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         UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Litigation Release No. 15136 \ October 25, 1996

U.S. v. Joseph Polichemi, Lyle Edward "Pete" Neal, Oscar William
Olson, John Joseph DeVincens, Charles R. Padilla, Larry P.
Oesterman and Edward W. Russey, N.D. Ill., No. 94 CR 555.    

     The Commission and the U.S. Attorney's Office for the
Northern District of Illinois announced that on October 22, 1996,
the Honorable William T. Hart of the United States District Court
for the Northern District of Illinois sentenced Joseph Polichemi
(Polichemi), Lyle Neal (Neal), Oscar William Olson, Jr. (Olson),
and Charles Padilla (Padilla) for their criminal convictions
arising from their involvement in multiple fraudulent schemes
involving purported "Prime Bank Instruments."  These schemes
included the Chicago Housing Authority's (CHA) $14 million
investment in the Konex Roll Program, the subject of an action
previously brought by the Commission against Polichemi, Neal,
Olson and others for violations of 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.  

Specifically, Polichemi was sentenced to serve 210 months for
convictions on one count of conspiracy, eight counts of money
laundering and fifteen counts of wire fraud.  Neal was sentenced
to serve 235 months for convictions on one count of conspiracy,
five counts of money laundering, thirteen counts of wire fraud
and three counts of perjury.  Padilla was sentenced to serve 78
months for thirteen counts of wire fraud and three counts of
perjury.  Finally, Olson was sentenced to serve 121 months for
convictions on three counts of money laundering.  These
defendants also were ordered to pay, on a joint and several
basis, restitution to investors in the amount of $10 million. 
The perjury convictions against Neal and Padilla resulted from
their sworn testimony in connection with Commission's
investigation concerning the Konex Roll Program.  Larry Oesterman
(Oesterman) and Edward Russey (Russey) earlier plead guilty to
charges relating to the fraudulent schemes.  Oesterman was
sentenced to serve 46 months and Russey was sentenced to nine
months home detention.  In a separate criminal action, John Lauer
(Lauer), CHA's Director of Risk Management and Benefits, plead
guilty to wire fraud, mail fraud and obstruction of justice
charges.  To date, Lauer has not been sentenced. 

     The criminal charges relating to the Konex Roll Program
parallel the conduct alleged in the Commission's action filed in
the United States District Court for the Northern District of
Illinois on June 21, 1994, against Polichemi, Neal, their
respective companies, Copol Investments Limited (Copol), Konex
Holding Corp. (Konex), and Lauer and his company, Clifton Capital
Investors L.P. (CCI).  The Commission's Complaint and Amended
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Complaint, which added Olson as a defendant, alleged that from
January 1993 to June 1994, Konex, Neal's company, raised at least
$12.5 million from the CHA through the offer and sale of
investments in the Konex Roll Program.  In fact, the purported
Roll Program, which was designed to pool investor funds to
purchase and trade in "Prime Bank Instruments," was nothing more
than a scam to defraud investors.  Thus, the Complaint alleged
that Polichemi, Olson and Neal, through, Copol and Konex, made
false and misleading statements regarding the use of CHA proceeds
and the risks and returns associated with the investment.

     The Complaint further alleged that Lauer, among other
things, failed to disclose to the CHA the role of his private
company, CCI, in the administration of CHA's investment, his
receipt of compensation and his resulting conflict of interest. 
Moreover, the Complaint alleged that Lauer made false and
misleading statements to prospective investors concerning the
rate of return CHA earned and the circumstances under which the
CHA invested in the Roll Program.   

     On June 21, 1994, the Honorable Wayne Andersen of the U.S.
District Court for the Northern District of Illinois entered an
order in the Commission's action temporarily restraining and
enjoining the defendants from future violations of the antifraud
provisions of the federal securities laws and, among other
things, froze their assets.  On July 29, 1994, the Court entered
an Order of Permanent Injunction and Other Equitable Relief by
Default against Polichemi, Neal, Copol and Konex.  On October 24,
1995, the Court entered an Order of Permanent Injunction and
Other Relief against Lauer and CCI, including ordering them to
pay $4.853 million in disgorgement plus prejudgment interest.  On
June 7, 1996, the Court entered an Order of Preliminary
Injunction and Other Equitable Relief against Olson.  The action
remains pending as to Olson and to determine the appropriate
amount of disgorgement and civil penalties to be assessed against
Polichemi, Copol, Neal and Konex.