Mark Drucker, and Michael Weinstock

SECURITIES AND EXCHANGE COMMISSION

Litigation Release No. 16335 / October 15, 1999

SEC v. Mark Drucker, and Michael Weinstock (Relief Defendant), 1:99-CV-2687 (N.D. Ga.)

SEC Gets TRO, Asset Freeze To Stop Ongoing Ponzi Scheme
Operated by Atlanta Day-Trader

The Commission announced today that it sought and obtained a temporary restraining order and asset freeze to halt an on-going Ponzi scheme operated by Mark Drucker ("Drucker"), a resident of Atlanta, Georgia. The Commission's complaint, which it filed in the United States District Court for the Northern District of Georgia, alleges that Drucker has raised millions of dollars from investors and lost hundreds of thousands of dollars by engaging in extensive day-trading.

According to the Commission's complaint, Drucker violated 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 alleges that from at least July 1998 through September 1999, Drucker raised approximately $6.2 million from an estimated 80 investors. Drucker solicits investors by representing that he is a successful day-trader and that investors will receive returns on their investment of 50%, or more, in two months or less. Drucker did not disclose to investors that he has consistently lost money trading stocks with the investors' money, that he lost in excess of $630,000 trading in stocks in 1999, that he used the investment principal of recent investors to pay returns to earlier investors, and that he used money from investors to pay personal expenses, including hundreds of thousands of dollars to finance elaborate parties.

The Commission's complaint also names Michael Weinstock, an Atlanta attorney, as a relief defendant who has been unjustly enriched through his participation in Drucker's scheme. Weinstock invested approximately $1,035,916 and received approximately $1,575,514 from Drucker.

The Commission is also seeking preliminary and permanent injunctions based on violations of 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 also seeks the disgorgement of ill-gotten gains or unjust enrichment together with prejudgment interest from Drucker and the relief defendant, as well as an accounting by Drucker of his use of investors' funds.