U.S. SECURITIES AND EXCHANGE COMMISSION

   Litigation Release No. 16624 / July 12, 2000

   Securities and Exchange Commission v. David J. Naughton, et al., Civil
   Action No. 00-07531 R(Ex) (C.D. Cal.)

   On July 12, 2000, the Securities and Exchange Commission
   ("Commission") filed a complaint in federal court in Los Angeles
   charging twelve sales agents formerly employed by Papa Holdings, Inc.
   ("Papa Holdings") for securities fraud in connection with the sale of
   $23 million in securities. The complaint alleges that the Defendants
   failed to disclose to investors the amount of the commissions they
   were receiving for selling the stock.

   Papa Holdings formerly operated restaurants in Pasadena, Beverly
   Hills, Encino and Long Beach, California under the name "Papashon."
   The company and its restaurant subsidiaries, based in Woodland Hills,
   California, raised nearly $23 million from 1,400 investors nationwide,
   purportedly to open four new restaurants and create a publicly traded
   company. Instead, these companies used investor funds to pay
   undisclosed sales commissions and to pay for losses at existing
   restaurants.

   The complaint alleges that at various times from about November 1995
   to January 1999, the Defendants sold preferred stock in Papa Holdings
   and its restaurant subsidiaries. Through offering documents, the
   Defendants represented that they would receive sales commissions equal
   to "10% or more" or "a percentage of the purchase price" of the stock.
   In fact, the actual sales commission paid ranged from 31% to 40%. The
   Defendants received a combined total of nearly $4 million in
   commissions from the sale of the stock. Naughton, a director of two
   restaurant subsidiaries, also knew, but failed to disclose to
   investors, that the proceeds from at least one restaurant subsidiary's
   stock offering would be used to cover losses at existing, related
   restaurants and to pay commissions rather than to open a new
   restaurant, as the investors were told.

   The complaint names the following persons as Defendants David J.
   Naughton, age 40 and a former resident of Sherman Oaks, California;
   Stephen R. Keenum, age 44 and a current resident of Frazier Park,
   California; Mark R. Avila, age 35 and a current resident of Woodland
   Hills, California; Stephen R. Rawlings, age 59 and a former resident
   of Chatsworth, California; Richard C. Reining, age 41 and a current
   resident of Thousand Oaks, California; Adam E. Peck, age 26 and a
   former resident of Chatsworth, California; Victor R. Grauaug, age 48
   and a former resident of Westlake Village, California; Raffi T. King,
   age 33 and a former resident of Los Angeles, California; Charles F.