David Morgenstern, Fred Morgenstern, Bernadette Stevens, and Amquest International, Ltd.

Litigation Release No. 15902 / September 24, 1998

SEC SUES FORT LAUDERDALE-BASED MICROCAP COMPANY AND OTHERS IN FRAUDULENT PRIVATE OFFERING SCHEME

Securities and Exchange Commission v. David Morgenstern, Fred Morgenstern, Bernadette Stevens, and Amquest International, Ltd. (United States District Court, S.D. Fla., Civil Action No. 98-7044-CIV-DIMITROULEAS (S.D., FLA, F t. Lauderdale Division)

The Securities and Exchange Commission filed civil fraud charges today against a Fort Lauderdale, Florida "financial services" firm and three affiliated individuals for engaging, throughout 1996, in offering fraud and an attempted "pump and dump" scheme. The SEC is seeking more than $4 million in disgorgement and penalties. The SEC filed its suit in the U.S. District Court for the Southern District of Florida against Amquest International, Ltd., based in Fort Lauderdale, Florida, David Morgenstern, age 48, of Boca Raton, Florida, Fred Morgenstern, age 48, of Boca Raton, Florida and Bernadette Stevens, age 39, of Davie, Florida.

The SEC alleges in its complaint that Amquest, D. Morgenstern, F. Morgenstern and Stevens, a broker, engaged in securities fraud in connection with a private offering of common stock by Amquest, which resulted in approximately $4.1 million in losses to investors. Specifically, the SEC alleges that, in the offer and sale of Amquest's securities, Amquest, D. Morgenstern, F. Morgenstern and Stevens used fraudulent offering documents calculated to deceive prospective investors through misleading representations and omissions. According to the SEC's complaint, Amquest's offering documents contained the following misrepresentations:

* that Amquest had "total assets" in excess of $408 million, including certain "Brazilian bonds" claimed as an Amquest asset and valued at more than $250 million;

* that certain successful individuals were directors and "full-time" employees of Amquest;

* that Amquest had a "firm commitment" contract for $10 million in funding;

* that a certain mortgage company had been acquired by Amquest;

* that Amquest had "mortgage warehousing lines" worth $100 million.

The SEC further charges in its suit that D. Morgenstern, F. Morgenstern and Stevens misappropriated the bulk of the Amquest offering proceeds, including approximately $700,000 in proceeds from a related offering of stock issued by SleepSource International, Ltd. As alleged in the SEC's complaint, D. Morgenstern, F. Morgenstern and Stevens used the offering proceeds to fund an attempted scheme to inflate artificially the price of Amquest stock by engaging in pre-arranged trades in nominee brokerage accounts. As also alleged in the complaint, D. Morgenstern prepared and filed with the SEC a fraudulent Form 10 registration statement, primarily to promote trading and increase the price of Amquest stock. The complaint alleged that Amquest, Morgenstern, Stevens and F. Morgenstern violated Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The complaint also alleged that Amquest, Morgenstern and Stevens violated Sections 5(a) and 5(c) of the Securities Act of 1933. The SEC seeks in its lawsuit permanent injunctions against Amquest, D. Morgenstern, F. Morgenstern and Stevens, disgorgement of their ill-gotten profits and money penalties.

This enforcement action is one of several cases filed by the SEC today in an effort to address abuses in the offer and sale of microcap stocks. It is also part of the SEC's four-pronged approach to minimizing microcap fraud: enforcement, inspections, investor education and regulation. For more information about the SEC's response to microcap fraud, visit the SEC's Microcap Fraud Information Center at http://www.sec.gov/news/extra/microcap.htm.

Person to contact:

Randall J. Fons

(305) 982-6332