United States Securities and Exchange Commission
Litigation Release No. 17720 / September 11, 2002
SEC Settles Financial Fraud Charges Against Kenneth Kurtz, Alex Sheyfer, and Alexander Zalmenenko
Securities and Exchange Commission v. Tanner, et al.., 02-CIV-0306 (S.D.N.Y.)
The Securities and Exchange Commission ("Commission") announced that on July 26, 2002, the Honorable William H. Pauley, United States District Judge for the Southern District of New York, entered Final Consent Judgments of Injunction and Other Relief ("Judgments") against Kenneth Kurtz ("Kurtz") of Salt Lake City, Utah, Alex Sheyfer ("Sheyfer") of Staten Island, New York, and Alexander Zalmenenko of Brooklyn, New York.
The Commission's Complaint alleged that Kurtz, Sheyfer, Zalmenenko, and others engaged in a scheme to manipulate the stock price of Maid Aide, Inc. ("MDAN"), a publicly traded shell company. To facilitate the scheme, the defendants gained control of MDAN, set up two boiler room operations, and directed unlicensed brokers to sell unregistered stock at artificially inflated prices, using high-pressure sales tactics, in exchange for undisclosed kickbacks. Through this scheme, the defendants defrauded investors out of more than $3.7 million.
The Judgment against Kurtz enjoines him from future violations of 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 promulgated thereunder. Kurtz's Judgment orders him to pay $153,773 in disgorgement and prejudgment interest and a $50,000 civil penalty.
The Judgments against Sheyfer and Zalmenenko enjoin them from future violations of Sections 5(a), 5(c), and 17(a) of the Securities Act, Sections 10(b) and 15(a) of the Exchange Act, and Rule 10b-5 promulgated thereunder. The Judgments order each of them to pay $1,753,993.54 in disgorgement and prejudgment interest, but waive such payments, and not impose civil monetary penalties, based upon Sheyfer's and Zalmenenko's sworn statements of financial condition and other documents submitted to the Commission indicating their inability to pay.
Sheyfer and Zalmenenko were indicted for conspiracy to commit securities fraud, securities fraud, and wire fraud for similar boiler room activities at or around the time of the MDAN fraud. They each subsequently pled guilty.