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.