==========================================START OF PAGE 1====== UNITED STATES SECURITIES AND EXCHANGE COMMISSION Litigation Release No. 15197 \ December 19, 1996 SEC v. John D. Lauer, Clifton Capital Investors, L.P., Konex Holding Corp., Lyle E. Neal, Copol Investments Limited, Joseph Polichemi and Oscar William Olson, Jr., U.S.D.C. N.D. Ill., No. 94 C 3770, filed June 21, 1994. The Commission announced that on November 27, 1996, the Honorable Wayne R. Andersen of the United States District Court for the Northern District of Illinois permanently enjoined Oscar William Olson, Jr. (Olson), Defendant Copol Investments Limited's (Copol) General Counsel, from future violations of Section 17(a) of the Securities Act of 1933 (Securities Act) and Section 10(b) of the Securities Exchange Act of 1934 (Exchange Act) and Rule 10b-5 thereunder. In addition, the Court ordered Olson to disgorge $575,000 plus prejudgment interest of $168,000. Payment of disgorgement was waived and Olson was not ordered to pay a civil penalty, based on his financial inability to pay. Olson consented to the entry of the order without admitting or denying the allegations in the Complaint. The allegations in the Commission's Complaint charged Joseph Polichemi (Polichemi), Lyle E. Neal (Neal), John D. Lauer, and their respective companies, Copol, Konex Holding Corp. (Konex), and Clifton Capital Investors L.P. (CCI), with violations of Section 17(a) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder in connection with the offer and sale of interests in the Konex Roll Program, an investment which purportedly was designed to pool investor funds to purchase and trade in "Prime Bank Instruments." The Commission filed an Amended Complaint which added Olson as a defendant and charged him with violations of the above-mentioned antifraud provisions for his role in the Roll Program. The Commission's Complaint alleged that from January 1993 to July 1994, Konex raised at least $12.5 million from the Chicago Housing Authority (CHA) through the offer and sale of investment contracts in the Roll Program. In fact, the purported Roll Program was nothing more than a scam to defraud investors. Thus, the Complaint alleged that Polichemi and Neal, through their respective companies, made false and misleading statements regarding the use of CHA proceeds and the risks and returns associated with the investment. The Complaint further alleged that Lauer, CHA's Director of Risk Management and Benefits, among other things, made false and misleading statements to prospective investors concerning the rate of return the CHA earned and the circumstances under which the CHA invested in the Roll Program. The Amended Complaint alleged that Olson, an attorney, ran the operations of Copol's London office. He created and ==========================================START OF PAGE 2====== instituted the Roll Program with Polichemi and prepared and disseminated to Neal and others the procedures he expected to be used to carry out the scheme. He also misappropriated investor funds for his benefit and for the benefit of his partners in the scheme. In the process, Olson made false and misleading statements to others concerning the existence and legitimacy of the Roll Program, the use of investor proceeds and the returns and risks of investing in the Roll Program with the knowledge and intent that such statements be disseminated to investors. On June 21, 1994, Judge Andersen entered an order temporarily restraining and enjoining the defendants from future violations of the federal securities laws and, among other things, froze their assets. On July 29, 1994, the Court entered an Order of Permanent Injunction and Other Equitable Relief by Default against Polichemi, Neal, Copol and Konex. On October 24, 1995, the Court entered an Order of Permanent Injunction and Other Equitable Relief against Lauer and CCI, including ordering them to pay $4.853 million in disgorgement plus prejudgment interest. On June 7, 1996, the Court entered an Order of Preliminary Injunction and Other Equitable Relief against Olson and, by this order, permanently enjoined him. The action remains pending to determine the appropriate amount of disgorgement and civil penalties to be assessed against Polichemi, Copol, Neal and Konex and to collect and distribute disgorged funds to investors. In a related criminal action, On October 22, 1996, the Honorable William T. Hart of the United States District Court sentenced Olson, Polichemi, Neal and others for their criminal convictions arising from their involvement in multiple fraudulent schemes involving "Prime Bank Instruments," including the Konex Roll Program. Specifically, Olson was sentenced to serve 121 months for convictions on three counts of money laundering. Polichemi was sentenced to serve 210 months for convictions on one count of conspiracy, eight counts of money laundering and fifteen counts of wire fraud. Neal was sentenced to serve 235 months for convictions on one count of conspiracy, five counts of money laundering, thirteen counts of wire fraud and three counts of perjury. The perjury convictions against Neal resulted from his sworn testimony in connection with the Commission's investigation in the Konex Roll Program. In addition, Olson, Polichemi and Neal were ordered to pay, on a joint and several basis, restitution to investors in the amount of $10 million. The defendants were ordered to surrender for incarceration on January 7, 1997. Lauer is a defendant in a separate criminal action brought by the United States Attorney's Office for the Northern District of Illinois. Lauer plead guilty to wire fraud, mail fraud and obstruction of justice charges. To date, Lauer has not been sentenced.