U.S. Securities and Exchange Commission
LITIGATION RELEASE NO. 18882 / September 13, 2004
SECURITIES AND EXCHANGE COMMISSION V. NATIONAL INSTITUTE COMPANIES, INC., ET AL. Civil Action No. 00-CV-1216 (W.D.Pa.)
The Securities and Exchange Commission announced today that on August 20, 2004, the Honorable Joy Flowers Conti, United States District Judge for the Western District of Pennsylvania, entered final judgment orders permanently enjoining National Institute Companies of America, Inc. ("NICA"), John A. D'Onofrio, Robert C. Walters, Dennis J. Oslosky and Jason J. Riley from violations of certain provisions of the federal securities laws. The orders also barred D'Onofrio from serving as an officer or director of a public company; and set disgorgement against NICA, D'Onofrio, Walters, Oslosky and Riley, respectively, in the amounts of $1,600,000, $287,000, $105,000, $38,875, and $23,000, in each instance together with prejudgment interest. The Court waived payment of all but $75,000 of disgorgement and prejudgment interest owed by D'Onofrio based on his demonstrated inability to pay. The Court also waived payment of disgorgement and prejudgment interest by Riley, and imposed no civil penalty on Riley, D'Onofrio, Walters and Oslosky, based upon their demonstrated inability to pay. All defendants consented to the entry of these judgments.
The Court also ordered defendant Raymond P. Sobieralski to pay disgorgement of $198,000, together with prejudgment interest, but waived such payment and did not impose a civil penalty based on his demonstrated inability to pay. Sobieralski consented to the entry of that judgment. Previously, on December 14, 2001, the Court entered an order, by default, enjoining Sobieralski from violations of certain provisions of the federal securities laws.
The Commission's complaint, filed June 22, 2000, alleges that from August 1996 to May 1998, the defendants violated the antifraud provisions of the federal securities laws through their participation in three separate offerings of securities issued by NICA's predecessor company, Mortgage Bankers Holding Corp. and its subsidiary, Commonwealth Capital Investment Corp. Those offerings, which generally targeted unsophisticated investors, involved fraudulent misrepresentations and omissions regarding, among other things, the risk of the investment, the financial condition of the issuers, and the use of proceeds. In addition, Sobieralski, D'Onofrio, Walters, and Oslosky violated the registration provisions of the Securities Exchange Act of 1934 ("Exchange Act") by failing to register as brokers or dealers before offering and selling those securities. The defendants raised more than $2.3 million in these three offerings, and used the money to benefit themselves, pay salaries and other business and personal expenses, and pay existing investors. Little if any of the money raised was used "to grow" the business of Mortgage Bankers or Commonwealth Capital as the defendants had told investors. No registration statement was on file or in effect with the Commission at any time for any of the three securities offerings.
As part of the settlement, D'Onofrio, Walters, Oslosky and Riley each agreed to have the Commission impose orders barring them from association with any broker or dealer, and from participating in any offering of a penny stock. Sobieralski previously agreed to the imposition of such an order, which the Commission issued May 24, 2004. (See Exchange Act Release No. 49762).