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SECURITIES AND EXCHANGE COMMISSION

Securities Act of 1933
Release No. 7963 / March 8, 2001
Securities Exchange Act of 1934
Release No. 44051 / March 8, 2001
Admin. Proceeding File No. 3-10437

In the Matter of Hunter Adams, Jason A. Cohen, Steven M. Cohen, David Hirsch, Jonathan D. Winston, John J. Gremmo, III, James L. Bila, Christian W. Blake, Louis R. Facchini, Jr., Roberto A. Mangiarano, Joseph P. Mannino, David M. Margules, James J. Pellizzi, David M. Pesso, Michael Pugliese, Christopher J. Russo, Howard I. Weinstein, and Robert J. Winston

The Securities and Exchange Commission today instituted public administrative proceedings, pursuant to Section 8A of the Securities Act of 1933 and Sections 15(b)(6) and 21C of the Securities Exchange Act of 1934, against the following persons:

First United Control Persons

Hunter Adams ("Adams"), age 33, is a resident of Atlantic Beach, New York;
Jason A. Cohen ("J. Cohen"), age 48, is a resident of Albertson, New York;
Steven M. Cohen ("S. Cohen"), age 43, is a resident of Port Washington, New York;
David Hirsch ("Hirsch"), age 38, is a resident of Jericho, New York;
Jonathan D. Winston ("J. Winston"), age 35, is a resident of Locust Valley, New York;

First United Trader

John J. Gremmo, III ("Gremmo"), age 44, is a resident of West Gilgo Beach, Babylon, New York;

First United Registered Representatives

James L. Bila ("Bila"), age 30, is a resident of Holbrook, New York;
Christian W. Blake ("Blake"), age 30, is a resident of Brooklyn, New York;
Louis R. Facchini, Jr. ("Facchini"), age 34, is a resident of Parkland, Florida;
Roberto A. Mangiarano ("Mangiarano"), age 27, is a resident of La Jolla, California;
Joseph P. Mannino ("Mannino"), age 27, is a resident of Lindenhurst, New York;
David M. Margules ("Margules"), age 44, is a resident of Hackensack, New Jersey;
James J. Pellizzi ("Pellizzi"), age 33, is a resident of Melville, New York;
David M. Pesso ("Pesso"), age 32, is a resident of Bell Harbor, Rockaway Park, New York;
Michael Pugliese ("Pugliese"), age 30, is a resident of New York, New York;
Christopher J. Russo ("Russo"), age 34, is a resident of Woodmere, New York;
Howard I. Weinstein ("Weinstein"), age 51, is a resident of Port Washington, New York; and
Robert J. Winston ("Winston"), age 33, is a resident of New York, New York.

In the Order Instituting Proceedings, the Division of Enforcement alleges that Respondents engaged in the following unlawful conduct:

Adams, J. Cohen, S. Cohen, Hirsch, J. Winston, Gremmo, Bila, Blake, Facchini, Mangiarano, Mannino, Margules, Pellizzi, Pesso, Pugliese, Russo, Weinstein, and R. Winston engaged in systematic, fraudulent and deceptive sales practices in the offering and sale of microcap securities during the period of approximately August 1995 through at least October 1997. Adams, J. Cohen, S. Cohen, Hirsch, and J. Winston, the control persons of First United Equities Corporation ("First United"), then a registered broker-dealer, acquired undisclosed control over large blocks of publicly traded microcap securities, including the securities issued by National Medical Financial Services, Inc., ("NMFS") and Ashton Technology Group, Inc. ("Ashton"). Thereafter, Adams, J. Cohen, S. Cohen, Hirsch, and J. Winston ("First United Management"), along with First United's trader, Gremmo, and First United registered representatives Bila, Blake, Facchini, Mangiarano, Mannino, Margules, Pellizzi, Pesso, Pugliese, Russo, Weinstein, and R. Winston ("First United registered representatives"), used a variety of fraudulent tactics to inflate artificially the demand for, and market price of, these securities and sell them to First United customers at inflated prices.

Specifically, in May 1996, First United was the principal underwriter on a firm commitment basis for an initial public offering ("IPO") of common stock and warrants of Ashton. First United also participated in an August 1995 IPO of the common stock of NMFS. On or after the effective dates of the initial public offerings of NMFS and Ashton, First United Management caused large, undisclosed blocks of NMFS and Ashton securities to be sold or otherwise placed into First United's inventory accounts or other accounts in the names of nominees and subject to arrangements that gave First United Management control over the sales of the securities and all or a portion of the proceeds. Thereafter, First United registered representatives, at the direction and under the control of First United Management, used deceptive and fraudulent sales practices to induce First United customers and other investors to purchase NMFS and Ashton securities at inflated prices. Among other things, First United registered representatives: (i) made material misrepresentations and omissions concerning an investment in NMFS or Ashton; (ii) misrepresented to customers that no First United client had ever lost money at the firm and First United would compensate its clients for any of their losses on investing in NMFS or Ashton; (iii) frequently refused, or failed to execute in a timely fashion, customer sell orders of NMFS or Ashton securities; and (iv) effected unauthorized purchases of NMFS or Ashton in the accounts of the First United customers, including on at least one occasion the account of a deceased customer. On many occasions, First United registered representatives, along with Gremmo, would not process a customer sell order for either NMFS or Ashton securities unless Gremmo could pair, or "cross," the sell order with a purchase of the same amount of the other security by that customer or the purchase of the same amount of the same security by another customer.

First United Management profited from the sale of NMFS and Ashton securities at artificially inflated prices from First United's inventory accounts and other accounts that they controlled. The arrangements for the sale of NMFS or Ashton securities by First United Management were not disclosed to First United customers at the time of their purchases of NMFS or Ashton securities or thereafter.

Illicit Profits

Adams, J. Cohen, S. Cohen, Hirsch, J. Winston, Gremmo, Bila, Blake, Facchini, Mangiarano, Mannino, Margules, Pellizzi, Pesso, Pugliese, Russo, Weinstein, and R. Winston received millions of dollars in illicit profits from the fraudulent and deceptive sales practices described above.

Violations

The Order alleges that Respondents willfully violated and committed or caused the violation of Section 17(a) of the Securities Act of 1933 ("Securities Act"), Section 10(b) of the Securities Exchange Act of 1934 ("Exchange Act"), and Rule 10b-5 thereunder.

A public hearing will be scheduled to determine whether the allegations against Respondents are true, and if so, what sanctions, if any, are appropriate.

http://www.sec.gov/litigation/admin/33-7963.htm