UNITED STATES SECURITIES AND EXCHANGE COMMISSION

LITIGATION RELEASE NO. 16598 / June 19, 2000

SECURITIES AND EXCHANGE COMMISSION v. JOHN WAYNE ZIDAR, JOHN WESLEY MATTHEWS and ELIZABETH ANNE PHILLIPS, in their personal capacities and doing business as OAKLEAF INTERNATIONAL, ROSEWOOD INTERNATIONAL and MELIORATIONS MANAGEMENT TEEM, No. C00-823C (USDC W.D. Washington).

The Commission announced the filing with the federal district court in Seattle, Washington of an application for entry of an Order to Show Cause why defendants John Wayne Zidar, of Gilbert, Arizona, and John Wesley Matthews, of Chandler, Arizona, should not be held in contempt based upon their failure to comply with the Court's Order entered on May 18, 2000. Zidar and Matthews consented to the entry of the Order, which requires them to return to the United States funds sent to various offshore banks that were raised from investors in Oakleaf International and Rosewood International. Zidar and Matthews also agreed, as part of the Court's May 18, 2000 Order to which they consented, to provide the Court and the Commission with a sworn accounting of all transactions between Oakleaf, Rosewood or affiliated entities and investors since February 1, 1998, including an accounting of how the investors' funds have been used since that time. Zidar and Matthews have failed to provide the accounting.

The Court's Order of May 18, 2000 also prohibits Zidar, Matthews, or their affiliates from directly or directly accepting any additional funds from investors pending a determination by the Court on the merits of the Commission's enforcement action. The Commission's complaint, filed May 10, 2000, alleges that Zidar, Matthews and Elizabeth Anne Phillips have defrauded investors in a scheme in which investors were promised capital preservation and 120% annual returns. The complaint alleges that investors' funds have instead been misused for the personal benefit of Zidar, Matthews and Phillips, used to pay sales commissions of up to 25% in a multi-level marketing scheme, and lost in various unprofitable ventures. Through this scheme, Zidar, Matthews and Phillips allegedly 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. Zidar and Phillips also allegedly violated Sections 5(a) and (c) of the Securities Act of 1933.