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             U.S. SECURITIES AND EXCHANGE COMMISSION

Litigation Release No. 15249 /  February 7, 1997

Accounting and Auditing Enforcement 
Release No. 880 / February 7, 1997

Securities and Exchange Commission v. The AppleTree Companies,
Inc., f/k/a Modami Services, Inc., Michael H. Salit, David B.
Lobel, Paul B. Kravitz, and W. Scott Long III, No. 96-8675-CIV-
RYSKAMP (S.D. Fla.) 

The Securities and Exchange Commission announced that on January
29, 1997, a Final Judgment of Permanent Injunction and Other
Relief was entered against The AppleTree Companies, Inc. by the
United States District Court for the Southern District of
Florida.  The final judgment enjoins AppleTree from future
violations of Sections 13(a) and 13(b)(2)(A) of the Securities
Exchange Act of 1934, and Rule 12b-20, 13a-1 and 13a-13,
thereunder.  The final judgment also requires AppleTree to
provide an accounting of the proceeds from its 1992 registered
offering of common stock.  AppleTree consented to the entry of
the permanent injunction and the accounting without admitting or
denying the Commission's allegations.

In its complaint, the Commission alleged that AppleTree, formerly
headquartered in Boca Raton, Florida, and known as Modami
Services, Inc., violated the books and records provisions of the
Exchange Act, and filed false and misleading annual and periodic
reports with the Commission in 1992 and 1993.  More particularly,
the Commission alleged that AppleTree:

     ù    falsely reported in 1992 and 1993 that it owned
          $440,000 in machinery and equipment which it did not in
          fact own;

     ù    failed to disclose that two former officers and
          directors, Michael Salit and David Lobel, claimed to be
          creditors of AppleTree's chief supplier while AppleTree
          was doing business with that company;

     ù    included in its 1992 annual report a false proposed
          joint venture agreement with a company called TSR, Inc.
          which purportedly had been signed by TSR's president
          when in fact AppleTree's former president, Paul
          Kravitz, had signed without authorization the name of
          TSR's president to the agreement;

     ù    misrepresented in its 1993 annual report that TSR and
          AppleTree had "mutually agreed" not to pursue the joint
          venture due to "marketing concerns" when in fact TSR's
          president broke off negotiations with AppleTree upon
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          discovering that Kravitz had signed his name to the
          proposed joint venture agreement without authorization.

Based on the above, the Commission alleged that AppleTree failed
to make and keep accurate books and records as required by
Section 13(b)(2)(A) of the Exchange Act, and that it filed false
and misleading annual and periodic reports with the Commission in
violation of Section 13(a) of the Exchange Act, and Rules 12b-20,
13a-1 and 13a-13, thereunder.  (On November 26, 1996, a Final
Judgment of Permanent Injunction was entered against Kravitz by
the United States District Court for the Southern District of
Florida with Kravitz' consent.  Kravitz neither admitted nor
denied the Commission's allegations.)

(For further information, see LR-15102 and LR-15172; AAE Rel. 840
and AAE Rel. 860)