Securities and Exchange Commission
Litigation Release No. 17513 / May 13, 2002
Securities and Exchange Commission v. Make It Reel Productions, Inc., Cine Star, Inc., Joseph Rubbo, Angela Rubbo (Sr.), Angela Rubbo (Jr.), Pasquale Rubbo, Nicholas Rubbo, and Peter D. Ragofsky, 02 CV 60255 (S.D. Fla.)
The Securities and Exchange Commission announced today that it filed an Amended Complaint on May 9, 2002, in its civil action against Make It Reel Productions, Inc. ("MIR"), Joseph Rubbo ("J. Rubbo"), MIR's president and CEO, and Peter D. Ragofsky ("Ragofsky"), a salesperson who touted investments in MIR. The Amended Complaint charges the following additional defendants with violations of the antifraud and registration provisions of the federal securities laws: Cine Star, Inc. ("Cine Star"), a nominee corporation controlled by J. Rubbo and several of his family members; Angela Rubbo (Sr.), J. Rubbo's mother and a control person of MIR and Cine Star; Angela Rubbo (Jr.), J. Rubbo's sister and the president of MIR; Pasquale Rubbo, J. Rubbo's brother and the supervisor of a boiler room that sold unregistered MIR securities; and Nicholas Rubbo, J. Rubbo's brother and a control person of Cine Star.
The Commission's Amended Complaint alleges as follows: From at least January through February 2002, the Defendants sought to raise $90 million through a fraudulent unregistered offering of MIR securities. During this two-month period, MIR raised at least $80,500 from unsuspecting investors. MIR solicited investors by placing an Offering Memorandum on its Internet web-site and by running a boiler room operation that cold-called investors and touted MIR securities. The Offering Memorandum contained numerous false statements concerning, among other things, MIR's rights to a movie project entitled "New Horizons" purportedly starring Tom Cruise and Catherine Zeta-Jones. In fact, MIR never had any rights to "New Horizons" and neither Tom Cruise nor Catherine Zeta-Jones had made any commitments to the "New Horizons" project. The Offering Memorandum also falsely stated that only 15% of the proceeds raised by MIR would be used for expenses that were not related to MIR's purported media projects. In reality, at least 60% of the proceeds raised were used by the Rubbos to pay personal and other expenses related to the MIR boiler room. The Rubbos operated MIR together as a fraudulent "family business." Each of the Rubbos participated in the drafting of the Offering Memorandum and they all played essential roles in the operation of the MIR boiler room. Investor proceeds were deposited into accounts in the name of Cine Star, which the Rubbos controlled.
The Commission's Amended Complaint charges all of the defendants with violations of the antifraud and registration provisions of the federal securities laws, specifically Sections 5(a), 5(c) and 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934, and Rule 10b-5 thereunder. The Amended Complaint also seeks permanent injunctions prohibiting future violations of the securities laws, disgorgement, and civil penalties. On February 21, 2002, the Commission obtained emergency relief, which included an order temporarily restraining the Defendants from violating the antifraud and registration provisions of the federal securities laws and freezing the assets of MIR. (See Litigation Release No. 17371). MIR, J. Rubbo, and Ragofsky consented to preliminary injunctions, and MIR consented to a continuation of the asset freeze, on March 4, 2002. (See Litigation Release No. 17393).