==========================================START OF PAGE 1====== UNITED STATES SECURITIES AND EXCHANGE COMMISSION Litigation Release No. 14910 / May 13, 1996 SEC v. John D. Lauer, Clifton Capital Investors, L.P., Konex Holding Corp., Lyle E. Neal, Copol Investments Limited, Joseph Polichemi and Oscar William Olson, Jr., U.S.D.C. N.D. Ill., No. 94 C 3770, filed June 21, 1994. The Commission announced that on May 8, 1996, the Commission filed an amended Complaint adding Oscar William Olson, Jr. (Olson), Defendant Copol Investments Limited's (Copol) General Counsel, as a defendant in the action. The Amended Complaint charges Olson with violations of Section 17(a) of the Securities Act of 1933 (Securities Act) and Section 10(b) of the Securities Exchange Act of 1934 (Exchange Act) and Rule 10b-5 thereunder for his role and participation in the creation, implementation and misappropriation of investor funds in connection with the offer and sale of interests in the Konex Roll Program, an investment which purportedly was designed to pool investor funds to purchase and trade in "Prime Bank Instruments." The allegations in the Commission's original Complaint charged Joseph Polichemi (Polichemi), Lyle E. Neal (Neal), John D. Lauer, and their respective companies, Copol, Konex Holding Corp. (Konex), and Clifton Capital Investors L.P. (CCI), with violations of Section 17(a) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder. The Commission's Complaint alleged that from January 1993 to the present, Konex raised at least $12.5 million from the Chicago Housing Authority (CHA) through the offer and sale of investment contracts in the Roll Program. In fact, the purported Roll Program was nothing more than a scam to defraud investors. Thus, the Complaint alleged that Polichemi and Neal, through their respective companies, made false and misleading statements regarding the use of CHA proceeds and the risks and returns associated with the investment. The Complaint further alleged that Lauer, CHA's Director of Risk Management and Benefits, among other things, made false and misleading statements to prospective investors concerning the rate of return the CHA earned and the circumstances under which the CHA invested in the Roll Program. The Amended Complaint alleges that Olson created and instituted the Roll Program with Polichemi, prepared and disseminated to Neal and others the procedures he expected to be used to carry out the scheme and misappropriated investor funds for his benefit and for the benefit of his partners in the scheme. In the process, Olson made false and misleading statements to others concerning the existence and legitimacy of the Roll Program, the use of investor proceeds and the returns and risks of investing in the Roll Program with the knowledge and intent that such statements be disseminated to investors. The ==========================================START OF PAGE 2====== Amended Complaint seeks the entry of orders of preliminary and permanent injunction, - 2 - disgorgement including prejudgment interest, an asset freeze and civil penalties against Olson. The Honorable Wayne R. Andersen of the United States District Court entered a Temporary Restraining Order against the original defendants on June 21, 1994. Thereafter, on July 29, 1994, the Court entered an Order of Permanent Injunction and Other Equitable Relief by Default against Polichemi, Neal, Copol and Konex, leaving only the amount of disgorgement and civil penalties at issue. On October 24, 1995, the Court entered, by consent, an Order of Permanent Injunction and Other Equitable Relief against Lauer and CCI. That order required Lauer and CCI to disgorge $4.853 million plus prejudgment interest. Olson, Polichemi, Neal and Lauer are also defendants in criminal actions brought by the United States Attorney's Office for the Northern District of Illinois for their involvement in the Roll Program fraud. Lauer pled guilty in his action; the criminal trial against the other defendants is scheduled to commence in May 1996.