SECURITIES AND EXCHANGE COMMISSION

Litigation Release No. 17420 / March 19, 2002

FEDERAL JUDGE ENJOINS CORAL SPRINGS BROKER-DEALER WHICH RAISED OVER $2.7 MILLION IN CONNECTION WITH ALLEGED FRAUDULENT SECURITIES OFFERING

SECURITIES AND EXCHANGE COMMISSION V. DISCOVERY CAPITAL GROUP, ERIK WALSH, AND JOHN ABRESCH, Case No. 02-60363-CIV-HUCK (S.D. Fla., filed March 14, 2002)

The Securities and Exchange Commission ("SEC" or the "Commission") announced that on March 14, 2002 it filed an emergency federal civil action against Discovery Capital Group, Inc., a broker-dealer registered with the Commission since 1992, Erik Walsh, the Company's CEO, and John Abresch, the Company's vice president and director of institutional sales (collectively, "defendants"). On the next day, the Honorable Paul T. Huck, United States District Judge for the Southern District of Florida, entered, among other things, a temporary restraining order and an asset freeze to halt the alleged on-going offering of securities by Discovery Capital, Walsh and Abresch. The Court also entered an order appointing a Receiver over Discovery Capital.

The Complaint, alleges the following: since at least June 2001 through the present, Discovery Capital has raised at least $2.7 million from investors in the U.S. and abroad through the sale of securities in the form of promissory notes and preferred stock. Using high pressure, "boiler-room" tactics, sales agents employed by Discovery Capital falsely tell prospective investors, among other things, that Discovery Capital is affiliated with the well-known brokerage firm, E.F. Hutton, has "partnered" with major banks, or is poised to "go public" through an initial public offering ("IPO"). In reality, Discovery Capital is a registered broker-dealer with minimal legitimate business activities - its primary business activity since November 2001 has been to raise investor funds for the benefit of its principals and sales agents, including over $500,000 to Defendant John Abresch. The E.F. Hutton affilation was with a company recently formed by Walsh called "E.F. Hutton & Company, Inc." that had no ties to the original, and now defunct, E.F. Hutton. In addition to paying themselves lucrative salaries and commissions, Defendants have failed to record on the books and records of Discovery Capital at least $1.3 million worth of loans, placing Discovery Capital in violation of net capital rules under the securities laws and, thereby, placing its brokerage customers at risk. The Complaint also alleges that Walsh misappropriated at least $130,000 of the money raised from investors by improperly crediting those funds in Discovery Capital's books and records as his own capital contributions.

As a result, the Commission alleges that Discovery Capital, Walsh and Abresch with violations of Section 17(a) of the Securities Act of 1933 ("Securities Act") and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder; and Discovery Capital with additionally violating Sections 15(c) and 17(a) of the Exchange Act and Rules 15c1-2, 15c3-1, 17a-3, 17a-4, 17a-5 and 17a-11 thereunder. The SEC is also seeking in its lawsuit preliminary and permanent injunctions, disgorgement of ill-gotten profits and a civil money penalty against all defendants.

SEC Complaint in this matter.