SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 17122 / September 7, 2001
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 (DLC) (S.D.N.Y.)
SEC OBTAINS $19 MILLION JUDGMENT IN IPO STOCK FRAUD CASE
On August 14, 2001, the Commission obtained a final judgment requiring four defendants to pay a total of $19,395,066 in disgorgement, interest, and civil penalties in its securities fraud case involving Milan Capital Group, Inc., a company formerly based in Melville, New York, and Investment Offices d/b/a AC Financial, Inc., a former broker-dealer. The final judgment, by the United States District Court for the Southern District of New York, was entered against defendants Milan, AC Financial, Ira A. Monas, Jason M. Cope, and relief defendants Rita A. Monas, Jennifer Monas, Sands Point International Corp., Douglas H. Monas, Michael's Capital Consultants, Inc., and HWK Consultants, Inc. The opinion is reported at 2001 U.S. Dist. LEXIS 11804 (S.D.N.Y. August 14, 2001).
The Commission filed its original complaint in this matter on January 7, 2000, charging Milan with unlawfully offering for sale, and purportedly selling, IPO securities while failing to be registered with the Commission as a broker-dealer. On that same day, the Court granted the Commission's request for a temporary restraining order freezing Milan's assets and enjoining Milan from acting as an unregistered broker-dealer. See Litigation Release No. 16405 (January 10, 2000). On January 21, 2000, on application by the Commission, the Court appointed a receiver of Milan to, among other things, identify and secure Milan's assets and property, ascertain the disposition of investors' funds, and ensure the fair treatment of all investors who dealt with Milan.
In an amended complaint filed on February 29, 2000, the Commission charged Monas, Cope, Michael I. Lamhut, and others with violating the antifraud provisions of the federal securities laws, and charged Monas, Cope, and Lamhut with aiding and abetting Milan's violation of the broker-dealer registration provisions. The Commission also named members of Monas' family and three entities as relief defendants. See Litigation Release No. 16460 (March 1, 2000).
On November 9, 2000, the Court granted the Commission's motion for partial summary judgment, finding that Monas and Milan, through Cope and his team of brokers at the AC Financial Pittsburgh office, convinced approximately 200 customers to pay almost $9 million for shares in several IPOs. The Court found that Milan did not have access to IPOs and never provided investors with any IPO shares. The Court found that Monas, Cope, and Lamhut (who is now deceased) violated the antifraud provisions of the federal securities laws, and aided and abetted Milan's violation of the broker-dealer registration provisions. See Litigation Release No. 16802 (November 16, 2000).
On December 29, 2000, the Court entered a Final Judgment of Permanent Injunction against Monas, Cope, Lamhut, and AC Financial enjoining them from further violations of the antifraud provisions of the securities laws. Cope appealed that judgment, but later abandoned his appeal, which has since been dismissed for failure to prosecute.
On August 14, 2001, the Court entered final judgment against defendants Monas, Cope, Milan, and AC Financial, holding them jointly and severally liable for disgorgement and prejudgment interest in the amount of $9,395,066, and for the costs and fees of the Receiver. Additionally, having found that Monas's and Cope's violations of the antifraud provisions involved fraud and deceit and resulted in substantial losses to investors, the Court ordered Cope and Monas to pay a civil penalty of $10 million. The Court further entered final judgment for restitution and disgorgement against the six relief defendants that received investor assets.