Securities and Exchange Commission

Litigation Release No. 17833 / November 8, 2002

Recidivist Securities Law Violator Convicted and Sentenced for Mail and Wire Fraud

United States v. Steven H. Adler, Criminal Action No. 8:01-CR-413-T-24-MSS (M.D. Fla., Tampa Division)

Steven H. Adler, who was twice the subject of Securities and Exchange Commission (SEC) administrative proceedings, has been convicted of mail and wire fraud and sentenced to jail. The charges against Adler arose out of the same misconduct that was the basis for an SEC order dated November 15, 2001. Among other things, the SEC's administrative order barred Adler from associating with any broker, dealer, or investment adviser.

On November 6, 2001, the United States Attorney's Office for the Middle District of Florida (USAO) indicted Steven H. Adler of Tampa, Florida, charging him with mail and wire fraud. The indictment was based on allegations that Adler violated the law by convincing investors to entrust their money to him, and then misappropriating those funds. The indictment alleged that Adler:

• solicited and received funds from investors between October 1994 and September 1998, while he was the president and majority owner of Vector Index Advisors, Inc. (Vector), formerly based in Tampa;
   
• kept some of the money that he raised and invested the rest, but later withdrew it without the knowledge or consent of the investors;
   
• prepared and furnished to investors fictitious monthly statements assuring investors that their investments were intact and appreciating in value; and
   
• used investor funds for his own or Vector's benefit.

Following a nine day jury trial, Adler was convicted in May 2002 of thirteen counts of mail fraud and seven counts of wire fraud. On September 24, 2002, Adler, age 64, was sentenced to a term of five years imprisonment and ordered to pay more than $900,000 in restitution to his victims.

The SEC took action against Adler for the same misconduct that led to his criminal conviction. In the Matter of Vector Index Advisors, Inc. and Steven H. Adler, Securities Act of 1933 Release No. 8034 (November 15, 2001). The Commission also instituted an order imposing a cease-and-desist order against Adler in 1996, In the Matter of Vector Index Advisors, Inc. and Steven H. Adler, Investment Advisors Act of 1940 Release No. 1569 (July 8, 1996).

See also Litigation Release No. 17238 (Nov. 16, 2001).