==========================================START OF PAGE 1====== UNITED STATES OF AMERICA Before the SECURITIES AND EXCHANGE COMMISSION SECURITIES ACT OF 1933 Release No. 7414 / April 15, 1997 SECURITIES EXCHANGE ACT OF 1934 Release No. 38509 / April 15, 1997 ADMINISTRATIVE PROCEEDING File No. 3-9124 ------------------------------- : In the Matter of : : ORDER MAKING FINDINGS MICHAEL D. GIBSON, : AND IMPOSING REMEDIAL GREGORY C. MOORE, : SANCTIONS BY DEFAULT JAY D. LIEBOWITZ, and : DAVID McCLURE : ------------------------------: Jay D. Liebowitz is in default under the Securities and Exchange Commission s ( Commission ) Rules of Practice, Rules 155 and 220(f), 17 C.F.R.  201.155 and .220(f) (1996), because he failed to answer the Order Instituting Public Proceedings which the Commission issued on September 30, 1996, and the Show Cause Order which I issued on March 26, 1997.1 Accordingly, I find that the allegations in the Order as to Respondent Liebowitz are true: A. The O.N. Equities Sales Company ("ONESCO") is an Ohio corporation with its principal place of business in Cincinnati, Ohio. Since 1968, ONESCO has been registered with the Commission as a broker-dealer pursuant to Section 15(b) of the Securities Exchange Act of 1934 ("Exchange Act"). It similarly has been a member of the National Association of Securities Dealers, Inc. since 1968. B. Jay D. Liebowitz ("Liebowitz"), age 47, resides in Pittsburgh, Pennsylvania. Liebowitz has worked in the securities industry as a registered representative associated with various 1 On February 12, 1997, the Division of Enforcement ( Division ) filed its first Motion for Default Against Respondent Jay D. Liebowitz ( Motion ). That Motion was withdrawn and refiled on March 24, 1997, because service was not accomplished as required by Rule 141(a)(2) prior to the February 12, 1997 Motion. Order on Motion for Default Against Respondent Jay D. Liebowitz (February 13, 1997). ==========================================START OF PAGE 2====== broker-dealers since 1980. C. From May 1993 through January 1995, C est Lestial Waters, Inc. ( CWI ) raised over $7 million from more than 100 investors through the offering and sale of unregistered collateral trust bonds (the "CWI bonds"), as well as the securities of certain entities related to CWI. In connection with that offering, CWI, certain of its principals and agents, as well as certain other entities and individual sales representatives violated, variously, the securities registration, antifraud and broker-dealer registration provisions of the federal securities laws. Specifically, these entities and individuals made misrepresentations of material fact and failed to disclose material information concerning the security underlying the CWI bonds and their relative safety; their status as exempt from registration with the Commission; and the use of offering proceeds. D. Liebowitz, in January 1995, offered and sold more than $96,000 in CWI bonds and received approximately $8,000 in commissions. In connection with these sales, Liebowitz made misrepresentations and omissions of material fact to investors, including that: 1. the CWI bonds were fully secured through a first and irrevocable lien interest in certain assets of CWI in favor of investors; 2. the proceeds of the CWI bonds were to assist CWI in corporate expansion; and 3. the financial stability of CWI was irrelevant because the CWI bonds were fully secured. E. Based on the conduct described above, Liebowitz willfully violated Section 17(a) of the Securities Act of 1933 ("Securities Act") and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, in connection with the offer, purchase and sale of securities, in that he, directly and indirectly, by use of the mails and the means and instruments of transportation and communication in interstate commerce, and the means and instrumentalities of interstate commerce: (1) employed devices, schemes or artifices to defraud; (2) obtained money and property by means of, and made, untrue statements of material fact and omitted to state material facts necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading; and (3) engaged in acts, transactions, practices, and courses of business which operated as a fraud or deceit upon offerees and purchasers of securities. F. Based on the conduct described above, Liebowitz willfully violated Sections 5(a) and 5(c) of the Securities Act in that he, directly and indirectly, made use of the mails or other means or instruments of transportation or communication in ==========================================START OF PAGE 3====== interstate commerce to offer to sell, sell, and deliver after sale to members of the public, certain securities, namely the CWI bonds, when no registration statement was filed or in effect as to said securities and no exemption from registration was available. I find further that it is in the public interest to: (1) bar Liebowitz from association with any broker, dealer, or registered securities association, pursuant to Sections 15(b) and 19(h) of the Exchange Act; (2) direct Liebowitz to disgorge $10,000 plus prejudgment interest pursuant to Section 8A(e) of the Securities Act and Sections 21B(e) and 21C(e) of the Exchange Act; (3) order Liebowitz to pay a civil penalty of $55,000 pursuant to Section 21B of the Exchange Act; and (4) order Liebowitz to cease and desist from committing or causing any violations or future violations of Sections 5(a), 5(c), and 17(a) of the Securities Act, and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, pursuant to Section 21C of the Exchange Act. ACCORDINGLY, it is: ORDERED, pursuant to Sections 15(b) and 19(h) of the Exchange Act, that Jay D. Liebowitz is barred from association with any broker, dealer, or registered securities association; ORDERED, pursuant to Section 8A(e) of the Securities Act and Sections 21B(e) and 21C(e) of the Exchange Act, that Jay D. Liebowitz disgorge $10,000 plus prejudgment interest from February 1, 1995, through the last day of the month preceding the month in which payment of disgorgement is made at the rate of interest established under Section 6621(a)(2) of the Internal Revenue Code, 26 U.S.C.  6621(a)(2), compounded quarterly, pursuant to Rule 600 of the Commission s Rules of Practice; ORDERED, pursuant to Section 21B of the Exchange Act, that Jay D. Liebowitz pay a civil penalty of $55,000; and ORDERED, pursuant to Section 8A of the Securities Act and Section 21C of the Exchange Act, that Jay D. Liebowitz cease and desist from committing or causing any violations or future violations of Sections 5(a), 5(c), and 17(a) of the Securities Act, and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder. Payment of sums owed shall be: (i) made by United States postal money order, certified check, bank cashier s check, or bank money order; (ii) made payable to the Securities and Exchange Commission; (iii) delivered by hand or courier to the Office of the Secretary, Securities and Exchange Commission, 450 5th Street, N.W. Washington, D.C. 20549; and (iv) submitted under cover letter which identifies Jay D. Liebowitz as the Respondent in these proceedings, and the file number of these proceedings. ==========================================START OF PAGE 4====== The Division shall, pursuant to Rule 610, submit a plan of disgorgement no later than sixty (60) days after Liebowitz has paid any or all of the disgorgement amount and interest. G. Marvin Bober Administrative Law Judge