U.S. SECURITIES AND EXCHANGE COMMISSION

     Litigation Release No. 15661 / March 6, 1998


     SECURITIES AND EXCHANGE COMMISSION V. DIRECT PARTICIPATION SERVICES, INC.
     D/B/A GOVERNMENT FINANCIAL, JEFFREY A. LOBEL, WILLIAM ROSSI, UNITED AVALON
     GROUP, LTD., AND FRANK M. NAFT, Civil Action No. 96-6594 LGB (Mcx)  (C.D.
     Cal.)

          The Securities and Exchange Commission ("Commission") announced that
     on February 25, 1998 a Judgment of Permanent Injunction and Other Relief
     was entered against defendants United Avalon Group, Ltd. ( UAG ), a
     California corporation, and its sole owner, officer and director, Frank M.
     Naft ("Naft"), which enjoined them from future violations of the antifraud
     provisions of the Exchange Act and ordered them to disgorge $310,307.40.  
     The Complaint alleges that UAG served as trustee for Direct Participation
     Services, Inc., d/b/a Government Financial ( GF ). GF allegedly offered and
     sold nine-month promissory notes ("Notes ), raising approximately $26
     million from approximately 750 investors between, July 1, 1993 and May 15,
     1995.  The Complaint alleges, among other things, that GF misrepresented
     the use of the proceeds from the securities offering, the safety of the
     investment, and the duties of UAG, which was to serve as an independent
     trustee.

           Specifically, the Complaint alleges that GF s offering materials
     represented that proceeds from the sale of Notes would be deposited into a
     segregated internal trust account held by the trustee.  The offering
     materials, further, provided that the trustee would assume principal
     responsibility for administering the investment, including holding all loan
     portfolio documents, receiving assignments of all assets purchased by GF,
     receiving all payments from obligors, and enforcing the Noteholders 
     security interest in the accounts receivable which GF was to purchase.  The
     Complaint alleges that UAG and Naft knowingly failed to discharge these
     duties. Instead, the Complaint alleges that the trustee operated as a mere
     disbursing agent.  In addition, the Complaint alleges that Naft and his
     affiliates received approximately $3.0 million in unsecured, undocumented
     loans from GF.  As a result of GF s failure to operate GF in the manner
     represented, the Note program evolved into a ponzi-like scheme since,
     according to the Complaint, investors were repaid using funds of subsequent
     investors. UAG and Naft were enjoined from future violations of Section 10b
     of the Securities Exchange Act of 1934 [15 U.S.C.  78j(b)] and Rule 10b-5
     thereunder [17 C.F.R.  240.10b-5]. UAG and Naft were additionally enjoined
     from knowingly providing substantial assistance to another person in
     violation of the provisions of the Securities Exchange Act of 1934, or of
     any rule or regulation issued thereunder.






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