Litigation Release No. 17239 / November 19, 2001
SEC CHARGES OREN FACHLER, RALPH DIFALCO, AND STEVEN BOCCHINO IN CONNECTION WITH PREVIOUSLY FILED FRAUDULENT OFFERING CASE
SECURITIES AND EXCHANGE COMMISSION v. GOLDMAN LENDER & CO. HOLDINGS, BLACKWELL CO., TRADERZ ASSOCIATES HOLDING INC., SHARON HAROSH, AMERICO ROBERT GALLO, OREN FACHLER, RALPH DIFALCO, AND STEVEN BOCCHINO, 98 Civ. 7525 (S.D.N.Y.)(JGK)
The Securities and Exchange Commission filed an Amended Complaint in federal court in Manhattan on November 13, 2001, bringing additional charges relating to a series of six fraudulent offerings that raised over $2.1 million from 190 investors from May 1997 through August 1998. The Amended Complaint charges that the defendants, in various combinations, created phony private placements of stock of Traderz Associates Holding, Inc., Niki Taylor, R.H. Roberts Holding Corp., Beverly Glenn Interactive, Goldman Lender & Co. Holdings, and Blackwell Co. and sold the purported private placement stock through a series of boiler rooms.
The Commission's Amended Complaint charges the following defendants:
Goldman Lender, a Delaware corporation that was located in New York City;
Blackwell, a sole proprietorship that was located in New York City;
Traderz Associates, a Delaware corporation that was located in New York City;
Sharon Harosh, age 27, the purported president and secretary of Goldman Lender and the sole proprietor of Blackwell. At the relevant time, Harosh resided in Brooklyn, New York;
Americo Robert Gallo, age 34, the president of Traderz during a portion of the time of the fraudulent offerings were conducted. At the relevant time, Gallo resided in Brooklyn, New York, and was a registered representative of Montrose Capital Management Ltd., West America Securities Corp., and Meridian Equities Co.;
Oren Fachler, age 26, the purported president, treasurer, and CEO of Traderz during a portion of the time the fraudulent offerings were conducted. At the relevant time, Fachler resided in Brooklyn, New York, and was a registered representative of Meridian Equities Co., Carlin Equities Corp., Clearing Services of America, Inc., and Montrose Capital Management Ltd.;
Ralph DiFalco, age 26, an officer of Traderz, and president of R.H. Roberts. At the relevant time, DiFalco resided in Brooklyn, New York; and
Steven Bocchino, age 30, a resident of Brooklyn, New York, and a registered representative of M.A. Gillespie Investment Corp., and E.C. Capital, Ltd. at the relevant time. Currently, Bocchino resides in East Stroudsburg, Pennsylvania.
The Commission filed its initial complaint on October 23, 1998 charging Goldman Lender, Blackwell, Traderz, Harosh, and Gallo with violations of the antifraud provisions of the Securities Act of 1933 ("Securities Act") and the Securities Exchange Act of 1934 (the "Exchange Act") in connection with the Goldman Lender and Blackwell offerings. The complaint also charged Harosh with a fraudulent scheme involving purported sales of stock of Ramtron International Corp., which traded on the NASDAQ. The initial complaint sought temporary emergency relief, which was granted. An asset freeze and preliminary injunction are currently in effect against the original defendants, and a temporary receiver has been appointed for Goldman Lender, Blackwell, and Traderz.
The Amended Complaint alleges that, directly or though salespeople acting at their direction, defendants used traditional boiler-room tactics, including high-pressure sales tactics, false and misleading representations, and fictitious names and false addresses, to sell the offerings. In each of the offerings, the primary selling point was the promise of an imminent initial public offering ("IPO") and the significant profits on the investment that would result. The defendants and other salespeople told investors that they could purchase securities in the private placements and in a few months the companies would go public and the investors would double or triple their money. In the Traderz, R.H. Roberts, Goldman Lender, and Blackwell offerings, some investors also received offering memoranda that contained material misrepresentations about the issuer's financial condition, the experience of its officers and directors, and the use of the offering proceeds, as well as a fabricated audit report. In the Goldman Lender and Blackwell offerings, the defendants also falsely told investors that their money would be kept in an escrow account and refunded in the event the offering failed to raise a stated minimum amount of proceeds. With the exception of Traderz, the issuers were all sham companies and had no operations or assets; the bulk of Traderz' operations consisted of selling the fraudulent offerings. None of the promised IPOs ever occurred. The funds raised were used primarily to enrich the individual defendants, pay commissions to salespeople, and otherwise defray the cost of the fraudulent offerings.
The Amended Complaint also includes the charges against Harosh relating to the purported sale of Ramtron stock.
The Amended Complaint charges that each of the defendants violated the antifraud provisions -- Section 17(a) of the Securities Act and Section 10(b) of the Exchange Act, and Rule 10b-5, thereunder - and that the individual defendants, Harosh, Gallo, Fachler, DiFalco, and Bocchino, acted as unregistered brokers in violation of Section 15(a) of the Exchange Act. The Commission seeks permanent injunctions, disgorgement and other equitable relief, and civil penalties.
Defendants Harosh, Gallo, and Fachler each are or have been the subject of criminal charges prosecuted by the Office of the United States Attorney for the Southern District of New York arising out of some or all of the conduct alleged in the Amended Complaint.