U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 19002 / December 17, 2004
Accounting and Auditing Enforcement
Release No. 2153 / December 17, 2004
Securities and Exchange Commission v. Jack D. Weiss, Case Number 04 Civ 9889 (RPP) (S.D.N.Y.)
SEC Files Settled Fraud Case Against Jack D. Weiss
On December 16, 2004, the United States Securities and Exchange Commission filed a settled civil injunctive action in the United States District Court for the Southern District of New York against Jack D. Weiss. The Commission's complaint alleges that Jack D. Weiss, a New York City attorney, aided and abetted a fraudulent scheme to inflate the assets of an Israeli company. In 2000, Direct Capital Investments Ltd. ("DCI"), an Israeli corporate shell whose securities were trading on the Tel Aviv Stock Exchange, was being revived by its promoter, CEO and controlling shareholder, through a private placement of stock in the United States and Israel. DCI publicly reported that it had raised $825,000: $325,000 in Israel and $500,000 in the U.S. In connection with the preparation of the company's June 30, 2000 quarterly financial statements, DCI's independent auditors requested confirmation of its receipt of $300,000 (of the $500,000) from the U.S. offering. At the promoter's request, Weiss submitted two false written confirmations to DCI's attorney claiming that $300,000 from four U.S. investors had been deposited into his escrow account for the purchase of DCI shares. In fact, Weiss held no investor money in escrow at that time. DCI's auditors accepted the false confirmations as authoritative and gave their approval to DCI's financial statements for the quarter ended June 30, 2000, which were published and filed with the Tel Aviv Stock Exchange.
Without admitting or denying the allegations in the complaint, Weiss consented to the entry of a final judgment permanently enjoining him from aiding and abetting violations of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder and requiring him to pay a civil penalty of $25,000.
The Commission acknowledges the assistance of the Israel Securities Authority in this matter.