U.S. Securities and Exchange Commission

Litigation Release No. 15023  / August 23, 1996

SECURITIES AND EXCHANGE COMMISSION v. RONALD MARGOLIN, et al., 92 Civ. 6307 (PKL)

NEW YORK -- The Securities and Exchange Commission announced that in a Memorandum
Order dated August 8, 1996, United States District Judge Peter K. Leisure of the
Southern District of New York found Ronald Margolin in civil contempt of a Final
Judgment issued by the Court against him, and ordered that he be incarcerated until
he purges the contempt.

     On January 20, 1993, the SEC obtained the Final Judgment against Margolin and
others that, among other things, orders Margolin to disgorge $893,410.04, and pay
penalties of $838,305.00.  The Final Judgment was affirmed by the United States
Court of Appeals for the Second Circuit on September 13, 1993.

     The SEC's complaint, filed on August 20, 1992, charged Margolin and others
with securities "free-riding" in violation of the federal securities laws.  In
furtherance of the free-riding scheme, which lasted from September 1991 to April
1992, Margolin and his co-defendants made misrepresentations to brokers which
included false assessments of their net worth, their ability to deliver funds or
securities if the market moved adversely, their intention to settle unprofitable 
trades, and, in some cases, their identities, in order to induce brokers to do
business with them.   Margolin and his co-defendants refused to pay for the
unprofitable trades, leaving the brokerage firms to absorb the resulting losses. 
Margolin and his co-defendants netted over $140,000 from the scheme, and avoided
losses of over $640,000.

     In its Memorandum Opinion, the Court found that since the entry of the Final
Judgment, Margolin has not paid any amount towards satisfying the Final Judgment,
despite three years of collection efforts by the SEC.  The Memorandum Opinion traced
the SEC's efforts to collect from Margolin, including the SEC's numerous requests to
Margolin for financial information to determine his ability to satisfy the Final
Judgment.  The Court noted that Margolin consistently claimed inability to pay,
while providing the SEC with a wealth of incomplete and unsubstantiated financial
information.  When subpoenaed for documents and testimony concerning his financial
status, Margolin invoked his Fifth Amendment privilege, and refused to provide any
information.

     The Court held that Margolin is bound to comply with the Final Judgment, or
bear the burden of showing plainly and unmistakably why compliance is impossible. 
The Court found that Margolin failed to meet this standard.  The Court also found
that while Margolin is entitled to assert his Fifth Amendment privilege to financial
disclosure, that does not relieve him of his burden of producing evidence showing
that compliance is impossible.

     Holding that Margolin's failure to comply with the Final Judgment is a harm of
substantial magnitude, undermining the deterrent effect of SEC enforcement actions
and the enforceability of court orders, Judge Leisure found that any sanction of
lesser severity than incarceration would be ineffective to coerce Margolin's
compliance.  Because Margolin is presently incarcerated in an unrelated criminal
case, Judge Leisure ordered that Margolin be incarcerated when he is released from
criminal custody until such time as he purges his civil contempt.