SECURITIES AND EXCHANGE COMMISSION

Litigation Release No. 16860 / January 12, 2001

SECURITIES AND EXCHANGE COMMISSION v. CLAUDE COSSU, Case No. S-00-1198 WBS GGH (E.D. Ca.) (amended complaint filed November 29, 2000).

SEC SETTLES CIVIL ACTION AGAINST CLAUDE COSSU IN CONNECTION WITH HIS ROLE IN SEBASTIAN INTERNATIONAL ENTERPRISES' $17.7 MILLION PONZI SCHEME

The Securities and Exchange Commission (SEC) announced that on November 29, 2000, the United States District Court for the Eastern District of California entered a final judgment of permanent injunction and other relief against Claude Cossu, of Vacaville, California. The injunction, which Cossu entered into on consent without admitting or denying the allegations in the SEC's amended complaint filed on November 29, 2000, enjoins him from future violations of the antifraud and securities and broker-dealer registration provisions of the federal securities laws.

The amended complaint alleged that between May 1998 and August 19, 1999, Cossu, an insurance salesman and former securities broker, fraudulently sold over $2.5 million in unregistered promissory notes issued by Sebastian International Enterprises, Inc. (SIE). The amended complaint also alleged that SIE issued over $17.7 million of these promissory notes. Further, the amended complaint alleged that Cossu made material misrepresentations and omissions to investors that purchased the SIE notes concerning, among other things, the ability of SIE to pay interest and principal on the promissory notes, the alleged existence of a surety bond guaranteeing the promissory notes, and the commissions that SIE paid Cossu for each promissory note he sold. According to the amended complaint, Cossu received approximately $397,000 in commission payments from SIE.

Pursuant to a consent executed by Cossu, the final judgment of permanent injunctive and other relief enjoined Cossu from future violations of Sections 5(a), 5(c) and 17(a) of the Securities Act of 1933 (Securities Act) and Sections 10(b) and 15(a)(1) of the Securities Exchange Act of 1934 (Exchange Act) and Rule 10b-5 thereunder. Cossu was also ordered to pay disgorgement of $394,065, but payment of that disgorgement was waived, and the SEC did not seek civil penalties, due to Cossu's demonstrated financial inability to pay.