U.S. SECURITIES AND EXCHANGE COMMISSION

Litigation Release No. 16766 / October 13, 2000

United States v. Mark D. Seigel, et al., CR 99-507-ER

PROMOTERS OF OIL AND GAS INVESTMENTS CONVICTED OF RUNNING A $40 MILLION PONZI SCHEME

On October 5, 2000, a federal jury convicted three persons of conspiracy, securities fraud, mail fraud, and money laundering arising from a fraudulent oil and gas investments promotion. The 3½ week trial in Los Angeles was prosecuted by the United States Attorney for the Central District of California. The defendants convicted are:

• Betty Ann Rubin, age 52, of Woodland Hills, California. Rubin was the president of Lazar Frederick & Company, a now defunct broker-dealer that was located in Beverly Hills, California.

• Mark D. Seigel, age 51, of Westlake Village, California. Seigel was the Vice-President and Director of Weststar Exploration, Inc., the purported operator of the oil and gas wells.

• John J. Judd, Jr., age 44, of Manhattan Beach, California. Judd was the President and sole owner of KS Resources, the general partner of the oil and gas limited partnerships.

The evidence presented to the jury showed that the defendants orchestrated a Ponzi scheme by paying a significant portion of the promised 10-12% annual returns to investors using the funds of other investors. More than 1,500 individuals, most of whom were elderly, invested over $42 million in the oil and gas limited partnerships which began in 1991 and continued into December 1995, when the Securities and Exchange Commission obtained a temporary restraining order and appointment of a receiver over the companies' assets.

Each of the defendants was found guilty of one count of conspiracy, eight counts of securities fraud, nine counts of mail fraud, and 22 counts of money laundering. Sentencing is scheduled for December 18, 2000 before United States District Judge Edward Rafeedie.

The defendants had previously resolved the Commission's action. For additional information see Litigation Release Nos. 14766, 14866, 15331, 15668, 15713, 16191.

http://www.sec.gov/litigation/litreleases/lr16766.htm