U.S. Securities and Exchange Commission
Litigation Release No. 18591 / February 24, 2004
SECURITIES AND EXCHANGE COMMISSION v. MOHAMAD WAEL IBRAHIM ELZEIN, INDIVIDUALLY AND D/B/A FOCUS MENTORS ELZEIN MANAGEMENT; HUSSEIN HASSAN EL ZEIN; AND DARIN RAYMOND KNEE,
Civil Action No. 3:03-2843-24 (D.S.C.).
FEDERAL COURT ENJOINS HUSSEIN EL ZEIN IN FRAUDULENT, UNREREGISTERED OFFERING OF SECURITIES
The Securities and Exchange Commission (the "Commission") announced today that the Honorable Margaret B. Seymour, United States District Judge for the District of South Carolina, entered an Order of Permanent Injunction and Other Relief Against Hussein Hassan El Zein ("H. El Zein") on February 19, 2004, restraining him from further violations of Sections 5(a), 5(c) and 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. H. El Zein was ordered to pay disgorgement, prejudgment interest and a civil penalty in amounts to be resolved upon motion of the Commission at a later date. H. El Zein consented to the entry of the order without admitting or denying any of the allegations of the Commission's complaint.
The Commission's complaint alleged that H. El Zein, Mohamad Elzein ("Elzein") and Darin Knee ("Knee"), from approximately July through October 2001, raised approximately $541,000 from investors in a fraudulent, unregistered offering of securities in the form of investment contracts. The defendants made materially false and misleading statements and omissions in connection with the offers and sales of the investment contracts including, among other things, false historical returns, and promised returns without a reasonable basis therefore. Also, the complaint alleged that the private placement memorandum utilized by the defendants inaccurately stated that Focus Mentors Elzein Management ("Focus Mentors") was fully insured by Allstate Insurance Company, such that the assets of Focus Mentors were protected in the unlikely case that Focus Mentors or its executives were to declare bankruptcy and falsely stated that each client's principal investment was protected in the case of acts of dishonesty. These statements were false because Focus Mentors did not have such insurance. The complaint further alleged that Knee promoted Focus Mentors on his MoneyJoe.com website and in his related electronic newsletter called "Insiders Club." Among other things, the complaint alleged that Knee's website described Focus Mentors as a "secure opportunity" with "107% plus principal guaranteed" even though Knee had no reasonable basis for such statements.
See also L. R. 18440 (November 3, 2003); L. R. 18324 (September 5, 2003)