U.S. SECURITIES AND EXCHANGE COMMISSION

     Litigation Release No. 15514 / September 29, 1997

     SECURITIES AND EXCHANGE COMMISSION v. PHOENIX METALS U.S.A. II, INC. and
     ROBERT F. FLAHERTY, Civil Action No. CV-97-7153-SVW(AJWx) (C.D. Cal.)

          The Securities and Exchange Commission ("Commission") announced that
     on September 29, 1997, it sued Phoenix Metals U.S.A. II, Inc., of Beverly
     Hills, California for fraud and Robert F. Flaherty, age 61, of Alhambra,
     California for fraud and failing to register with the Commission as a
     broker-dealer.  The complaint was filed in federal district court in Los
     Angeles.

          From 1989 to 1994, Flaherty sold contracts for the purchase and
     processing of cinder ore into refined gold or other precious metals to at
     least 49 investors, raising approximately $680,000.  In 1993, Flaherty
     gained control of Phoenix Metals, whose stock trades on the OTC Bulletin
     Board under the symbol PMTU.  From 1994 to 1995, Phoenix Metals and
     Flaherty sold Phoenix Metals stock to approximately 30 investors, raising
     $1,835,000.  Flaherty also sold options on Phoenix Metals stock, raising
     approximately $73,000.

          Phoenix Metals and Flaherty told investors that they were in the
     business of extracting gold and other precious metals from volcanic cinder
     ore located in Arizona and Nevada.  Phoenix Metals and Flaherty claimed to
     use a propriety process to extract precious metals on a commercially viable
     basis.  The Commission alleges that Flaherty used most of the $2.5 million
     raised for his personal use and for expenses unrelated to ore processing
     activities.  Phoenix Metals and Flaherty made numerous misrepresentations
     to investors: (1) Flaherty promised investors in the cinder ore contracts
     that they would receive a guaranteed 300% return but he has not paid
     investors any return; (2) Phoenix Metals and Flaherty falsely claimed
     extensive ownership of cinder ore in Arizona and Nevada; and (3) Phoenix
     Metals and Flaherty falsely claimed that they owned cinder ore processing
     facilities and had the present capability of processing cinder ore into
     precious metals on a commercially viable basis.

          The Complaint seeks a permanent injunction, disgorgement and an
     accounting against Phoenix Metals for violating 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 and against Flaherty for violating Section
     17(a) of the Securities Act of 1933 and Sections 10(b) and 15(a) of the
     Securities Exchange Act of 1934 and Rule 10b-5 thereunder.









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