UNITED STATES OF AMERICA BEFORE THE SECURITIES AND EXCHANGE COMMISSION SECURITIES ACT OF 1933 Release No. 7565 / August 18, 1998 SECURITIES EXCHANGE ACT OF 1934 Release No. 40333 / August 18, 1998 ADMINISTRATIVE PROCEEDING File No. 3-9491 ______________________________ : In the Matter of : : ERIC S. BLUMEN :ORDER MAKING FINDINGS AND JORDAN I. SHAMAH :IMPOSING REMEDIAL SANCTIONS IRVING STITSKY :AND A CEASE-AND-DESIST :ORDER Respondents. : ______________________________: I. The Securities and Exchange Commission ("Commission") instituted public administrative and cease-and-desist proceedings pursuant to Section 8A of the Securities Act of 1933 ("Securities Act") and Sections 15(b), 19(h) and 21C of the Securities Exchange Act of 1934 ("Exchange Act") against Respondents Eric S. Blumen ("Blumen"), Jordan I. Shamah ("Shamah") and Irving Stitsky ("Stitsky") on December 1, 1997. II. Respondents Blumen, Shamah and Stitsky have submitted Offers of Settlement ("Offers") to the Commission, which the Commission has determined to accept. Solely for the purpose of this proceeding and any other proceeding brought by or on behalf of the Commission, or in which the Commission is a party, and without admitting or denying the findings contained herein, except as to the jurisdiction of the Commission over Respondents Blumen, Shamah and Stitsky and over the subject matter of this proceeding, which are admitted, Respondents Blumen, Shamah and Stitsky by their Offers consent to the entry of findings, remedial sanctions and cease-and-desist order set forth below. III. On the basis of this Order Making Findings and Imposing Remedial Sanctions and a Cease-and-Desist Order ("Order") and the Offer submitted by Respondent Blumen, the Commission finds that: A.From November 1991 to October 1995, Respondent Blumen was a registered representative ("RR") at the now defunct registered broker-dealer Stratton Oakmont, Inc. ("Stratton"). In April 1995, Respondent Blumen became a principal at Stratton. Respondent Blumen is 28 years old and resides in Rosyln, New York. B.On April 6, 1995, Andrew S. Friedman ("Friedman"), posing as Respondent Blumen, sat for the Series 24 licensing exam administered by the National Association of Securities Dealers, Inc. ("NASD") and obtained a passing score on that exam on Respondent Blumen's behalf. As a result of Friedman's obtaining a passing grade on the Series 24 exam on Respondent Blumen's behalf, Respondent Blumen became a principal at Stratton and supervised registered representatives and other employees effecting and soliciting securities transactions. C.During the period from March 1993 through October 1995 ("Relevant Period"), Respondent Blumen made baseless price predictions in order to induce at least four customers to purchase securities of companies for which Stratton had underwritten the initial public offerings, including, but not limited to, the securities of Dualstar Technologies, Inc. ("Dualstar"), Select Media Communications, Inc. ("Select Media") and/or United Leisure Corporation. D.During the Relevant Period, Respondent Blumen made unauthorized purchases of securities, including, but not limited to, the securities of Childrobics, Inc. ("Childrobics"), IDM Environmental Corporation, Master Glaziers Karate International, Inc. ("Master Glaziers"), Octagon, Inc. ("Octagon") and Select Media, in the accounts of at least four customers. E.As described in paragraph III. B. above, during the period April 1995 through October 1995, Stratton violated, and Respondent Blumen willfully aided and abetted and caused the violations by Stratton of, Section 15(b)(7) of the Exchange Act and Rule 15b7-1 thereunder, in that Stratton effected transactions in, or induced the purchase or sale of, securities while the natural persons associated with Stratton who effected or were involved in effecting such transactions were not registered or approved in accordance with the standards of training, experience, competence, and other qualification standards (including but not limited to submitting and maintaining all required forms, paying all required fees, and passing any required examinations) established by the rules of the NASD of which Stratton was a member. F.As described in paragraphs III.C. and III.D. above, during the Relevant Period, Respondent Blumen willfully violated Section 17(a) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, by using any means or instruments of transportation or communication in interstate commerce, or by use of the mails, or of any facility of any national securities exchange or any means or instrumentality of interstate commerce, in the offer or sale or in connection with the purchase or sale of securities in that he, either knowingly or with reckless disregard for the facts, directly or indirectly employed devices, schemes or artifices to defraud; obtained money or property by means of, or otherwise made, untrue statements of material facts or omitted to state material facts necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading; or engaged in transactions, practices or courses of business which operated as a fraud or deceit upon the purchasers or upon other persons. G.Respondent Blumen has submitted a sworn financial statement and other evidence and has asserted his financial inability to pay disgorgement plus interest. The Commission has reviewed the sworn financial statement and other evidence provided by Respondent Blumen and has determined that Respondent Blumen does not have the financial ability to pay disgorgement of $89,000, plus prejudgment interest thereon from October 1995 to the date of the Order in the amount of $17,881.42, for a total amount of $106,881.42. IV. On the basis of this Order and the Offer submitted by Respondent Shamah, the Commission finds that: A.From June 1991 to December 1996, Respondent Shamah was an RR at Stratton. In May 1994, Respondent Shamah became a principal at Stratton. Respondent Shamah is 39 years old and resides in North Hills, New York. B.During the Relevant Period, Respondent Shamah made unauthorized purchases of securities, including, but not limited to, the securities of Aquanatural Company, Childrobics, Dualstar, Master Glaziers, and Octagon, in the accounts of at least five customers. C.As described in paragraph IV.B. above, during the Relevant Period, Respondent Shamah willfully violated Section 17(a) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, by using any means or instruments of transportation or communication in interstate commerce, or by use of the mails, or of any facility of any national securities exchange or any means or instrumentality of interstate commerce, in the offer or sale or in connection with the purchase or sale of securities in that he, either knowingly or with reckless disregard for the facts, directly or indirectly employed devices, schemes or artifices to defraud; obtained money or property by means of, or otherwise made, untrue statements of material facts or omitted to state material facts necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading; or engaged in transactions, practices or courses of business which operated as a fraud or deceit upon the purchasers or upon other persons. D.Respondent Shamah has submitted a sworn financial statement and other evidence and has asserted his financial inability to pay disgorgement plus interest, or to pay a civil penalty. The Commission has reviewed the sworn financial statement and other evidence provided by Respondent Shamah and has determined that Respondent Shamah does not have the financial ability to pay disgorgement of $18,500, plus prejudgment interest thereon from October 1995 to the date of the Order in the amount of $4,216, for a total amount of $22,716, or to pay a civil penalty. V. On the basis of this Order and the Offer submitted by Respondent Stitsky, the Commission finds that: A.From October 1990 to August 1995, Respondent Stitsky was an RR at Stratton. In January 1992, Respondent Stitsky became a principal at Stratton. Respondent Stitsky is 43 years old and resides in Brookville, New York. B.During the Relevant Period, Respondent Stitsky made unauthorized purchases of securities, including, but not limited to, the securities of Aquanatural Company, Childrobics, Dualstar, Master Glaziers, Octagon and Select Media, in the accounts of at least six customers. C.As described in paragraph V. B. above, during the Relevant Period, Respondent Stitsky willfully violated Section 17(a) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, by using any means or instruments of transportation or communication in interstate commerce, or by use of the mails, or of any facility of any national securities exchange or any means or instrumentality of interstate commerce, in the offer or sale or in connection with the purchase or sale of securities in that he, either knowingly or with reckless disregard for the facts, directly or indirectly employed devices, schemes or artifices to defraud; obtained money or property by means of, or otherwise made, untrue statements of material facts or omitted to state material facts necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading; or engaged in transactions, practices or courses of business which operated as a fraud or deceit upon the purchasers or upon other persons. VI. In view of the foregoing, the Commission deems it appropriate and in the public interest to accept the Offers submitted by Respondents Blumen, Shamah and Stitsky and impose the remedial sanctions and cease-and-desist order specified therein. Accordingly, IT IS ORDERED that: A.Respondent Blumen cease and desist, pursuant to Section 21C of the Exchange Act, from causing any violation and any future violation of Section 15(b)(7) of the Exchange Act and Rule 15b7-1 thereunder. B.Respondents Blumen, Shamah and Stitsky each cease and desist, pursuant to Section 8A of the Securities Act and Section 21C of the Exchange Act, from committing or causing any violation and any future violation of Section 17(a) of the Securities Act and Section 10(b) of the Exchange Act, and Rule 10b-5 thereunder. C.Effective immediately, Respondents Blumen, Shamah and Stitsky each be, and hereby are, barred from association with any broker, dealer, investment company, investment adviser or municipal securities dealer. D.Respondent Blumen pay, within three days of the entry of this Order, disgorgement in the amount of $89,000, plus prejudgment interest thereon from October 1995 to the date of the Order in the amount of $17,881.42, for a total amount of $106,881.42, to the Commission, but that payment by Respondent Blumen of such amount be waived based upon Respondent Blumen's demonstrated financial inability to pay and upon the condition that Respondent Blumen's sworn financial statement and other evidence regarding his financial condition fully and truthfully described his financial condition. The Commission's Division of Enforcement ("Division") may, at any time following entry of the Order, petition the Commission to: 1) reopen this matter to consider whether Respondent Blumen provided accurate and complete financial information at the time such representations were made; and 2) seek any additional remedies that the Commission would be authorized to impose against Respondent Blumen in this proceeding if Respondent Blumen's Offer had not been accepted. No other issues shall be considered in connection with such a petition by the Division to the Commission other than whether the financial information provided by Respondent Blumen was fraudulent, misleading, inaccurate or incomplete in any material respect and whether any additional remedies should be imposed. Respondent Blumen may not, by way of defense to any such petition by the Division, contest the findings in this Order or the Commission's authority to impose any additional remedies that were available in the original proceeding.E.Respondent Shamah pay, within three days of the entry of this Order, disgorgement in the amount of $18,500, plus prejudgment interest thereon from October 1995 to the date of the Order in the amount of $4,216, for a total amount of $22,716, to the Commission, but that payment by Respondent Shamah of such amount be waived based upon Respondent Shamah's demonstrated financial inability to pay and upon the condition that Respondent Shamah's sworn financial statement and other evidence regarding his financial condition fully and truthfully described his financial condition. The Division may, at any time following entry of the Order, petition the Commission to: 1) reopen this matter to consider whether Respondent Shamah provided accurate and complete financial information at the time such representations were made; 2) determine the amount of the civil penalty to be imposed against Respondent Shamah; and 3) seek any additional remedies that the Commission would be authorized to impose against Respondent Shamah in this proceeding if Respondent Shamah's Offer had not been accepted. No other issues shall be considered in connection with such a petition by the Division to the Commission other than whether the financial information provided by Respondent Shamah was fraudulent, misleading, inaccurate or incomplete in any material respect, what the amount of the civil penalty against Respondent Shamah should be, and whether any additional remedies should be imposed. Respondent Shamah may not, by way of defense to any such petition by the Division, contest the findings in this Order or the Commission's authority to impose any additional remedies that were available in the original proceeding. F.Respondent Stitsky pay disgorgement in the amount of $18,500, plus prejudgment interest thereon from October 1995 to the date of the Order in the amount of $4,216, for a total amount of $22,716, to the United States Securities and Exchange Commission, according to the following payments schedule: $3,500 within two months of the issuance of the Order, $3,500 within four months of the issuance of the Order, $3,500 within six months of the issuance of the Order, $3,500 within eight months of the issuance of the Order, $3,500 within ten months of the issuance of the Order, and $5,216 within twelve months of the issuance of the Order. Such payments shall be: (a) made by United States postal money order, certified check, bank cashier's check or bank money order; (b) made payable to the United States Securities and Exchange Commission; (c) delivered by certified mail to the Comptroller, Securities and Exchange Commission, 450 Fifth Street, N.W., Mail Stop 0-3, Washington, D.C. 20549; and (d) submitted under cover letter which identifies Respondent Stitsky as a respondent in this proceeding, the file number of this proceeding, and the Commission's case number (NY-6236), a copy of which cover letter and money order or check shall be sent to Alexander M. Vasilescu, Senior Trial Counsel, Northeast Regional Office, Securities and Exchange Commission, 7 World Trade Center, 13th Floor, New York, New York 10048. G.Respondent Stitsky pay a civil penalty in the amount of $18,500 to the United States Securities and Exchange Commission, according to the following payments schedule: $3,000 within three months of the issuance of the Order, $3,000 within five months of the issuance of the Order, $3,000 within seven months of the issuance of the Order, $3,000 within nine months of the issuance of the Order, $3,000 within eleven months of the issuance of the Order, and $3,500 within thirteen months of the issuance of the Order. Such payments shall be: (a) made by United States postal money order, certified check, bank cashier's check or bank money order; (b) made payable to the United States Securities and Exchange Commission; (c) delivered by certified mail to the Comptroller, Securities and Exchange Commission, 450 Fifth Street, N.W., Mail Stop 0-3, Washington, D.C. 20549; and (d) submitted under cover letter which identifies Respondent Stitsky as a respondent in this proceeding, the file number of this proceeding, and the Commission's case number (NY-6236), a copy of which cover letter and money order or check shall be sent to Alexander M. Vasilescu, Senior Trial Counsel, Northeast Regional Office, Securities and Exchange Commission, 7 World Trade Center, 13th Floor, New York, New York 10048. By the Commission. Jonathan G. Katz Secretary NEWS DIGEST COMMISSION BARS ERIC S. BLUMEN, JORDAN I. SHAMAH AND IRVING STITSKY, FORMER PRINCIPALS AT STRATTON OAKMONT, INC., AND ORDERS OTHER REMEDIAL RELIEF The Commission settled public administrative and cease-and-desist proceedings pursuant to Section 8A of the Securities Act of 1933 and Sections 15(b), 19(h) and 21(C) of the Securities Exchange Act of 1934 ("Exchange Act"), against Eric S. Blumen, Jordan I. Shamah and Irving Stitsky, former principals at Stratton Oakmont, Inc., the now defunct former registered broker-dealer. Without admitting or denying the Commission's findings, Blumen, Shamah and Stitsky consented to the entry of an Order finding that Blumen, Shamah and Stitsky willfully violated Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, by making unauthorized trades in customer accounts, and, as to Blumen, by also making baseless price predictions to customers. The Order further finds that Blumen participated in a scheme to fraudulently pass the Series 24 licensing exam administered by the NASD, and, as a result, Blumen willfully aided-and-abetted and caused violations by Stratton of Section 15(b)(7) of the Exchange Act and Rule 15b7-1 thereunder. The Order bars Blumen, Shamah and Stitsky from associating with any broker, dealer, investment company, investment adviser or municipal securities dealer, directs them to cease and desist from committing or causing any violations and future violations of the above provisions that they respectively violated or caused to be violated, directs Blumen and Shamah to each pay disgorgement and interest, but waives payment based on their demonstrated inability to pay, and directs Stitsky to pay disgorgement and interest in the total amount of $22,716, and a civil penalty of $18,500. Alexander M. Vasilescu NERO (212) 748-8158 SERVICE LIST Rule 141 of the Commission's Rules of Practice provides that the Secretary, or another duly authorized officer of the Commission, shall serve a copy of Order Making Findings And Imposing Remedial Sanctions And A Cease-And-Desist Order on each person named as a party in the order and their legal agent. The attached Order Making Findings And Imposing Remedial Sanctions And A Cease-And-Desist Order has been sent to the following parties and other persons entitled to notice: The Honorable Brenda P. Murray Chief Administrative Law Judge Securities and Exchange Commission Mail Stop 11-6 450 Fifth Street, N.W. Washington, D.C. 20549 Securities and Exchange Commission Northeast Regional Office 7 World Trade Center 13th Floor New York, New York 10048 Attn:Alexander M. Vasilescu Senior Trial Counsel Securities and Exchange Commission Branch of Regional Office Assistance Mail Stop 8-9 450 Fifth Street, N.W. Washington, D.C. 20549 Attn: Jill M. Peterson Senior Counsel Lawrence Leibowitz, Esq. Wexler & Burkhart, P.C. 50 Charles Lindbergh Boulevard Mitchell Field, New York 11553 Attorney for Jordan I. Shamah Irving Stitsky 1985 Cedar Swamp Road Brookville, New York 11545 Eric S. Blumen 335 Baltustrol Circle Roslyn, New York 11576 Jordan I. Shamah 141 Firestone Circle North Hills, New York 11030 Mr. Eric S. Blumen 335 Baltustrol Circle Roslyn, New York 11576 Re:In the Matter of Eric S. Blumen, Jordan I. Shamah & IrvingStitsky, Admin. Proc., File No. 3-9491 Dear Mr. Blumen: Please find enclosed an Order Making Findings And Imposing Remedial Sanctions And A Cease-And-Desist Order ("The Order") against you in the above-captioned matter. If you have any questions, or wish to discuss any aspect of the proceedings, you may communicate with Alexander M. Vasilescu, Senior Trial Counsel, at the Commission's Northeast Regional Office, (212) 748-8158, 7 World Trade Center, New York, New York 10048. Sincerely, Jonathan G. Katz Secretary Enclosure Lawrence Leibowitz, Esq. Wexler & Burkhart, P.C. 50 Charles Lindbergh Boulevard Mitchell Field, New York 11553 Attorney for Jordan I. Shamah Re:In the Matter of Eric S. Blumen, Jordan I. Shamah & IrvingStitsky, Admin. Proc., File No. 3-9491 Dear Mr. Leibowitz: Please find enclosed an Order Making Findings And Imposing Remedial Sanctions And A Cease-And-Desist Order ("The Order") against your client, Jordan I. Shamah ("Shamah"), in the above-captioned matter. If you have any questions, or wish to discuss any aspect of the proceedings, you may communicate with Alexander M. Vasilescu, Senior Trial Counsel, at the Commission's Northeast Regional Office, (212) 748-8158, 7 World Trade Center, New York, New York 10048. Sincerely, Jonathan G. Katz Secretary Enclosure Mr. Jordan I. Shamah 141 Firestone Circle North Hills, New York 11030 Re:In the Matter of Eric S. Blumen, Jordan I. Shamah & IrvingStitsky, Admin. Proc., File No. 3-9491 Dear Mr. Shamah: Please find enclosed an Order Making Findings And Imposing Remedial Sanctions And A Cease-And-Desist Order ("The Order") against you in the above-captioned matter. If you have any questions, or wish to discuss any aspect of the proceedings, you may communicate with Alexander M. Vasilescu, Senior Trial Counsel, at the Commission's Northeast Regional Office, (212) 748-8158, 7 World Trade Center, New York, New York 10048. Sincerely, Jonathan G. Katz Secretary Enclosure Mr. Irving Stitsky 1985 Cedar Swamp Road Brookville, New York 11545 Re:In the Matter of Eric S. Blumen, Jordan I. Shamah & Irving StitskyAdmin. Proc., File No. 3-9491 Dear Mr. Stitsky: Please find enclosed an Order Making Findings And Imposing Remedial Sanctions And A Cease-And-Desist Order ("The Order") against you in the above-captioned matter. If you have any questions, or wish to discuss any aspect of the proceedings, you may communicate with Alexander M. Vasilescu, Senior Trial Counsel, at the Commission's Northeast Regional Office, (212) 748-8158, 7 World Trade Center, New York, New York 10048. Sincerely, Jonathan G. Katz Secretary Enclosure