==========================================START OF PAGE 1====== UNITED STATES OF AMERICA Before the SECURITIES AND EXCHANGE COMMISSION SECURITIES EXCHANGE ACT OF 1934 Release No. 38579 / May 7, 1997 ADMINISTRATIVE PROCEEDING File No. 3-9307 ______________________________ : In the Matter of: : ORDER INSTITUTING PUBLIC : PROCEEDINGS, MAKING DOUGLAS R. DAMON, : FINDINGS AND IMPOSING ROBERT M. DAVIS and : REMEDIAL SANCTIONS KENNETH C. KOLOVITZ, : : Respondents. : _____________________________: I. The Securities and Exchange Commission (Commission) deems it appropriate and in the public interest that public proceedings be instituted pursuant Sections 15(b) and 19(h) of the Securities Exchange Act of 1934 (Exchange Act) against Douglas R. Damon (Damon), Robert M. Davis (Davis) and Kenneth C. Kolovitz (Kolovitz). In anticipation of these proceedings, Damon, Davis and Kolovitz have submitted Offers of Settlement which the Commission has determined to accept. Solely for the purpose of this proceeding and any other proceeding brought by or on behalf of the Commission, or to which the Commission is a party: Damon, by his Offer of Settlement, without admitting or denying the Commission's findings, except the findings contained in sections III.A, III.B and III.L, which are admitted, consents to the entry of this Order Instituting Public Proceedings, Making Findings and Imposing Remedial Sanctions (Order); Davis, by his Offer of Settlement, without admitting or denying the Commission's findings, except the findings contained in sections III.C, III.D and III.L, which are admitted, consents to the entry of this Order; and Kolovitz, by his Offer of Settlement, without admitting or denying the Commission's findings, except the findings contained in sections III.E, III.F and III.L, which are admitted, consents to the entry of this Order. II. Accordingly, IT IS HEREBY ORDERED THAT proceedings pursuant to Sections 15(b) and 19(h) of the Exchange Act be, and they hereby are, instituted. ==========================================START OF PAGE 2====== -2- III. On the basis of this Order and the Offers of Settlement submitted by Damon, Davis and Kolovitz, the Commission finds that: RESPONDENTS A. Damon, age 55, resides in Kewaunee, Wisconsin. From approximately 1989 through approximately October 1990, Damon was the president of Union Credit of Illinois Corporation (UCC). Damon operated UCC, which was purportedly in the business of purchasing and leasing machines for use by small retail businesses and restaurants, for the sole purpose of issuing and offering securities. At no time was Damon registered as a broker-dealer with the Commission or associated with a broker- dealer registered with the Commission; B. In 1990, during the offer and sale of securities issued by UCC (UCC securities), the Illinois Securities Department and the New Mexico Director of Securities issued orders against Damon prohibiting him from offering and selling UCC securities in those states; C. Davis, age 44, resides in Denver, Colorado. In 1990, Davis was the president and sole employee of American Investment & Trust, Inc. (AIT), a Maryland corporation. At no time was Davis registered as a broker-dealer with the Commission or associated with a broker-dealer registered with the Commission; D. Davis formed AIT for the sole purpose of offering and selling UCC securities. At no time was AIT registered as a broker-dealer with the Commission; E. Kolovitz, age 44, resides in Pearl River, Louisiana. In 1989 and 1990, Kolovitz was the Manager of UCC's satellite office located in Atlanta, Georgia; F. At no time was Kolovitz registered as a broker- dealer with the Commission or associated with a broker-dealer registered with the Commission; ==========================================START OF PAGE 3====== -3- FEDERAL SECURITIES LAWS VIOLATIONS G. From approximately 1989 through October 1990, Damon and Kolovitz, and from January 1990 through October 1990 Davis, willfully violated Sections 5(a) and 5(c) of the Securities Act of 1933 (Securities Act) in that they directly or indirectly made use of the means or instruments of transportation or communication in interstate commerce or of the mails to offer to sell, or to sell, through the use or medium of a prospectus or otherwise, or caused to be carried through the mails or in interstate commerce, by the means or instruments of transportation, for the purpose of sale or for delivery after sale, securities, namely, UCC securities, for which no registration statement was in effect or filed with the Commission; H. From approximately 1989 through October 1990, Damon and Kolovitz, and from January 1990 through October 1990 Davis, willfully violated Section 17(a) of the Securities Act in that they, in the offer and sale of UCC securities, by the use of the means or instruments of transportation or communication in interstate commerce or by the use of the mails, directly or indirectly employed devices, schemes or artifices to defraud; obtained money or property by means of untrue statements of material fact or omissions 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; or engaged in transactions, practices or courses of business which operated or would operate as a fraud or deceit upon purchasers and prospective purchasers of such securities. As a part of this conduct, they made misrepresentations and omissions of material facts to investors concerning: (a) the use of investor funds; (b) the source of funds to be repaid to investors; (c) the risks associated with UCC securities; and (d) the returns to be realized by investors. Further, Damon and Davis made misrepresentations and omissions of material facts to investors concerning Damon's criminal and regulatory history; I. From approximately 1989 through October 1990, Damon and Kolovitz, and from January 1990 through October 1990 Davis, willfully violated Section 10(b) of the Exchange Act and Rule 10b-5 thereunder in that they, in connection with the purchase and sale of the securities described in paragraph III.G. above, directly or indirectly, by the use of the means or instrumentalities of interstate commerce, or of the mails: employed devices, schemes or artifices to defraud; made untrue statements of material fact or 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; or engaged in acts, practices, or courses of business which operated or would operate as a fraud or deceit upon the purchasers of the securities, as described in paragraph III.H. above; ==========================================START OF PAGE 4====== -4- J. From approximately 1989 through October 1990, Damon and Kolovitz, and from January 1990 through October 1990 Davis, willfully violated Section 15(a)(1) of the Exchange Act in that they, while acting as brokers, made use of the mails or the means or instrumentalities of interstate commerce to effect transactions in, or to induce or attempt to induce the purchase or sale of, UCC securities, without being registered as, or associated with, a broker or dealer registered with the Commission pursuant to Section 15(b) of the Exchange Act; K. From approximately 1989 through October 1990, Damon and Kolovitz, and from January 1990 through October 1990 Davis, willfully violated Section 15(c)(1) of the Exchange Act and Rule 15c1-2 thereunder in that they, while acting as broker- dealers, made use of the mails or the means or instrumentalities of interstate commerce to effect transactions in, or to induce or attempt to induce the purchase or sale of UCC securities, otherwise than on a national securities exchange of which they were members, by means of manipulative, deceptive or other fraudulent devices or contrivances, including acts, practices or courses of business which operated or would operate as a fraud or deceit 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 made those statements or omissions with knowledge or reasonable grounds to believe they were untrue or misleading, as described in paragraph III.H. above; L. On April 15, 1997, the United States District Court for the Northern District of Illinois, in the case of Securities and Exchange Commission v. Douglas R. Damon, Robert M. Davis and Kenneth C. Kolovitz (Civil Action No. 95C 7569), entered a Final Judgment and Order of Permanent Injunction by consent against Damon, Davis and Kolovitz, which enjoins them from future violations of Sections 5(a), 5(c) and 17(a) of the Securities Act, and Sections 10(b), 15(a)(1) and 15(c)(1) of the Exchange Act and Rules 10b-5 and 15c1-2 thereunder. ==========================================START OF PAGE 5====== -5- IV. In view of the foregoing, it is in the public interest to impose the sanctions specified in the Offers of Settlement, such sanctions to begin from the date of the entry of the Commission's order. Accordingly, IT IS ORDERED THAT: Douglas R. Damon, Robert M. Davis and Kenneth C. Kolovitz be and hereby are, barred from association with any broker, dealer, municipal securities dealer, investment adviser or investment company. By the Commission. Jonathan G. Katz Secretary