SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 16826 / December 12, 2000
SECURITIES AND EXCHANGE COMMISSION V. ARTHUR BRUCE BAHLAV AND FRANK J. FASANO, 99 CIV. 11772 (S.D.N.Y.) (SWK)
The Securities and Exchange Commission ("Commission") announced today that on December 6, 2000, the Honorable Shirley Wohl Kram, United States District Judge for the Southern District of New York, entered final judgments against defendants Arthur Bruce Bahlav ("Bahlav") and Frank J. Fasano ("Fasano"), former owners of SFI Investments, Inc. ("SFI"), a broker-dealer.
The Commission's Complaint, which was filed on December 3, 1999, alleged that Bahlav and Fasano orchestrated a scheme through which they defrauded at least 24 SFI customers of more than $1.5 million by: (a) inducing investors to purchase unsecured promissory notes from Bahlav and Fasano with promises of high rates of return; (b) making materially false statements, and failing to disclose material information, to investors concerning, among other things, the use and disposition of the securities that investors used to purchase the notes; and (c) liquidating the investors' securities and using the proceeds to pay, among other things, Bahlav's and Fasano's personal and business expenses, and to repay earlier investors their interest and principal.
Bahlav and Fasano were previously convicted in federal court in the Eastern District of New York of mail fraud, securities fraud and conspiracy, and conspiracy to commit securities fraud, respectively, based on the same conduct alleged in the Commission's Complaint.
Bahlav consented to the final judgment without admitting or denying the allegations in the Complaint. The Court entered a default judgment against Fasano. These injunctions permanently enjoin Bahlav and Fasano from violating Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act and Rule 10b-5. The Commission did not seek disgorgement or civil penalties against Fasano or Bahlav.