U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.

Litigation Release No. 17296 / January 7, 2002

SEC CHARGES COLE A. BARTIROMO, A 17-YEAR-OLD, AS THE MASTERMIND BEHIND THE RECENT "INVEST BETTER 2001" FRAUDULENT INTERNET OFFERING THAT RAISED MORE THAN $1 MILLION FROM AT LEAST ONE THOUSAND INVESTORS

Securities and Exchange Commission v. Invest Better 2001, Cole A. Bartiromo, and John and Jane Does 1 through 10, 01 Civ. 11427 (BSJ) (S.D.N.Y. Dec. 13, 2001)

On December 13, 2001, as part of its "real time" enforcement initiative, the SEC filed an enforcement action to stop an ongoing fraud by Invest Better 2001 ("IB2001"), before having identified the individuals behind the scheme. Today, the SEC amended its complaint to add Cole Bartiromo ("Bartiromo"), a 17-year-old high school student, who the SEC has now identified as a principal behind IB2001as well as an additional defendant. In a settlement also announced today, the SEC is recovering from Bartiromo approximately $900,000 obtained from investors in the scheme.

The Amended Complaint alleges that from at least November 1, 2001, through approximately December 15, 2001, Bartiromo, through IB2001, raised more than $1 million from more than 1,000 investors through the offer of purportedly "guaranteed" and "risk-free" investment programs in which IB2001 pooled investor funds to bet on sporting events, and promised to repay investors between 125% to 2500% of their principal within specified periods ranging from three days to several weeks, depending on the program selected. The Amended Complaint alleges that in December 2001, Bartiromo transferred approximately $900,000 of investor funds to an account he controls at a casino in Costa Rica.

The Amended Complaint, filed in the United States District Court for the Southern District of New York, charges the defendants with violating Sections 5(a), 5(c) and 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. Also today, the Court issued a partial final judgment and order, on consent, which permanently enjoins Bartiromo and IB2001, directs Bartiromo and IB2001 to repatriate all assets outside the United States and deposit such assets into the Court's account, freezes Bartiromo's and IB2001's assets, directs Bartiromo and IB2001 to provide an accounting, and grants other expedited and equitable relief.

The Amended Complaint names as defendants:

• IB2001 is an entity that until Monday, December 3, 2001, operated a website, hosted by a server in New York City, and that until approximately December 15, 2001, operated a bulletin board at the MSN Networks Communities website. On its website and the MSN bulletin board, IB2001 has held itself out as "the #1 investment service in existence."

• Cole A. Bartiromo is 17 years old and resides with his parents in Mission, Viejo, California. Bartiromo is responsible for, and controlled, the Investment Programs offered by Defendant IB2001.

• Defendants John and Jane Does 1-10 are unknown individuals or groups of individuals, in addition to Bartiromo, who are responsible for, or controlling, the Investment Programs offered by Defendant IB2001 and the IB2001 website or bulletin board.

According to the Amended Complaint:

Since at least November 1, 2001, through approximately December 15, 2001, Bartiromo, through the IB2001 website and bulletin board, offered investments into four Investment Programs: (a) the "125% 3 Day Ongoing Program," through which IB2001 promised a supposed 125% return after a three-day investment; (b) the "250% 1 Week Ongoing Program," through which IB2001 guaranteed a supposed 250% return after one week; (c) the "1250% 1 Month Program," through which IB2001 guaranteed a supposed 1250% return after a one-month investment; and (d) the "2500% Christmas Miracle Program" through which IB2001 guaranteed a supposed 2500% return beginning December 26, 2001, on funds invested between November 10, 2001, and December 15, 2001. Bartiromo, through the IB2001 website and bulletin board, represented to investors that the investments in, and returns from, the four Investment Programs are "safe" and "guaranteed." Bartiromo further represented that IB2001 generated profits for the Investment Programs by pooling investors' money and placing "safe bets" with three online sportsbooks.

These representations were materially false and misleading. Among other things, gambling by its very nature requires the undertaking of risk, and Bartiromo and IB2001 could not provide risk-free exorbitant returns on investments in the Investment Programs by betting on sporting events. In addition, it is economically not feasible for an issuer of fixed-instruments to provide exorbitant short-term financial returns, in an open-ended offering, which are "risk-free."

The litigation is pending as to the issues of the amounts of disgorgement of ill-gotten gains and civil penalties.

For more information contact Alexander M. Vasilescu, Senior Trial Counsel at (646) 428-1928 and see prior Litigation Release No. 17272 (December 13, 2001).