SECURITIES AND EXCHANGE COMMISSION
SECURITIES EXCHANGE ACT OF 1934
Release No. 44785 / September 12, 2001
File No. 3-10573
ADMINISTRATIVE PROCEEDING INSTITUTED AGAINST RAFFI T. KING
On September 12, 2001, the Commission issued an Order Instituting Public Administrative Proceeding against Raffi T. King pursuant to Section 15(b)(6) of the Securities Exchange Act of 1934 (Exchange Act). The Order alleges that a United States District Court permanently enjoined King from future violations of Sections 5(a), 5(c) and 17(a) of the Securities Act of 1933 and Sections 10(b) and 15(a) of the Exchange Act and Rule 10b-5 thereunder. The Final Judgment also orders King to pay disgorgement of $374,942 and a civil penalty of $110,000.
In the District Court action, the Commission's complaint alleged that King failed to disclose the actual commissions paid to him in connection with his sales of the unregistered securities of Papa Holdings, Inc. and its restaurant subsidiaries: Ponzu V, Inc., Ponzu VI, Inc., Express 1, Inc., and Papa Exp 2, Inc. Papa Holdings and its restaurant subsidiaries, operating out of offices in Woodland Hills, California, raised over $21 million from approximately 1,300 investors nationwide from November 1995 to January 1999. The restaurant subsidiaries each raised money purportedly to open a "Papashon" or "Papashon Express" restaurant, but instead used the money to pay undisclosed commissions and pay for losses incurred by existing Papashon restaurants. Four of the restaurant subsidiaries never opened a restaurant and, due to their losses, existing Papashon restaurants in Pasadena, Beverly Hills, Encino and Long Beach, California, each closed in 1999.
A hearing will be scheduled to determine whether the allegations against King are true and if so, the appropriate remedial action.