UNITED STATES SECURITIES AND EXCHANGE COMMISSION Litigation Release No. 15947 / October 27, 1998 SECURITIES AND EXCHANGE COMMISSION v. GOLDMAN LENDER & CO. HOLDINGS, BLACKWELL CO., TRADERZ ASSOCIATES HOLDING INC., SHARON HAROSH and AMERICO ROBERT GALLO, 98 Civ. 7525 (S.D.N.Y.)(JGK) NEW YORK-- The Securities and Exchange Commission filed an action in federal court in Manhattan on October 23, 1998, alleging that two individuals and three entities fraudulently raised over $210,000 through a scheme involving phony private placements of securities. According to the Commission's Complaint, the defendants told investors that they could purchase securities in the private placements of three entities and in a few months the companies would go public and the investors would double or triple their money. The defendants also falsely told investors that investing in the private placements involved low risk because the investors' money would be kept in an escrow account at a law firm. In fact, there was no escrow account and the two principals of the three entities misappropriated a significant portion of the investors' money. Named in the Complaint were: Americo Robert Gallo, age 32, the President of Traderz Associates Holding Inc. ("Traderz Associates"), and a resident of Brooklyn, New York; Sharon Harosh, age 25, the President and Secretary of Goldman Lender & Co. Holdings ("Goldman Lender") and the sole proprietor of Blackwell Co. Harosh resides in Brooklyn, New York; Traderz Associates, a Delaware corporation whose principal place of business was in New York City; Goldman Lender, a Delaware corporation whose principal place of business also was in New York City; and Blackwell, a sole proprietorship owned by Sharon Harosh. Blackwell's principal place of business was in New York City. The Commission's Complaint alleges that Gallo telephoned investors and solicited them to purchase the securities of Traderz Associates in a private placement. The Complaint alleges that in those phone calls, Gallo made misrepresentations to investors concerning, among other things, the risk of investing in Traderz Associates securities, the potential profit investors could expect to make by purchasing Traderz Associates securities and the use of investors' funds by Traderz Associates. In fact, Gallo has misappropriated a significant portion of the offering proceeds and has given other large sums to colleagues. The Commission's Complaint also alleges that Harosh used several fictitious names, or instructed his agents to use fictitious names, in soliciting investors to purchase the securities of Goldman Lender and Blackwell. Harosh, or his unknown agents, made misrepresentations to investors concerning, among other things, the risk of investing in the securities of Goldman Lender and Blackwell, the potential profit investors could expect to make by purchasing the securities of Goldman Lender and Blackwell, the use of investors funds by Goldman Lender and Blackwell and the existence of Blackwell securities. Harosh ultimately received all of the money that investors sent to Goldman Lender and Blackwell and deposited those funds into various bank accounts in the names of those entities. Shortly after depositing the investors' funds, Harosh wired a significant part of the funds to offshore bank accounts and also withdrew in cash a significant part of the remaining proceeds. The investors in each of the three offerings have not received any securities nor any confirmation of their supposed purchases. The investors have never been refunded their money. In addition to the above-described violations, in July 1998, several of the investors who had purchased Goldman Lender's securities were again solicited to purchase shares in Ramtron International Corp. ("Ramtron"), a Delaware corporation that designs, manufactures and sells semiconductor memory chips. Ramtron's stock price is quoted on the NASDAQ National Market System. Investors were told that they could purchase shares of Ramtron at approximately $2 per share and sell them later that same day through Goldman Lender at approximately double the price. At least two investors agreed to buy Ramtron stock and sent at least $37,500 to Goldman Lender. These investors never received any Ramtron shares nor did they receive confirmation that they had purchased or sold shares of Ramtron stock. None of these investors in Ramtron ever received back any of the funds that they sent to Goldman Lender. In its Complaint, the Commission alleges that the defendants violated the antifraud provisions of the federal securities laws -- 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. The Commission is seeking an asset freeze, an accounting of investors' money and a temporary restraining order against all five defendants. The Commission also seeks permanent injunctions against future violations of the antifraud provisions, disgorgement of defendants' ill-gotten gains plus prejudgment interest, and civil penalties.