SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 16441 / February 17, 2000
SECURITIES AND EXCHANGE COMMISSION v. ARON O. BRONSTEIN, TOMER M. YUZARY, ROMAN SAKHAROVICH, a/k/a ROMAN SAKH, IOSEF PAK, a/k/a JOSEPH PAK , AND J.P. GIBBONS & CO., INC., f/k/a THE GOLDEN, LENDER FINANCIAL GROUP, INC., U.S. District Court, S.D.N.Y., No. 00 CIV 1179 (LAK)
The Securities and Exchange Commission today charged that a Manhattan brokerage firm, its two principals and two of its registered representatives misappropriated over $5 million in investor funds through a fraudulent, unregistered offering of the brokerage firm's own stock. Simultaneously, the United States Attorney for the Southern District of New York announced criminal indictments of these five defendants based upon the same underlying conduct.
Named in the Commission's Complaint filed in the U.S. District Court for the Southern District of New York are:
The Complaint alleges as follows:
From January 1998 through November 1999, the defendants raised at least $5,270,000 in a fraudulent, unregistered offering of Golden Lender stock. Bronstein and Yuzary controlled all aspects of Golden Lender and beneficially owned the majority of its stock. Acting at their direction, Sakh and Pak sold Golden Lender stock to retail customers -- including many elderly and infirm customers of modest means -- using a high pressure sales pitch that included numerous material misrepresentations and omissions. Bronstein and Yuzary pocketed the bulk of the proceeds of the fraud. Although Golden Lender has been a consistently money-losing business since its founding in 1996, Bronstein and Yuzary gave themselves a total of $6,600,000 in compensation and other payments from 1997 through 1999.
Among the misrepresentations and omissions used by the defendants to induce investors to part with their savings were the following:
The defendants also recommended and sold Golden Lender stock to numerous investors for whom it was clearly unsuitable, including retirees who invested large portions of their modest retirement funds.
The sales of Golden Lender stock violated the antifraud provisions of the Securities Act of 1933 ("Securities Act") and the Securities Exchange Act of 1934 ("Exchange Act"), as well as the registration provisions of the Securities Act. Specifically, the Complaint charges Golden Lender, Bronstein, Yuzary, Sakh and Pak with violations of Sections 5(a), 5(c), and 17(a) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder. The Complaint also charges Golden Lender, directly, and Bronstein and Yuzary, as controlling persons of Golden Lender, with violations of Sections 10(b) and 15(c) of the Exchange Act, and Rules 10b-3 and 15c1-2 thereunder. The Commission seeks permanent injunctions, disgorgement of ill-gotten gains plus prejudgment interest, and civil monetary penalties against all of the defendants.
The Commission acknowledges the valuable assistance of the United States Attorney's Office for the Southern District of New York, the Federal Bureau of Investigation, and NASD Regulation, Inc. in bringing this case.http://www.sec.gov/litigation/litreleases/lr16441.htm