U.S. Securities and Exchange Commission
Litigation Release No. 18639 / March 25, 2004
SEC v. Discover Capital Holdings Corp., et al., 03 Civ. 1496 (RMC) (D.D.C., filed July 9, 2003)
BROOKLYN BROKER BARRED FROM INDUSTRY, TO DISGORGE $362,000, PAY $100,000 CIVIL PENALTY
On March 23, 2004, the Honorable Judge Rosemary M. Collyer of the United States District Court for the District of Columbia entered final judgments against David Rubin, formerly known as David Rubinov, and his consulting company Stronghold Associates, Inc., arising from charges that they participated in the fraudulent, unregistered offering of the preferred shares of Discover Capital Holdings Corp. Without admitting or denying the allegations of the Commission's complaint, Rubin and Stronghold consented to the entry of final judgments permanently enjoining them from violating the antifraud and registration provisions of the federal securities laws, ordering Rubin to disgorge $362,510 in ill-gotten gains plus prejudgment interest, and ordering Rubin to pay a $100,000 civil penalty. The judgment orders that Rubin surrender all of his assets currently frozen by a prior court order and pay the remaining balance within one year of the date of the final judgment. In related proceedings, the Commission issued an administrative order on March 25, 2004, to which Rubin consented, barring Rubin from associating with any broker or dealer in the future.
Specifically, Rubin and Stronghold consented to the entry of final judgments permanently enjoining them from violating Sections 5 and 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and rule 10b-5 promulgated thereunder.
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 Eli and Ari Dinov, Discover Capital, and Indianapolis Securities, including permanent injunctions, disgorgement of ill-gotten gains, and civil money penalties.