SEC Charges Two With Securities Fraud in $4.4 Million Market Manipulation and Kickback Case

Guilty Plea Entered in Parallel Criminal Case

FOR IMMEDIATE RELEASE
2007-197

Washington, D.C., Sept. 24, 2007 - The Securities and Exchange Commission today filed a settled enforcement action against Florida residents Paul Harary and Douglas Zemsky for their involvement in an alleged $4.4 million market manipulation and kickback scheme that defrauded customers of a Boca Raton brokerage firm.

"The Commission's action started with a trading suspension in an over-the-counter stock because of concerns about representations made in the company's press releases," said Linda Chatman Thomsen, Director of the SEC's Division of Enforcement. "The trading suspension led to the discovery of a multi-million dollar market manipulation and kickback scheme, which caused great harm to a number of brokerage customers, as alleged in the Commission's Complaint. By following the loose threads in the trading suspension, the SEC and other law enforcement agencies were able to unravel a complex fraud. Today's action brings two of its perpetrators to justice and demonstrates the Commission's continuing commitment to rooting out fraud in the over-the-counter market."

Cheryl Scarboro, Associate Director of the SEC's Division of Enforcement, added, "The allegations, which include losses of $3.8 million when brokerage customers were left with worthless shell-company shares, illustrate the real harm that results from schemes to manipulate the market."

The SEC's complaint alleges that in 2004 and 2005:

• Harary, 43, and a Florida stockbroker defrauded the stockbroker's customers by acquiring control of two shell companies, creating an artificial market for those companies' common stock, and manipulating the price of that stock using pre-arranged matched orders.
   
• Another perpetrator, Zemsky, 44, identified and purchased the shell companies and coordinated matched orders to start the trading in one of them at a pre-arranged, artificial price.
   
• The Florida stockbroker created the demand for the stock in the two firms by purchasing it for his firm's customers, while Harary controlled the supply of the unrestricted shares and sold them.
   
• Other investors, who purchased shares of one of the shell companies on the open market but who were not customers of the brokerage firm, also lost money because Harary manipulated the share price of that company's stock.
   
• Harary made more than $4.4 million in proceeds on his sales of these stocks and then provided the Florida stockbroker more than $1 million in kickbacks through a series of cash handoffs and checks.
   
• The customers of the Florida stockbroker were left with worthless shares of the shell companies and lost approximately $3.8 million.

According to the SEC's complaint, the two shell companies were Secure Solutions Holdings, Inc. (SSLX) and American Financial Holdings, Inc. (AFHJ). Each traded on the over-the-counter market and was quoted on the Pink Sheets.

The U.S. Attorney for the District of Columbia announced that Harary pleaded guilty to conspiracy to commit mail and wire fraud in a parallel criminal action brought in the United States District Court for the District of Columbia. See United States v. Harary, Crim. No. 07-Cr.-209 (EGS) (D.D.C.).

Without admitting or denying the allegations in the complaint, Harary and Zemsky consented to the entry of final judgments: (1) permanently enjoining each from violating the antifraud and securities registration provisions of the federal securities laws; (2) imposing penny stock bars against each; (3) imposing an officer and director bar against Zemsky; and (4) directing Harary to pay approximately $4 million and Zemsky to pay approximately $97,000 in disgorgement and prejudgment interest.

Previously, on July 15, 2005, the Commission issued an Order suspending trading in SSLX common stock for ten days because of questions about the accuracy of representations in SSLX's press releases concerning, among other things, the identity of the management and directors of the company and the status of its corporate organization. See Securities Exchange Act of 1934 Release No. 52037 (July 15, 2005).

The Commission acknowledges the assistance of the U.S. Attorney's Office for the District of Columbia, the Federal Bureau of Investigation, the United States Postal Inspection Service, NASD (now known as the Financial Industry Regulatory Authority), and the British Columbia Securities Commission.

The Commission's investigation in this matter is ongoing.

The Commission has published guidance for investors concerning investments in microcap stocks: http://www.sec.gov/investor/pubs/microcapstock.htm.

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For more information, contact:

C. Joshua Felker
Assistant Director
SEC Division of Enforcement
202-551-4960

  Additional materials: Litigation Release No. 20293

http://www.sec.gov/news/press/2007/2007-197.htm