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U.S. Securities and Exchange Commission

SECURITIES AND EXCHANGE COMMISSION

Litigation Release No. 16460 / March 1, 2000

Securities and Exchange Commission v. Milan Capital Group, Inc., Investment Offices d/b/a AC Financial, Inc., Ira A. Monas, Michael Irwin Lamhut, Jason M. Cope, Rita A. Monas, Jennifer Monas, Sands Point International Corp., Douglas H. Monas, Michael's Capital Consultants, Inc., and HWK Consultants, Inc., 00 Civ. 108 (DC) (S.D.N.Y.) (February 29, 2000)

SEC Charges Prison Inmate with IPO Scam that Defrauded
Over 190 Investors of $8.7 Million

Yesterday, in federal district court in Manhattan, the Securities and Exchange Commission charged Ira A. Monas-who is currently incarcerated in an upstate New York prison for grand larceny3/4with defrauding over 190 investors of approximately $8.7 million in a scam involving several highly publicized initial public offerings ("IPOs") of securities. The Commission also charged in the scam two entities controlled by Monas-Milan Capital Group, Inc. and the broker-dealer Investment Offices (which operated under the name AC Financial, Inc.)-along with Michael Irwin Lamhut, the operations manager of Milan Capital, and Jason M. Cope, the branch manager of AC Financial's Pittsburgh, Pennsylvania office.

The amended complaint alleges that: In the fall of 1999, Monas, along with the other defendants, offered and purportedly sold to investors shares in four "hot" IPOs, meaning that the securities offerings were oversubscribed and difficult to purchase. The defendants collected $8.7 million from approximately 190 investors, who were told that the defendants had access to the market for these highly-publicized IPOs and could purchase shares in the IPOs at the initial offering prices. These representations were false. The defendants neither had access to the exclusive IPO market nor purchased IPO shares for the investors. Instead, the defendants stole the investors' money and, to create the illusion of legitimate stock purchases, gave the investors phony trade confirmations and account statements. The defendants also returned relatively small sums of money to some victims who were defrauded in the early stages of the scheme, and falsely represented these monies as repayment of principal and profits on the sham IPO investments.

Yesterday's action expands the case initially brought by the Commission, on January 7, 2000, which alleged that Milan Capital had violated broker-dealer registration provisions by offering for sale and purportedly selling IPO securities, while failing to be registered as a broker-dealer with the Commission. In that action, among other things, Judge Denise Cote of the U.S. District Court for the Southern District of New York: (1) froze all funds and other assets held in Milan Capital's name, including $3.7 million held in a bank account; and (2) preliminarily enjoined Milan Capital from acting as an unregistered broker-dealer. On January 21, 2000, the Court appointed a receiver for Milan Capital. The receiver is charged with, among other things, (1) identifying and securing Milan Capital's assets and property, (2) ascertaining the disposition of investors' funds, and (3) ensuring the fair treatment of all investors who dealt with Milan Capital.

Named as defendants are:

  • Ira A. Monas, age 45, who resides at the Adirondack Correctional Facility in Ray Brook, New York, where he is serving a two-to-four year sentence.

  • Michael Irwin Lamhut, age 53, who resides in Levittown, New York. Shortly before being incarcerated in October 1999, Monas hired Lamhut to operate Milan Capital.

  • Jason M. Cope, age 26, who resides in Coraopolis, Pennsylvania. Cope opened, and became the branch manager of AC Financial's Pittsburgh, Pennsylvania office in or around June 1999.

  • Milan Capital Group, Inc., a New York corporation with offices located in Melville, New York, which is not registered with the Commission as a broker-dealer.

  • Investment Offices, which does business under the name AC Financial, Inc., and is a Maine corporation registered with the Commission as a broker-dealer.

    Named as relief defendants are:

    • Rita A. Monas, who resides in Massapequa Park, New York and is, or was, married to Ira Monas.

    • Jennifer Monas, age 19, who is the daughter of Ira and Rita Monas, and was employed by Milan Capital.

    • Sands Point International Corporation, which is the New York corporation through which Ira Monas purchased AC Financial.

    • Douglas H. Monas, age 41, who resides in New York City. He is the brother of Ira Monas.

    • Michael's Capital Consultants, Inc., which is an entity wholly owned and controlled by Lamhut.

    • HWK Consultants, Inc., which is an entity wholly owned and controlled by Lamhut.

      The complaint charges that the defendants, through their respective roles in the IPO scam, violated the antifraud provisions of the federal securities laws, 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. The complaint also charges Milan Capital with violating, and the other defendants with aiding and abetting Milan Capital's violations of, the broker-dealer registration provisions, Section 15(a) of the Exchange Act. As to the defendants, the SEC seeks permanent prohibitory injunctions, verified accountings of the defendants' receipt and disbursement of investors' funds, disgorgement of the defendants' ill-gotten gains plus prejudgment interest, and civil money penalties. As to the relief defendants, the SEC seeks verified accountings of the relief defendants' receipt and disbursement of investors' funds, the return of the investors' funds that they received, and prejudgment interest thereon.

      The Commission's investigation into this matter continues.

      http://www.sec.gov/litigation/litreleases/lr16460.htm
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      Modified:03/01/2000