U.S. SECURITIES AND EXCHANGE COMMISSION

Litigation Release No. 21142 / July 21, 2009

Securities and Exchange Commission v. The Formula, Inc., The Formula, LLC, and Brian A. Neiman, Civil Action No. 09-61074-CIV- ZLOCH/Rosenbaum (S.D. Fla.)

SEC Charges Two Real Estate Companies and Founder for Securities Fraud in Connection With Sale of Investments in Discounted, Pre-Construction Condominium Units

Defendants Agree to Settlements Including Permanent Injunctions and Founder Agrees to Pay a Civil Penalty of $40,000

The Securities and Exchange Commission ("Commission") announced today that yesterday it filed a civil action charging Brian A. Neiman, a resident of Fort Lauderdale, Florida, and his two companies, The Formula, Inc. and The Formula, LLC (collectively, The Formula), with fraudulently selling real estate investments. The Formula solicited investors to purchase discounted, pre-construction condominium units that either The Formula or the developer would re-sell prior to closing for a substantial profit to investors. In connection with the sale of these investments, The Formula and Neiman made misleading statements to investors, including, among other things, The Formula's profitability and its success rate.

The Commission's complaint alleges that from at least 2002 until mid-2007, The Formula sold unregistered securities in the form of investment contracts in real estate developments. The Formula entered into bulk purchase agreements with developers to purchase a block of the condominium units in a condominium development, in exchange for a discount from the initial listing price of the condominiums. The Formula then solicited individuals to purchase units as a "joint venture" with The Formula, and promised that no investor would ever have to close on the transaction. Instead, The Formula or the developer would re-sell the unit once the development was completed, and all investors would realize a substantial profit.

In connection with the sale of these investments, The Formula and Neiman made a number of material misstatements and omissions to prospective investors, including:

• misrepresenting the success rate and profitability of its investments, often telling investors that they could expect profits ranging from 50% to 100% within two years

• touting its "sterling" track record on its website, when by late 2006, approximately 60% of the investments were tied to unsuccessful projects where the developer was in default or in litigation with The Formula

• misrepresenting Neiman's background, and failing to disclose his criminal background

The Commission's complaint further alleges that during its operation, The Formula raised over $68 million from 330 investors nationwide and internationally. The vast majority of investors did not receive any profit (although they did receive back the deposits they initially paid to reserve the units). Shortly after the SEC commenced its investigation, The Formula ceased soliciting new investors for projects and, to date, over $65 million in deposits have been returned to investors.

Without admitting or denying the allegations in the Commission's Complaint, The Formula and Neiman have consented to the entry of final judgments enjoining them from violating sections 5(a), 5(c), 17(a)(2), and 17(a)(3) of the Securities Act of 1933. Neiman also has consented to pay a civil penalty of $40,000.

http://www.sec.gov/litigation/litreleases/2009/lr21142.htm