-------------------- BEGINNING OF PAGE #1 ------------------- UNITED STATES SECURITIES AND EXCHANGE COMMISSION Litigation Release No. 14704 / October 31, 1995 Securities and Exchange Commission v. Anthony Sarivola, et al. (U.S.D.C. - S.D.N.Y.) 95 Civ. 9270 (LMM) The Securities and Exchange Commission ("Commission") announced the filing of a Complaint in the United States District Court for the Southern District of New York against Anthony Sarivola, Donna Sarivola, Alan Cohen, Joseph J. Mazzo, George C. Bergleitner, Jr., Richard Voight, Edward F. Duffy, Michael N. Karp, Mark Anthony, Michelle P. Suppes, Milan International, Ltd., Milan National Corporation, Leona Enterprises, Inc., Standard Investment Holdings, Inc., Eurobanc, Ltd., and Suppes Securities, Inc. The Commission's Complaint charges the defendants with fraud and, variously, with violations of the registration, corporate reporting, and books and records provisions of the federal securities laws. The Commission's Complaint alleges, among other things, that: Beginning in or about October 1991 and continuing until at least July 1992, Sarivola masterminded a scheme to inflate artificially the reported assets of Leona and the other corporate defendants which were secretly under his control (collectively "the Sarivola Companies") by more than $60 million dollars. The scheme enabled Sarivola, Donna Sarivola, Cohen, Mark Anthony, Suppes and Suppes Securities to profit from the unlawful offer and sale of securities of the Sarivola Companies. Sarivola concealed his control of the companies in order to avoid disclosing his prior record of securities violations and criminal fraud charges. Sarivola also conducted the scheme, in part, for 4 months while incarcerated for an unrelated mail fraud conviction at Allenwood Federal Prison. Among other things, Sarivola made numerous telephone calls from Allenwood in furtherance of the scheme, and defrauded another inmate of at least $170,000 by selling him Leona securities at inflated prices. Sarivola acquired control of Leona from Bergleitner in or about October 1991. Bergleitner was the undisclosed promoter of Leona and several other companies during 1989-1990. Between January 1989 and September 1990, Bergleitner caused each of these companies to file a registration statement on Form S-18 with the Commission for the issuance of stock and warrants through a "blank check" or "blind pool" offering. These registration statements failed to disclose, among other things, Bergleitner's role as a promoter, his compensation, and previous Commission injunctions against him. After Sarivola acquired Leona from Bergleitner, Sarivola concealed his own control of Leona from the public and, together with officers and directors of the Sarivola Companies, including Donna Sarivola, Mazzo, Voight, Cohen, Duffy, and Karp, began disseminating fraudulent information to the public stating, among other things, that the Sarivola Companies controlled assets worth tens of millions of dollars. In fact, the Sarivola Companies were essentially shell corporations; at no time did the Sarivola Companies have assets greater than $400,000, many of which comprised the proceeds from illegal trades. In furtherance of the scheme, Sarivola and Donna Sarivola falsified books and -------------------- BEGINNING OF PAGE #2 ------------------- records of the Sarivola Companies and provided fraudulent documents to the independent auditor of Leona and Milan International. Sarivola designed the scheme to generate demand for Leona's stock so that he and certain of the defendants could then profit from selling the stock at vastly inflated prices. As a result of the fraudulent conduct described above, Sarivola and Milan International realized in excess of $1 million from, among other things, the sale of unregistered securities of Leona purportedly pursuant to the provisions of Regulation S, and the offer and sale of unregistered Standard securities. Sarivola and Cohen also caused losses to a broker-dealer of approximately $350,000 as a result of "free ride" purchases of Leona stock. Two registered representatives, Suppes and Anthony, facilitated the scheme by promoting Leona securities and disseminating the false financial information to the public in exchange for undisclosed compensation, or "kickbacks." In addition, Suppes and Anthony executed Sarivola's illegal sales of unregistered Leona securities through their firm Suppes Securities, which Suppes exclusively controlled. The Complaint seeks permanent injunctions against each of the defendants variously for violations of Sections 5 and 17(a) of the Securities Act of 1933 ("Securities Act"), Sections 10(b), 13(b)(2), 13(d), 15(c)(1) and 15(d) of the Securities Exchange Act of 1934 ("Exchange Act") and Rules 10b-3, 10b-5, 12b-20, 13b2-1, 13b2-2, 13d-1, 15c1-2, 15d-1 and 15d-11. The Complaint also seeks an order requiring Sarivola, Donna Sarivola, Suppes, Mark Anthony, Bergleitner, and Suppes Securities to disgorge their ill-gotten gains plus prejudgment interest thereon; an order barring Sarivola, Donna Sarivola, Cohen, Mazzo and Bergleitner from serving as officers or directors of a public company pursuant to Section 20(e) of the Securities Act, and Section 21(d)(2) of the Exchange Act; civil penalties against Sarivola, Donna Sarivola, Mazzo, Cohen, Suppes, Anthony, Voight, Duffy, Karp, Leona, Eurobanc, Milan International, Milan National, Standard and Suppes Securities, pursuant to Section 20(d) of the Securities Act and Section 21(d)(3) of the Exchange Act. Simultaneous with the filing of the Complaint, Cohen, who served as Director of Shareholder Relations, and Duffy and Karp, who had served as directors of and counsel to certain of the corporate defendants, without admitting or denying the allegations in the Complaint, consented to the entry of final orders permanently enjoining them from further violating the antifraud provisions of the federal securities laws. In addition, Duffy agreed to pay a $10,000 civil penalty and Karp agreed to pay a $5,000 civil penalty. Duffy and Karp, practicing lawyers, also consented to the entry of orders in related administrative proceedings arising out of the conduct described above, barring them from appearing or practicing before the Commission pursuant to the Commission's Rules of Practice.