U.S. Securities and Exchange Commission

   Litigation Release No. 16331/ October 7, 1999

   , Civil Action No. 99-1237 (EEx) (C.D. Cal.)

   On October 7, 1999, the Securities and Exchange Commission sued
   Debisys, Inc., and its principals Mark T. Flanagan and James S.
   Eberhart, both of Costa Mesa, for fraudulently selling $2.3 million in
   unregistered securities to 150 investors nationwide from January
   through July 1997.

   Defendants sold unregistered securities in the form of investment
   contracts for a sale-leaseback program for point-of-sale terminals.
   Point-of-sale terminals process retail forms of payment, including ATM
   cards, debit cards, credit cards, check guarantee cards, and "smart"
   cards. Defendants made several material misrepresentations to
   investors. First, Defendants misrepresented the use of investor funds,
   falsely representing that they would use investor funds to purchase
   the terminals, when, in fact, Defendants paid approximately 66 percent
   of investor funds for sales commissions, administrative costs, and
   "returns" to investors. Second, Defendants represented that Debisys
   would re-purchase the terminals at the end of the four-year lease for
   the full amount of the investment, but Defendants failed to disclose
   that they were not financially able to satisfy the buy-back
   obligations and had no reasonable expectation that they would be able
   to do so in the future. Defendants also represented that they would
   file the necessary forms to secure the investors interests in the
   terminals but they did not do so.

   Debisys and Flanagan consented to the entry of permanent injunctions
   against violations of the antifraud, securities registration, and
   broker-dealer registration provisions of Sections 5(a), 5(c), and
   17(a) of the Securities Act of 1933 and Sections 10(b) and 15(a) of
   the Securities Exchange Act of 1934 and Rule 10b-5. Flanagan's
   settlement did not require him to pay penalties because he
   demonstrated that he was unable to pay them. The Complaint also seeks
   a permanent injunction, disgorgement, and civil penalties against
   Eberhart for the same violations.
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Modified 10/22/1999