UNITED STATES OF AMERICA
SECURITIES AND EXCHANGE COMMISSION
Securities Act of 1933
Release No. 8110 / July 9, 2002
File No. 3-10826
In the Matter of
| ORDER INSTITUTING CEASE-AND-DESIST
PROCEEDINGS PURSUANT TO SECTION 8A
OF THE SECURITIES ACT OF 1933, MAKING
FINDINGS AND IMPOSING A
The Securities and Exchange Commission ("Commission") deems it appropriate that cease-and-desist proceedings be, and hereby are, instituted against Gerald Cohn ("Respondent" or "Cohn") pursuant to Section 8A of the Securities Act of 1933 ("Securities Act").
In anticipation of the institution of these proceedings, Respondent has submitted an Offer of Settlement ("Offer") which the Commission has determined to accept. Solely for the purpose of these proceedings and any other proceeding brought by or on behalf of the Commission or in which the Commission is a party, and without admitting or denying any of the findings contained herein, except as to the jurisdiction of the Commission over him and over the subject matter of these proceedings, which are admitted, Respondent consents to the entry by the Commission of this Order Instituting Cease-And-Desist Proceedings Pursuant to Section 8A of the Securities Act of 1933, Making Findings and Imposing A Cease-and-Desist Order ("Order").
On the basis of this Order and the Respondent's Offer, the Commission finds that:
- Cohn, age 75, resides in Boca Raton, Florida. He has been in the insurance industry since 1949, and operates a business by the name of "Capital Funding Consultants."
- From at least July 2000 through August 2001 (the "relevant time period"), Cohn participated in a prime bank scheme carried out by The Strategies Group, Inc. ("TSG"). The securities offered to the general public by TSG purported to invest funds in medium term notes secured by guarantees, and TSG represented that these notes were generally available to wealthy individuals through a select number of the world's largest financial institutions. In reality, the securities offered by TSG did not exist.
- TSG conducted investment seminars in which it offered these fictitious securities, and in which Cohn participated at TSG's request. At the seminars or in later conversations or correspondence with seminar attendees, Cohn represented that the securities offered by TSG existed, that investors could expect returns of approximately 15-50%, and that TSG was offering a new investment program that purported to turn an initial $5 million investment into $223.5 million during a 50-week trading cycle. These representations were not true. Cohn made these representations based on information that was supplied to him by TSG. Cohn took no reasonable steps to verify whether the securities being offered by TSG existed or whether the representations made at the seminars were true. Further, Cohn distributed materials about TSG to prospective investors without establishing or investigating the accuracy or veracity of those materials.
- Cohn also knew that TSG erroneously represented to seminar attendees that Cohn was a broker who had successfully placed a client's funds in TSG trading programs. Despite the falsity of that representation, Cohn did not publicly correct TSG's statements.
- As a result of the foregoing, Cohn violated Sections 17(a)(1) and 17(a)(3) of the Securities Act by using the means or instruments of transportation or communication in interstate commerce or by use of the mails, to employ devices, schemes, or artifices to defraud, or to engage in transactions, practices and courses of business which operated or would operate as a fraud or deceit upon a purchaser in the offer or sale of a security.
Based on the foregoing, the Commission deems it appropriate to accept the Offer submitted by Respondent.
Accordingly, IT IS HEREBY ORDERED, pursuant to Section 8A of the Securities Act, that Respondent Cohn cease and desist from committing or causing any violations and any future violations of Sections 17(a)(1) and 17(a)(3) of the Securities Act.
By the Commission.
Jonathan G. Katz