UNITED STATES SECURITIES AND EXCHANGE COMMISSION LITIGATION RELEASE NO. 15944 / October 23, 1998 SECURITIES AND EXCHANGE COMMISSION v. UNIQUE FINANCIAL CONCEPTS, INC., ET AL., Civil Action No. 98-7147 (S.D. Fla.) The Securities and Exchange Commission announced that, on October 22, 1998, the Honorable Shelby Highsmith, District Judge, United States District Court for the Southern District of Florida, entered a Temporary Restraining Order ("TRO") against Unique Financial Concepts, Inc. ("Unique"), of Boca Raton, Florida; Frederick N. Hollander, Unique's founder and sales manager, who lives in Parkland, Florida; Ernest J. Patti, another founder, as well as president and owner, a resident of Fort Lauderdale, Florida; and Nicholas D. DeAngelis, Unique's primary salesperson, who lives in Lake Worth, Florida. The defendants were charged with fraudulently offering unregistered securities, namely interests in a purported trading program involving options on foreign currency. The TRO also freezes the defendants' assets and grants other emergency relief, including an order requiring them to repatriate assets located outside of the United States. A preliminary injunction hearing is scheduled for October 30, 1998. The Commission's complaint, filed the same day, alleges that, from October 1997 through the present, the defendants have engaged in a scheme to defraud investors by making material misrepresentations and omissions in connection with the sale of interests in a purported trading program involving options on foreign currency through a foreign currency market known as Forex, and misappropriating investor funds. Through high-pressure sales tactics and aggressive nationwide advertising in major newspapers and on cable television outlets such as CNBC, the defendants have raised at least $6,575,714 from hundreds of investors nationwide. The complaint alleges that Unique has failed to produce evidence of any actual trading, and that the defendants have misappropriated at least 60 percent of funds invested. The complaint alleges that the defendants advertised returns as high as 1,000 percent, and represented to investors that their funds would be sent to an account in the Bahamas from which trading would occur. In fact, of the approximately $6.5 million raised, less than $2.5 million, or 38 percent, was actually sent to the Bahamas. The defendants used at least $3.3 million of investor funds on personal and business expenses, including advertising, luxury car rentals, purported commissions, loans to principals and salaries. In addition, Unique used $644,704 of new investor funds to pay its obligations to existing investors, the hallmark of a Ponzi scheme. The TRO temporarily enjoins the defendants from violating the antifraud provisions of Section 17(a) of the Securities Act of 1933 ("Securities Act") and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, as well as the registration provisions of Sections 5(a) and 5(c) of the Securities Act. The Commission is also seeking preliminary and permanent injunctions against the defendants, disgorgement, prejudgment interest and civil penalties. The Commission acknowledges the assistance of the Commodity Futures Trading Commission and the Office of Comptroller, Department of Banking and Finance, of the State of Florida in this action.