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UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Litigation Release No. 16419 / January 27, 2000

SECURITIES AND EXCHANGE COMMISSION v. CAVANAGH, et al., 98 Civ. 1818 (DLC) (S.D.N.Y)

On January 21, 2000, the Honorable Denise L. Cote of the United States District Court for the Southern District of New York issued a default judgment against relief defendants Bernd Stieghorst, Jean-Pierre Neuhaus and The Owners of Account No. 13601/Cumbre at Affida Bank of Zurich (now Bank Leu). The Court ordered these overseas relief defendants, who received free Electro-Optical Systems Corp. ("EOSC") shares or proceeds from the sale of those shares, to disgorge the sale proceeds and any EOSC shares they retain. Stieghorst, of Cologne, Germany, was ordered to pay $271,281 in EOSC sale proceeds and $26,061.46 in prejudgment interest and to disgorge 24,000 shares of EOSC stock. Neuhaus, of Zurich, Switzerland, was ordered to pay $565,031 in EOSC sale proceeds and $5,281.45 in prejudgment interest and to disgorge 34,000 shares of EOSC stock. The Affida account owners were ordered to pay $1,000,000 in EOSC sale proceeds and $96,068.10 in prejudgment interest, subject to reduction for payments received by the Court from specified defendants and relief defendants in excess of $8,904,111.71.

This default judgment follows two earlier default judgments issued on July 23, 1999, and November 19, 1999, against various other defendants and relief defendants. The payments for disgorgement ordered by all three default judgments exceed $10 million. The default judgments provide that all disgorged funds received in this action are to be equitably distributed to defrauded retail investors at the conclusion of this action.

This action, which has unadjudicated claims against contesting defendants and relief defendants, is presently stayed pending a criminal investigation.

Related Litigation Releases:

No. 15660 / March 13, 1998
No. 15715 / April 21, 1998
No. 16035 / January 21, 1999
No. 16152 / May 19, 1999
No. 16372 / November 29, 1999

http://www.sec.gov/litigation/admin/lr16419 .htm


Modified:01/27/2000