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                SECURITIES AND EXCHANGE COMMISSION

LITIGATION RELEASE NO. 15224 / January 22, 1997

SECURITIES AND EXCHANGE COMMISSION v. WILLIAM P. DILLON, No. 96-
11265-RGS (D. Mass. filed June 19, 1996). 

     The Commission announced that on December 23, 1996, the
Honorable Richard G. Stearns of the U. S. District Court for the
District of Massachusetts (the "Court") issued a Final Judgment
of Permanent Injunction against William P. Dillon ("Dillon"). 
Dillon, who consented to this order without admitting or denying
the allegations in the complaint, was enjoined from further
violations of the antifraud provisions contained in Section 17(a)
of the Securities Act of 1933, Section 10(b) of the Securities
Exchange Act of 1934 and Rule 10b-5 thereunder.  Dillon also was
barred from maintaining any interest in any margin account and
from purchasing or selling securities on margin and ordered to
disgorge $235,498.94, plus prejudgment interest thereon.  This
amount represents losses Dillon avoided by failing to pay margin
debits at five broker-dealer firms.

     The complaint, filed on June 19, 1996, alleged that Dillon
deceived several broker-dealers by conducting a fraudulent margin
trading scheme.  On July 2, 1990, Dillon, as a result of a prior
Commission enforcement action, was barred by the Court for a
period of five years from maintaining a margin account and from
trading on margin.  The complaint alleged that Dillon, in order
to avoid this restriction, opened margin accounts at five broker-
dealers in January 1995 using the name and social security number
of a maintenance man he employed.  Dillon also submitted inflated
net worth and income figures to the broker-dealers in order to
induce the firms to open margin accounts.  Between January and
June 1995, Dillon deposited his own funds into the five accounts
and, by impersonating the maintenance man, engaged in hundreds of
securities transactions.  The Commission's complaint alleged that
Dillon made the trades without an intention or the means to pay
for the trades if large losses resulted.

     In June 1995, Dillon's scheme unraveled when he placed two
orders, each to sell 100 call options contracts, for the common
stock of Lotus Development Corporation ("Lotus") without owning
either the call options or the underlying Lotus stock.  On June
5, 1995, International Business Machines announced a tender offer
for all of the outstanding stock of Lotus, causing a substantial
rise in the price of Lotus.  Dillon, who became obligated to
purchase 20,000 shares of Lotus stock to cover his option
position, sustained a loss of approximately $450,000.  Dillon did
not have sufficient funds to purchase the necessary Lotus stock. 
Consequently, the broker-dealer through which Dillon had
purchased the call options became obligated to make the purchase
and suffered a loss of approximately $219,000.
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     On June 18, 1996, Dillon was indicted on charges of mail
fraud, criminal contempt and deceptive use of a social security
number in connection with the same conduct alleged in the
Commission's action.  On October 1, 1996, Dillon entered a guilty
plea to the criminal charges.  United States v. Dillon, No. 96-
10170-PBS (D. Mass. filed June 18, 1996).

(For further information, See Litigation Release No. 14950).