==========================================START OF PAGE 1====== UNITED STATES OF AMERICA Before the SECURITIES AND EXCHANGE COMMISSION Securities Exchange Act of 1934 Release No. 37242 / May 23, 1996 Administrative Proceeding File No. 3-8774 -----------------------------x In the Matter of : BIRGIT MECHLENBURG, a/k/a ORDER MAKING FINDINGS AND GITTE MECHLENBURG, : IMPOSING REMEDIAL SANCTIONS Respondent. : -----------------------------x I. In connection with public administrative proceedings instituted pursuant to Section 15(b)(6) of the Securities Exchange Act of 1934 ("Exchange Act"), Respondent Birgit Mechlenburg, also known as Gitte Mechlenburg ("Mechlenburg"), has submitted an Offer of Settlement ("Offer") to the Securities and Exchange Commission ("Commission"), which the Commission has determined to accept.1 Solely for the purpose of this proceeding and any other proceeding brought by or on behalf of the Commission, or in which the Commission is a party, and without admitting or denying the Commission's findings, except the findings contained in Paragraphs II.1., II.2. and II.10 below and the Commission's jurisdiction, which are admitted, Mechlenburg consents to the entry of the findings and remedial sanctions set forth below. II. On the basis of this Order and the Offer submitted by Mechlenburg, the Commission finds that: 1. Mechlenburg is, and since 1982 has been, licensed as a registered representative by the National Association of Securities Dealers. 1 The Order Instituting Public Administrative Proceedings against Mechlenburg was issued by the Commission on August 8, 1995. ==========================================START OF PAGE 2====== 2. From November 1985 through October 1993, Mechlenburg was a registered representative of Townsley Associates & Company, Inc., then a broker-dealer registered with the Commission pursuant to Section 15(b)(1) of the Exchange Act. 3. Mechlenburg is the sole officer and director of Motzfeldt Funding Corporation ("Motzfeldt"), a Liberian corporation, the offices of which were, at all times relevant hereto, located in Poughkeepsie, New York. 4. From in or about October 1991 to in or about February 1992, Mechlenburg solicited investors and potential investors to purchase partnership interests, through investment contracts, in the Motzfeldt Investment Club (the "Club"). Mechlenburg described the Club as a pool of funds to be invested in a "roll- trade program." 5. In furtherance of her solicitation of funds for the Club, Mechlenburg drafted portions of, and distributed to investors and potential investors, a document entitled "The Motzfeldt Investment Club Statement of Purpose and Operation" (the "Statement"). The Statement described a roll-trade as a transaction involving the purchase of one-year standby letters of credit, promissory bank notes, and promissory bank guarantees, and the subsequent resale of such instruments at a profit in a secondary market supposedly located in Europe. 6. The Statement also represented that Motzfeldt was an "offshore investment banking firm" and that Mechlenburg headed its "American operations." 7. The Statement further set forth that $50,000 of the funds raised from investors in the Club would be used to make a one-time loan to Motzfeldt for the purchase of an option to buy the land and buildings of a school in Lenox, Massachusetts. The Statement represented that the loan was to be repaid from the proceeds of the first roll-trade. If no roll-trade was effectuated to produce profits to repay the loan, however, the Statement represented that Motzfeldt guaranteed that it would repay the loan from the proceeds of its other investment banking transactions. 8. Mechlenburg made the representations set forth in paragraphs 4 through 7 above notwithstanding that she knew or should have known that, at the time the Statement was drafted and distributed, Motzfeldt had no (a) officers, directors, or employees other than Mechlenburg, (b) business operations, (c) completed investment banking transactions, or (d) assets with which to repay the $50,000 loan. 9. As provided in the Statement, $50,000 of the funds raised from investors were loaned to Motzfeldt. Motzfeldt has ==========================================START OF PAGE 3====== failed to repay any portion of the loan, or reimburse investors for any of those funds. 10. On March 23, 1995, a Final Judgment of Permanent Injunction and Other Relief was entered against Mechlenburg, on consent, in the United States District Court for the Southern District of New York, permanently enjoining Mechlenburg from future violations of Sections 17(a)(2) and (3) of the Securities Act of 1933 ("Securities Act"). SEC v. Motzfeldt Funding Corporation, et al., 93 Civ. 3942 (JES). The Commission's complaint in that case was based in part on the conduct alleged in paragraphs 4 through 9 above. 11. As a result of the foregoing conduct, Mechlenburg willfully violated Sections 17(a)(2) and (3) of the Securities Act. III. In view of the foregoing, the Commission deems it in the public interest to impose the sanctions specified in the Offer. Accordingly, IT IS HEREBY ORDERED that, effective immediately, Mechlenburg is barred from association with any broker, dealer, investment adviser, investment company, or municipal securities dealer, with a right to reapply to become so associated after one year to the appropriate self-regulatory agency or where there is none to the Commission. By the Commission. Jonathan G. Katz Secretary