-------------------- BEGINNING OF PAGE #1 ------------------- UNITED STATES SECURITIES AND EXCHANGE COMMISSION Litigation Release No. 14736 / November 27, 1995 SEC v. John D. Lauer, Clifton Capital Investors L.P., Konex Holding Corp., Lyle E. Neal, Copol Investments Limited and Joseph Polichemi, USDC N.D.Ill., 94 C 3770, filed June 21, 1994. The U.S Securities and Exchange Commission (Commission) announced today the filing of two civil contempt actions against Oscar William Olson, Jr. (Olson), the general counsel of Copol Investments Limited (Copol), a defendant in the action SEC v. John D. Lauer, et al., seeking compliance with Court orders requiring him to produce documents and appear for a deposition. The Commission filed the first of its contempt actions against Olson on June 5, 1995. In this action, the Commission alleged that Olson failed to comply with a Court-ordered subpoena requiring him to appear for his deposition in London on June 2, 1995 and to produce documents to the Commission before such deposition. After briefing and oral argument, on June 9, 1995, the Court compelled Olson to produce to the Commission by July 5, 1995 all responsive documents within his custody, possession or control in the United Kingdom and to produce all other responsive documents within his custody, possession or control by August 22, 1995. In addition, the Court ordered Olson to appear for his deposition at the U.S. Embassy in London, England on July 11, 1995. On July 10, 1995, after denying Olson's motion to cancel or continue the deposition and after noting that Commission attorneys were already in London ready to proceed, the Court again ordered Olson to appear for his deposition on July 11, 1995. Nonetheless, Olson failed to appear for his deposition on the date ordered but instead appeared two days later. In addition, Olson failed to produce any documents to the Commission pursuant to the subpoena or Court orders. As a result, on August 4, 1995, the Commission filed a second contempt action against Olson. In this action, the Commission alleged that Olson refused to comply with the Court's June 9 and July 10, 1995 orders. The Commission requested the Court to find Olson in contempt, and sought attorneys fees and costs against him for his delay in beginning the deposition. Finally, the Commission requested the Court to assess a $1,000. daily fine against Olson to enforce compliance with document production provisions of the Court's orders. After exhaustive briefing and multiple Court hearings, on November 9, 1995, the Court ordered Olson to produce to the Commission all Copol business records in his possession. The Court also ordered Olson to pay costs of $1,087. to the Commission as a sanction for his delay in beginning the deposition. The Commission's Complaint against Copol, John D. Lauer (Lauer), Clifton Capital Investors L.P. (CCI), Konex Holding Corp. (Konex), Lyle E. Neal (Neal) and Joseph Polichemi (Polichemi) -------------------- BEGINNING OF PAGE #2 ------------------- -2- alleged 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 in connection with the offer and sale of investment contracts involving purported "Prime Bank Instruments." The Complaint further alleged that Konex raised at least $14 million from at least one investor, Chicago Housing Authority's (CHA) Benefit Plan. On June 21st, the Court entered a Temporary Restraining Order (TRO) against the defendants, froze their assets and required them to provide an accounting to the Court and documents to the Commission. On July 29, 1994, the Court permanently enjoined Konex, Neal, Copol and Polichemi by default. On October 24, 1995, the Court entered, by consent, an Order of Permanent Injunction and Other Equitable Relief which permanently enjoined Lauer and CCI and ordered them to disgorge $4.853 million plus prejudgment interest. Discovery continues in the action to determine the appropriate amount of disgorgement and civil penalties to be ordered against the remaining defendants.