, Tanwir, Favata, OnCall, and Grant Singer were subjects of disciplinary actions by the Maryland State Securities Commission and the NASD relating to the Bernard Lee-Grant Singer fraudulent offerings. Among the illegal conduct alleged is the failure to disclose the relevant disciplinary history to investors who purchased OnCall stock and invested in promissory notes purportedly guaranteed by Grant, Singer & Hamilton Holdings, Inc., In addition to the unfounded promises of imminent IPOs and substantial price increases, and the failure to disclose relevant disciplinary history, the Complaint charges that:
Named as defendants in the Commission's Complaint are:
The Commission alleges that, through their misconduct, the defendants violated Section 17(a) of the Securities Act of 1933, and Section 10(b) of the Securities Exchange Act of 1934, and Exchange Act Rule 10b-5. In addition to interim relief, the Commission is seeking permanent injunctions, disgorgement and prejudgment interest, and civil penalties against the Defendants, and seeks to recover ill-gotten gains transferred to the relief defendants. The litigation is pending.