SECURITIES AND EXCHANGE COMMISSION
SECURITIES EXCHANGE ACT OF 1934
RELEASE NO. 48370 / August 20, 2003
FILE NO. 3-11229
COMMISSION ISSUES ORDER AGAINST BROKER-DEALER AND ITS PRESIDENT WHICH A FEDERAL DISTRICT COURT RECENTLY ENJOINED AND FOUND LIABLE TO HAVE COMMITTED VIOLATONS OF THE FEDERAL SECURITIES LAWS BY PARTICIPATING IN FRAUDULENT STOCK OFFERING
The Securities and Exchange Commission announced today that it issued an Order Instituting Public Administrative Proceedings and Notice of Hearing Pursuant to Section 15(b) of the Securities Exchange Act of 1934 ("Exchange Act") against Castle Securities Corp. ("Castle") and Michael T. Studer ("Studer"). In the Order, the Division of Enforcement alleges that recently, after a full trial on the merits, the United States District Court of the Southern District of New York issued permanent injunctions against Castle and Studer and found that these two defendants, along with other individuals, including defendant Mark D'Onofrio, defendant Ramon D'Onofrio, and Richard Kirschbaum ("the D'Onofrio Group") conducted a classic fraudulent blind pool offering, subsequent market manipulation and fraudulent sale of the underlying securities of U.S. Environmental, Inc. ("USE"), as well as in the public offering of securities of USE's predecessor, the blind pool company.
The Commission instituted this administrative proceeding after a district court in the Southern District of New York found Castle and Studer each liable for their roles in the Offerings. In so doing, the district court issued an opinion and order providing the Commission with full relief against Castle and Studer on the grounds that Castle and Studer violated Sections 5(a), 5(c), and 17(a) of the Securities Act of 1933 and Section 10(b) and 15(c)(1) of the Exchange Act, Rules 10b-3, 10b-5, 10b-6 (the predecessor to Rule 101 of Regulation M), and 15cl-2 thereunder. As a result of its findings, the Court permanently enjoined Castle and Studer each from future violations of the antifraud and registration provisions of the securities laws, ordered Castle and Studer to jointly disgorge to the Commission within sixty days ill-gotten gains totaling $132,224, plus pre-judgment interest from September 30, 1990 through the present. SEC v. U.S. Environmental, Inc., 94 Civ. 6608 (S.D.N.Y.) (PKL).
A hearing will be convened by an administrative law judge to determine whether the allegations in the Order are true and what, if any, remedial sanctions against Castle and Studer are appropriate in the public interest pursuant to Section 15(b) of the Exchange Act, including a broker-dealer bar and a penny stock bar.