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SEC LITIGATION RELEASE
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EXTRACTED KEY WORDS
COMMISSION SECURITIES ROSOFF EXCHANGE COMMISSION LITIGATION PROMISSORY NOTES CIV ALLEGES OFFICER COMPLAINT OFFERING DOCUMENTS STEVEN HOFFENBERG MICHAEL ROSOFF PARTICIPATING FRAUDULENT OPERATING SCHEME MISLEADING REVENUES VIOLATIONS ACT ARTHUR FERRO AMENDED COMPLAINT MARVIN BASSON CHARLES CHUGERMAN NEWS |
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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 15053 / September 17, 1996
Accounting and Auditing Enforcement
Release No.816 / September 17, 1996
SECURITIES AND EXCHANGE COMMISSION v. MICHAEL ROSOFF, 96 Civ.
7064 (WK) S.D.N.Y.
Michael Rosoff, former chief legal officer for the defunct
Towers Financial Corporation, was charged today with
participating in Towers' fraudulent sales of hundreds of millions
of dollars of promissory notes during the five years that Towers
was operating a huge Ponzi scheme. According to the Commission's
complaint, Rosoff, who began working at Towers (or a predecessor
company) in 1980, participated in the preparation of false and
misleading offering documents distributed to purchasers of
promissory notes, including financial statements that
significantly overstated Towers' revenues from its collection
business. The Commission has alleged that Rosoff knew that
Towers' method for reporting its collection revenues was not
supported by Towers' actual experience, and that Rosoff was also
aware that statements to investors about the promissory notes, in
offering documents he helped prepare, misleadingly described the
promissory notes as insured and fully collateralized. It is
alleged that the proceeds from the promissory notes had been
squandered on Towers' bloated operating expenses and perpetuating
the fraudulent scheme. The Commission has also alleged that
Rosoff was aware that bogus documents and testimony were being
provided to the Commission at a time when the promissory notes
were being sold.
The complaint, which alleges violations of violations of
Section 17(a) of the Securities Act of 1933 and Section 10(b) of
the Securities Exchange Act of 1934 and Rule 10b-5 thereunder,
seeks a permanent injunction against Rosoff, disgorgement of
ill-gotten gains, plus pre-judgment interest, civil penalties,
and an officer-and-director bar.
The Commission filed suit against Towers and other officers
in February 1993; in March 1993 Towers filed for protection under
Chapter 11 of the Bankruptcy Code. The Commission's actions
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