U.S. Securities and Exchange Commission

Litigation Release No. 17730 / September 17, 2002

SEC v. Isaac Sofair and Landway Estates, Inc., Civil Action No.02-7444 (GEL)(S.D.N.Y)

SEC CHARGES REGISTERED INVESTMENT ADVISER AND HIS FIRM WITH FRAUD

The Securities and Exchange Commission ("the Commission") announced today that it filed a civil fraud suit in the United States District Court for the Southern District of New York against Isaac Sofair of Bethesda, Maryland, and Landway Estates, Inc., a Delaware corporation owned and controlled by Sofair.

The Commission's complaint alleges that:

• From at least September 1997 until May 2001, Sofair, a registered investment adviser operating through Landway, engaged in a scheme to defraud investors, ultimately obtaining $4.7 million from ten investors and misappropriating $2.3 million from two of them.

• Sofair induced investors to become his advisory clients by falsely portraying himself as a wealthy and successful international investment adviser and by falsely portraying Landway as a wealthy and successful international investment advisory firm that catered to high net worth clients.

• Once Sofair obtained the investors' funds, he commingled nearly all of the money in an account at Fidelity Investments, held in Landway's name and controlled by him. Sofair then used the funds to trade aggressively in the stock market and to pay his personal expenses, including, to repay credit card and other personal debt, to purchase an automobile, to pay rent on two penthouse apartments, and to purchase household furnishings, art, wine and to finance trips.

As part of the alleged fraudulent scheme, Sofair prepared and distributed to existing and potential clients false and misleading report brochures. More specifically, the report brochures contained false performance returns; gross overstatements of assets under management; fictitious securities holdings; misrepresentations about Sofair's educational background; a description of a fictitious professional staff; and fictitious audit opinions.

The complaint also alleges that Sofair repeatedly filed false investment adviser registration forms with the Commission. Among the alleged misrepresentations contained in the Commission filings were gross overstatements of assets under management; falsification of Sofair's education background; and Sofair's failure to disclose his prior felony conviction.

Sofair and Landway are charged with violating Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934, and Rule 10b-5 thereunder. The complaint also charges Sofair with violating Sections 204, 206(1), 206(2), 206(4), and 207 of the Investment Advisers Act of 1940, 15 U.S.C. §§ 80b-4, 80b-6(1), 80b-6(2), 80b-6(4), and 80b-7, as well as Rules 204-2(a)(1), (2), (6), (7) and (8); 204-2(b); 206(4)-1(a)(5); and 206(4)-2(a), 17 C.F.R. §§ 275.204-2(a)(1), (2), (6), (7), and (8); 275.204-2(b); 275.206(4)-1(a)(5); and 275.206(4)-2(a), thereunder.

In addition to seeking an injunction that permanently restrains and enjoins Sofair and Landway from violating the federal securities laws, the Commission seeks to obtain disgorgement, civil penalties and an expedited accounting from the defendants.

SEC Complaint in this matter

http://www.sec.gov/litigation/litreleases/lr17730.htm