Litigation Release No. 16372 / November 29, 1999


On November 19, 1999, the Honorable Denise L. Cote of the United States District Court for the Southern District of New York issued a default judgment against defendants Cambiarios, S.L., Customer Safety, S.L., Construcciones Solariegas, S.L. and Vicente Tur Ortola and relief defendants SHBL Associates Europe Ltd., Inversora Dactilar, S.L. and Baja Ltd. The amended complaint alleges that defendants engaged in a fraudulent and manipulative scheme involving the unregistered offer and sale of securities of Electro-Optical Systems Corp. ("EOSC") at artificially inflated prices and that relief defendants received from defendants, without consideration, EOSC shares and proceeds from the sale of those shares. This default judgment permanently enjoins defendants from violating anti-fraud and registration provisions of the securities laws and orders them to disgorge, jointly and severally, the sum of $9,062,397.42 in proceeds of EOSC stock illegally sold to the public and $946,470.13 in prejudgment interest thereon. See Sections 5 and 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Act of 1934 and Rule 10b-5 thereunder.

The November 19, 1999 default judgment also orders the defaulting relief defendants to disgorge cash and/or securities and pay prejudgment interest as follows: SHBL to disgorge 18,000 EOSC shares and $328,649.80, plus $34, 323.94 in prejudgment interest; Inversora to disgorge 857,081 EOSC shares; and Baja to disgorge $6,922,175.02, plus $722,946.89 prejudgment interest, which sums shall be reduced to the extent of aggregate disgorgement payments in excess of $2,363,661.62 received by the Court from defendants Cambiarios, Customer Safety, Construcciones and Ortola.

An earlier default judgment was issued on July 23, 1999 against defendant Agira Trading and relief defendants Erin Nicolois, whose maiden name is Erin Martin, Arthur De Acutis, Joseph Falco, Kenneth C. Kehoe, Ana P. Lopez and Metropolitan Trade Finance Ltd. That judgment permanently enjoined defendant Agira from violating registration provisions of the securites laws and ordered it to disgorge $579,690 in illegally obtained proceeds of EOSC stock, plus $59,350.13 in prejudgment interest thereon, and ordered disgorgement from the defaulting relief defendants, as follows: Acutis to disgorge $62,812.50, plus $2,965.16 in prejudgment interest; Falco to disgorge $15,750, plus $1,741.77 in prejudgment interest; Lopez to disgorge $131,012.40, plus $13,413.38 in prejudgment interest; Kehoe to disgorge $5,700, plus $583.59 in prejudgment interest; and Metropolitan to disgorge $125,262.40, plus $12,824.69 in prejudgment interest.

Both default judgments provide that all disgorged funds received in this action are to be equitably distributed to defrauded retail investors at the conclusion of this action. The action against the remaining defendants and relief defendants is presently stayed pending a criminal investigation. For more information about this case see Litigation Release Nos. 15660 (March 13, 1998), 15715 (Aspirl 21, 1998), 16035 (January 21, 1999), and 16152 (Mary 19, 1999).