U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 19061 / February 3, 2005
SECURITIES AND EXCHANGE COMMISSION v. MOHAMAD WAEL IBRAHIM ELZEIN, INDIVIDUALLY AND D/B/A FOCUS MENTORS ELZEIN MANAGEMENT; HUSSEIN HASSAN EL ZEIN; AND DARIN RAYMOND KNEE, Civil Action No. 3:03-2843-24 (D.S.C.).
FEDERAL COURT ORDERS DISGORGEMENT, PREJUDGMENT INTEREST AND CIVIL PENALTIES, AND ENTERS FINAL JUDGMENT AGAINST MOHAMAD ELZEIN AND HUSSEIN EL ZEIN
The Securities and Exchange Commission (the "Commission") announced today that the Honorable Margaret B. Seymour, United States District Judge for the District of South Carolina, entered an Order Imposing Disgorgement, Prejudgment Interest and Civil Penalties Against Mohamad Elzein ("M. Elzein") and Hussein Hassan El Zein ("H. El Zein") on January 28, 2005. The order directed that M. Elzein and H. El Zein jointly and severally pay disgorgement in the amount of $35,000, and prejudgment interest thereon in the amount of $5,457.80. The court ordered disgorgement in the amount which was not reimbursed by the defendants to the investors, after the offering ceased. The order also directed that M. Elzein pay a civil penalty of $10,000 and that H. El Zein pay a civil penalty of $2,500. The order directed payment within 30 days from the entry of the final judgment. The court entered final judgment against the two defendants on February 2, 2005. The court previously enjoined M. Elzein and H. El Zein from further violations of Sections 5(a), 5(c) and 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, on October 30, 2003 and February 19, 2004, respectively. In the earlier injunctions, M. Elzein and H. El Zein stipulated that, for purposes of the resolution of disgorgement, prejudgment interest and civil penalties, the allegations of the Commission's complaint were deemed to be true.
The Commission's complaint alleged that M. Elzein, H. El Zein, and Darin Knee ("Knee"), from approximately July through October 2001, raised approximately $541,000 from investors in a fraudulent, unregistered offering of securities in the form of investment contracts. The defendants made materially false and misleading statements and omissions in connection with the offers and sales of the investment contracts including, among other things, false historical returns, and promised returns without a reasonable basis therefor. The complaint further alleged that Knee promoted Focus Mentors on his MoneyJoe.com website and in his related electronic newsletter called "Insiders Club" in which he described Focus Mentors as a "secure opportunity" with "107% plus principal guaranteed" even though Knee had no reasonable basis for such statements.
See also: L. R. 18591 (February 24, 2004); L. R. 18440 (November 3, 2003); L. R. 18324 (September 5, 2003)