UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 15886 / September 17, 1998
Securities and Exchange Commission v. Steven Schaefer, AMPG,
Inc., et. al. (United States District Court, M.D. Fla.,
Civil Action No. 98-343-CIV-ORL-22A, Complaint filed March
27, 1997)
The Securities and Exchange Commission ("Commission")
announced that on April 7, 1998 the United States District
Court for the Middle District of Florida entered a permanent
injunction and other equitable relief, by consent, neither
admitting nor denying the Commission's allegations, against
Steven R. Schaefer ("Schaefer"), AMPG, Inc. ("AMPG"), an
investment adviser registered with the Commission, and the
following Schaefer-controlled corporations: American Capital
& Equity Corporation ("ACEC"), Asset Management & Planning
Group, Inc. ("Asset Management"), Bristol Insurance Group,
Inc. ("Bristol") and Steven R. Schaefer & Associates, Inc.
("SSA"). On March 27, 1998, the Commission filed a complaint
seeking injunctive and other equitable relief and civil
penalties against Schaefer, AMPG and ACEC, and seeking
equitable relief against Asset Management, Bristol and SSA.
In its complaint, the Commission also named as relief
defendants, seeking against them disgorgement only, Parallex
Industries, Inc. ("Parallex") and United States Cryobanks of
Florida ("Cryobanks"). On March 28, 1998, the Court granted
the Commission's motion for a temporary restraining order as
against Schaefer, AMPG and ACEC, pending the Court's
determination of the Commission's contemporaneously filed
motion for a preliminary injunction.
The Commission alleged in its complaint that Schaefer, who
operates and is president and principal of AMPG, was
responsible for the sale of unregistered notes to his AMPG
clients. Schaefer's private company, ACEC, issued the
notes; an officer of both AMPG and AMPG's parent company
promoted the notes to the AMPG clients. Between February
1997 and December 1997, approximately $2.5 million in ACEC
promissory notes were sold to about 40 senior citizens. On
their face, the notes show a 9% annual return, payable
quarterly. The elderly clients were assured that the ACEC
note proceeds, representing funds they had carefully
accumulated for retirement, would be placed in safe, secured
investments. Contrary to these representations, Schaefer
loaned his clients' funds to entities, including entities
Schaefer owned or controlled, which had no apparent ability
or intention of generating a return for his clients, or of
preserving their funds for distribution upon the notes'
maturities. As a result of the fraudulent diversion of
investors' funds, the ACEC notes appear to be worthless, and
the investors stand to lose approximately $2.5 million.
The permanent injunction enjoins Schaefer, AMPG and ACEC
from violations of Section 206 of the Investment Advisers
Act of 1940, Section 17(a) of the Securities Act of 1933 and
Section 10(b) of the Securities Exchange Act of 1934, and
Rule 10b-5 thereunder. As concerns Asset Management,
Bristol and SSA, the injunction freezes their assets, in
addition to those of Schaefer, AMPG and ACEC, and provides
for expedited discovery. The injunction also requires
Schaefer, AMPG, ACEC, Asset Management, Bristol and SSA to
provide an accounting and to preserve records. Other
relief, including determining the appropriateness and the
amount of civil money penalties against Schaefer, AMPG
and/or ACEC, and the appropriateness and the amount of
disgorgement to be made by Schaefer, AMPG, ACEC, Asset
Management, Bristol and/or SSA is pending.