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          UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Litigation Release No.  15242 / February 3, 1997

SECURITIES AND EXCHANGE COMMISSION v. DAVID EDWARD FREITAG,
No. 96 C 50345 (N.D. Ill.)(filed September 30, 1996)

The Securities and Exchange Commission announced that on January
23, 1997, the United States District Court for the Northern
District of Illinois entered a Final Order Granting Permanent
Injunction and Other Equitable Relief by Default against David E.
Freitag ("Freitag").  The order permanently enjoins Freitag from
committing future violations of Sections 5(a), 5(c) and 17(a) of
the Securities Act of 1933, Sections 10(b), 15(a)(1) and 15(c)(1)
of the Securities Exchange Act of 1934 and Rules 10b-5 and 15c1-2
promulgated thereunder.

The Commission's complaint arose out of a Ponzi scheme Freitag
operated between 1993 and 1995.  Freitag defrauded at least 240
investors of nearly $7 million.  Freitag told investors that he
could obtain immediate returns of up to 10% by pooling their
funds and subsequently using the pool to invest in certain
unspecified mutual funds.  Freitag gave an additional incentive
for investment by telling prospective investors that the mutual
funds offered guaranteed annual returns of up to 25% and had no
risk of loss.  Contrary to his statements, Freitag never invested
any of the money he received in any mutual fund.  Instead, he
deposited the money in his own bank accounts and used it to pay
returns to earlier investors and for personal expenses.

Freitag offered securities that were not registered with the
Commission.  In executing his scheme, Freitag acted as a broker
by transacting in securities for his clients' accounts.  However,
he was not registered as a broker-dealer with the Commission. 
During the early part of the scheme, Freitag was associated with
a registered broker-dealer.

Freitag was indicted by the Illinois criminal authorities on
February 29, 1996, and by U.S. criminal authorities on January
21, 1997, in connection with the same activities.

See also Litigation Release No. 15098.