U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.

Litigation Release No. 19764 / July 17, 2006

Securities and Exchange Commission v. Renaissance Asset Fund, Inc., Ronald J. Nadel, and Joseph M. Malone, Civil Action No. SA CV 06-661-JVS (C.D. California)

The Commission filed civil fraud charges today against Renaissance Asset Fund, Inc., Ronald J. Nadel, and Joseph M. Malone. The Commission's complaint, filed in the United States District Court for the Central District of California, alleges that Renaissance and its principals raised over $16 million from more than 190 investors nationwide. Many of the victims were elderly and were solicited through Jehovah's Witnesses congregations.

According to the complaint, from at least March 1999 through April 2004, the defendants raised funds for multiple purported projects, including a general fund, an outlet mall, an international currency exchange, and a Swiss bank. Some of the purported projects did not exist, and others were unsuccessful. The defendants misrepresented to investors that their investments would earn returns ranging from 10% to 25% in as little as four months. The defendants also sent quarterly account statements to investors setting forth the fictitious profits their investments had purportedly earned. Based on the representations in these account statements, many investors reinvested their principal and purported profits in other Renaissance projects. The defendants operated Renaissance's programs as a Ponzi scheme, paying earlier investors with funds raised from later investors. Nadel also used investor funds to pay for lavish expenses, including country club memberships, car leases, and retail purchases. The majority of investors in Renaissance never received the interest or return of their principal the defendants had promised.

Based on this conduct, the complaint alleges that Defendants Renaissance, Nadel and Malone violated Section 17(a) of the Securities Act of 1933 (Securities Act) and Sections 5(a), 5(c) and 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The complaint also alleges that Nadel and Malone violated Section 15(a) of the Exchange Act. The complaint seeks final judgments permanently enjoining the defendants from violating or aiding and abetting violations of the antifraud and registration provisions of the federal securities laws. The Commission also seeks disgorgement of ill-gotten gains with prejudgment interest, an accounting, and civil penalties.

In related SEC proceedings, Senior Resources Asset Fund LLC and Kenneth Baum have consented to the issuance of cease-and-desist orders for their role in selling Renaissance investments. The Commission ordered both Senior Resources and Baum to cease and desist from selling unregistered securities, and ordered Baum to cease and desist from acting as an unregistered broker-dealer. Senior Resources and Baum consented to the issuance of the order without admitting or denying its findings. For further information, see Securities Act Release No. 33-8723 (July 17, 2006).

SEC Complaint in this matter