Inorganic Recycling Corporation, Edward J. Halloran, Michele Caridi, Daniel J. Moore and Richard Furman

SECURITIES AND EXCHANGE COMMISSION

Litigation Release No. 16322 / September 30, 1999

United States Securities and Exchange Commission v. Inorganic Recycling Corporation, Edward J. Halloran, Michele Caridi, Daniel J. Moore and Richard Furman, 99 Civ. 10159 (WHP) (S.D.N.Y.)

The Securities and Exchange Commission ("Commission") announced today that it filed a civil injunctive action in federal court in Manhattan charging Inorganic Recycling Corporation ("Inorganic") and four individuals with conducting a fraudulent offering of unregistered securities in Inorganic from 1995 through 1997, and with misappropriating a substantial portion of the offering proceeds. The Complaint alleges that the defendants obtained at least $2.5 million from 150 investors by means of numerous misrepresentations about the use of offering proceeds, Inorganic's plans for the future, and the anticipated returns and safety of the investment.

Named in the Complaint are:

Inorganic Recycling Corporation, a Delaware corporation with its principal place of business in Coral Springs, Florida. Inorganic is in the business of recycling hazardous manufacturing waste. In April, Inorganic emerged from reorganization proceedings under Chapter 11 of the Bankruptcy Code as a subsidiary of Pacific Sterling Corporation.

Edward J. Halloran ("Halloran"), age 52, ran Inorganic's daily operations from 1995 through 1997, maintained an office at Inorganic, sold its securities, but did not actually hold a formal title at the company. Since 1986, Halloran has served prison terms for crimes related to check-kiting and racketeering.

Michele Caridi ("Caridi"), age 38, was a director of Inorganic and the record owner of a majority of Inorganic's common stock from 1995 to 1997. Caridi married Halloran in November 1997.

Daniel J. Moore ("Moore"), age 39, was Inorganic's president from 1995 to 1996. On November 20, 1998, Moore pleaded guilty to charges brought by the New York County District Attorney's Office of scheming to defraud in the sale of Inorganic securities.

Richard Furman ("Furman"), age 39, a New York City criminal court officer, solicited investors in New York to purchase Inorganic securities.

According to the complaint:

From August 1995 to October 1997, Inorganic, Halloran, Caridi, Moore, and Furman conducted a fraudulent offering of Inorganic common stock, and units consisting of norganic common stock and warrants to purchase Inorganic common stock. Although the offering purported to be a private placement, in fact the Defendants conducted a general solicitation to more than 1,000 prospective investors. They did so by means of a series of material misrepresentations: (1) The Defendants represented to investors that the offering proceeds would be used for working capital when, in truth, the lion's share of the offering proceeds were misappropriated for the individual defendants' personal benefit. (2) Halloran, Furman, and Moore, and through them Inorganic, falsely represented to investors that Inorganic would conduct an initial public offering in the upcoming weeks or months and that Inorganic had contracted with an Indian tribe to acquire and operate certain gambling facilities. (3) Halloran and Moore, and through them Inorganic, baselessly told investors to expect a 200% return on their investment, and Halloran falsely claimed that investments in Inorganic were guaranteed by the proceeds of a certain lawsuit involving Halloran.

Some of the offering proceeds were diverted to Caridi or to entities associated with Caridi, for use by Caridi and Halloran. Moore transferred funds from the bank account designated to receive investor proceeds to his personal bank account and to an entity controlled by Moore's wife. Furman deposited investor checks into his personal bank accounts. Furman received compensation for his efforts to solicit investments in Inorganic, and acted as an unregistered broker dealer.

The Commission alleges that the Defendants violated Sections 5(a), 5(c) and 17(a) of the Securities Act of 1933 ("Securities Act"), Section 10(b) of the Securities Exchange Act of 1934 ("Exchange Act") and Rule 10b-5 thereunder, and that Furman also violated Section 15(a) of the Exchange Act. For relief, the Complaint seeks (a) against all defendants, permanent injunctions against future violations of those provisions; (b) against Halloran, Caridi, Moore, and Furman, disgorgement of ill-gotten gains, prejudgment interest on that amount, an accounting, and civil penalties; and (c) against Halloran, Caridi, and Moore, orders barring them from serving as officers or directors of companies that register securities or file reports with the Commission.

Simultaneously with the filing of the Complaint, Inorganic consented to a settlement of the charges against it. Without admitting or denying the allegations in the Complaint, Inorganic consented to the entry of a judgment permanently enjoining it from future violations of Sections 5(a), 5(c) and 17(a) of the Securities Act, and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder. Additionally, Caridi, simultaneously with the filing of the Complaint and without admitting or denying the allegations in the Complaint, consented to the entry of a partial final judgment: (i) permanently enjoining her from future violations of Sections 5(a), 5(c), and 17(a) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder; (ii) barring her from acting as an officer or director of public companies; and (iii) requiring her to provide the Commission with an accounting of her ill-gotten gains and her assets. Issues regarding disgorgement, prejudgment interest, and civil penalties are unresolved with respect to Caridi.

Litigation with the other defendants is pending.