U.S. SECURITIES AND EXCHANGE COMMISSION

SECURITIES AND EXCHANGE COMMISSION

   LITIGATION RELEASE NO. 17531 / May 22, 2002

   Securities and Exchange Commission Obtains Judgments Against all Four
   Defendants Involved in Fraudulent Promissory Note Case

   The Securities and Exchange Commission announced that the U.S.
   District Court for the Southern District of Florida has entered final
   judgments against all four of the defendants involved in a securities
   fraud action arising from a promissory note scheme. The Court granted
   summary judgments against two individual defendants, Raphael "Ray""
   Levy of Lake Worth, Florida and Larry Schwartz of Boca Raton, Florida,
   for their involvement in a scheme that fraudulently induced more than
   600 investors in 27 states to purchase at least $55 million in
   unregistered promissory notes. The remaining two defendants, U.S.
   Capital Funding, Inc. and First Capital Services, Inc., consented to
   the entry of final judgments against them.

   The Court permanently enjoined all four defendants from future
   violations of the antifraud provisions of the federal securities laws
   and from offering or selling unregistered securities. In addition, the
   court permanently enjoined Levy and U.S. Capital from selling
   securities without registering with the Commission as broker-dealers
   or associating with registered broker-dealers.

   The judgments against Levy and Schwartz require that they disgorge
   their ill-gotten gains plus interest and pay civil penalties. Levy was
   ordered to pay disgorgement of $798,600 plus prejudgment interest and
   a civil penalty of $798,600. (He is currently serving a 14 year
   sentence for fraud in an unrelated criminal action, in which he was
   ordered to pay restitution of $117 million.) Schwartz was order to pay
   disgorgement of $89,000 plus prejudgment interest and a civil penalty
   of $100,000.

   The Court also ordered U.S. Capital to disgorge $9.6 million and First
   Capital to disgorge $37.4 million and that the two entities satisfy
   the disgorgement orders to the extent of their financial capabilities.
   Therefore, disgorgement was waived with respect to U.S. Capital except
   to the extent that U.S. Capital receives funds pursuant to its claim
   in a bankruptcy proceeding against its co-defendant, First Capital,
   and disgorgement was waived with respect to First Capital except to
   the extent that the U.S. Bankruptcy Court for the Southern District of
   Florida orders First Capital to make a distribution to U.S. Capital's
   court-appointed receiver. The disgorged funds will be distributed to
   injured investors under a plan proposed by the receiver and approved