U.S. Securities and Exchange Commission
Litigation Release No. 18265 / July 31, 2003
SEC v. Discover Capital Holdings Corp., et al., 03 Civ. 1496 (RMC) (D.D.C., filed July 9, 2003)
Federal Court Issues Preliminary Injunction Order Against Ari Dinov, Eli Dinov, Discover Capital Holdings Corp., and Indianapolis Securities, Inc.
On July 30, 2003 the Honorable Rosemary M. Collyer of the United States District Court for the District of Columbia entered a preliminary injunction order, by consent, against Discover Capital Holdings Corp., its wholly-owned broker-dealer subsidiary Indianapolis Securities, Inc., Eli Dinov, Discover Capital's President and CEO, and Ari Dinov, Indianapolis Securities' Secretary and Treasurer. The preliminary injunction order continues to restrain the four defendants from violating the antifraud and registration provisions of the federal securities laws. The order also modifies the asset freeze as to defendants Discover Capital and Indianapolis Securities. On an ongoing basis, Indianapolis Securities will be required to pay any net profits into an escrow account. Indianapolis Securities and Discover Capital will be permitted to access these funds solely to pay their ordinary business expenses, subject to review and objection by the SEC.
On July 29, 2003, with respect to defendants David Rubin and Stronghold Associates, Inc., Judge Collyer issued an order moving the preliminary injunction hearing to August 13, 2003. The Temporary Restraining Order and asset freeze as to Rubin and Stronghold Associates remains in effect.
The Commission's complaint, filed on July 9, 2003, alleges that the defendants, Eli Dinov, his brother Ari Dinov, and David Rubin used spam e-mail touts and misleading, high pressure sales calls to raise $1.1 million dollars through the sale of private placement shares of Uniondale, New York-based Discover Capital, a company controlled by the individual defendants, through Discover's wholly-owned broker-dealer subsidiary, Indianapolis Securities.
The SEC continues to seek additional relief against all defendants, including permanent injunctions, disgorgement of ill-gotten gains, and civil money penalties.