Michael Graf and Larry E. Pust

U.S. SECURITIES AND EXCHANGE COMMISSION

Litigation Release No. 21514 / May 4, 2010

U.S. Securities and Exchange Commission v. Michael Graf, (United States District Court for the Northern District of Illinois, Case No. 10-cv-1365) and U.S. Securities and Exchange Commission v. Larry E. Pust, (United States District Court for the Northern District of Illinois, Case No. 10-cv-1367)

Two Men Ordered Jailed for Failing to Appear for SEC Testimony

The Securities and Exchange Commission announced today that on April 13, 2010, Judge Robert M. Dow, Jr. of the United States District Court for the Northern District of Illinois found Chicago-area resident Michael Graf and Larry Pust of Spokane, Washington, in civil contempt and ordered the U.S. Marshals Service to incarcerate them for refusing to provide testimony and documents to the SEC in violation of the Court's prior orders. The Court stayed the effect of its orders to allow Graf and Pust an opportunity to comply with the Court's prior orders. The period for Graf to comply expired and he has been taken into custody. Pust has until May 10, 2010 to comply.

The Court's orders to incarcerate Graf and Pust stem from subpoena enforcement actions that the SEC filed in federal court on March 1, 2010 against Graf and Pust alleging that they failed to comply with the SEC's subpoenas. The SEC alleged that it issued subpoenas to Graf and Pust requiring them to provide testimony and documents related to a non-public investigation that the SEC was conducting into a possible fraudulent investment scheme. The SEC alleged that the possible scheme is the subject of an SEC Formal Order Directing Private Investigation entitled In the Matter of Rosand Enterprises, Inc. The Formal Order authorized SEC staff to investigate, among other things, whether anyone violated the federal securities laws in connection with the offer and sale of securities by Rosand. The SEC's subpoena enforcement actions alleged that Rosand raised millions of dollars from investors for the stated purpose of constructing or rehabbing homes and then selling them for a profit. The SEC further alleged that it was informed that Graf served as the accountant for Rosand which paid at least $28,500 to Graf and that Pust raised investor funds for Rosand which paid at least $214,000 to Pust.

The SEC alleged that Graf and Pust refused to provide testimony and documents or otherwise respond to the SEC's subpoenas. On March 12th and March 15th, the Court ordered Graf and Pust, respectively, to comply with the SEC's subpoenas by a certain date. Graf and Pust, however, did not appear for testimony or provide documents. The Court's April 13th order requires that once incarcerated Graf and Pust are to remain in jail until they are in compliance with the Court's orders.