UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 16503 / April 6, 2000
United States Securities and Exchange Commission v. William J. Olivieri, Neptune Soft Water, Inc., and A Very Nice Car Co., Inc., 00CV532 (NAM) (BJD) (N.D.N.Y.)
The Securities and Exchange Commission ("Commission") announced today that it filed a civil injunctive action in federal district court in Syracuse, New York charging William J. Olivieri ("Olivieri"), Neptune Soft Water, Inc. ("Neptune"), and A Very Nice Car Co., Inc. ("Nice Car") with perpetrating a securities fraud "Ponzi" scheme. The Complaint alleges that the defendants fraudulently raised more than $1.9 million from over fifty investors by offering and selling unregistered securities in the form of assignments to retail installment contracts.
Named in the Complaint are:William J. Olivieri, age 58, resides in Syracuse, New York. Olivieri is the president and sole owner of Neptune. Olivieri is the vice president and fifty percent owner of Nice Car.
Neptune Soft Water, Inc. is a New York corporation with its principal place of business in Syracuse, New York. Founded in 1965, Neptune is a retailer of water softening and purification systems.
A Very Nice Car Co., Inc. is a New York corporation with its principal place of business in Syracuse, New York. Founded in 1994, Nice Car is a used car dealership.
According to the Complaint:Between 1990 and 1996, the Defendants knowingly or recklessly made numerous material misrepresentations and omissions in offering and selling Neptune and Nice Car installment contracts to the investing public through Neptune Funding, a purported division of Neptune (the "Neptune Funding Program"). The defendants represented that investors in the Neptune Funding Program would receive the right to the periodic payments made by customers on performing installment contracts. The defendants further represented to investors that Neptune and Nice Car would collect the customer payments on the assigned installment contracts and remit such payments to the investors. In fact, the defendants never intended to set aside the customer payments on specific installment contracts for specific investors. Instead, they pooled the customer payments together with the funds received from investments in the Neptune Funding Program, used the commingled funds to pay investors, and diverted some of those funds to pay personal expenses of Olivieri. Moreover, between 1993 and 1996, defendants sold certain investors installment contracts that did not exist or that already had been sold to other investors or pledged to financial institutions. Also, between 1991 and 1996, defendants gave investors false assurances of investment safety by promising to substitute performing installment contracts if any assigned contracts went into default - without any intention of ever making good on that promise. Defendants did not substitute performing contracts when underlying installment contracts went into default, as many did. Ultimately, defendants lacked enough installment contract receivables to satisfy ongoing obligations to investors, and had to draw increasingly from proceeds raised from new investments to satisfy periodic obligations to existing investors.
As a result of the foregoing, the Commission alleges that the defendants violated Section 17(a) of the Securities Act of 1933 ("Securities Act"), Section 10(b) of the Securities Exchange Act of 1934 ("Exchange Act") and Rule 10b-5 thereunder, and that Olivieri and Neptune also violated Sections 5(a) and 5(c) of the Securities Act. For relief, the Commission seeks (1) permanent injunctions against future violations of Section 17(a) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5 as to all defendants; (2) permanent injunctions against future violations of Sections 5(a) and 5(c) of the Securities Act as to Olivieri and Neptune; (3) disgorgement of all ill-gotten gains plus prejudgment interest in the case of all defendants; (4) an accounting in the case of all defendants; and (5) civil penalties pursuant to Section 20(d) of the Securities Act and Section 21(d)(3) of the Exchange Act in the case of all defendants.
The Commission thanks the New York Attorney General's Office for its cooperation in this matter. The Commission's case remains pending.http://www.sec.gov/litigation/litreleases/lr16503.htm