UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Litigation Rel. No. 17809 / October 28, 2002

          Former Broker Dennis Herula Incarcerated for Contempt of
         Court in SEC Fraud Action, and Judge Orders Attorney Mary
            Lee Capalbo Arrested for Failure to Appear in Court

   (United States District Court for the District of Rhode Island, C.A.
   No. 02 154 ML, filed April 1, 2002)

   The Commission announced that, at a hearing on October 24, 2002
   concerning the Commission's motions for contempt, in United States
   District Court for the District of Rhode Island, Judge Mary M. Lisi
   found former broker Dennis Herula in contempt of court for failure to
   provide a detailed accounting pursuant to a preliminary injunction
   order entered by the court in May 2002. Judge Lisi ordered Herula
   incarcerated until such time that he complies with those provisions.
   At the conclusion of the hearing, officers of the court took Herula
   into custody. Judge Lisi also issued a bench warrant for the arrest of
   Herula's wife, Rhode Island attorney Mary Lee Capalbo, for failure to
   appear for the October 24 hearing, as previously ordered by the court.
   Herula and Capalbo are defendants in a civil fraud action filed by the
   Commission on April 1, 2002. The Commission's complaint alleged that
   they and others participated in a fraudulent offering scheme that
   raised at least $52 million from investors. According to the
   complaint, Herula and Capalbo played integral roles in the fraudulent
   scheme and misappropriated approximately $8 million in investor funds.

   On May 8, 2002, the court issued a written order imposing preliminary
   injunctions and asset freezes against Herula, Capalbo, and certain
   other defendants. The order required them to submit a detailed
   accounting showing, among other things, all transfers or payments of
   funds to them from investors or clients, the precise disposition of
   all such transfers or payments, and the current location of all funds
   or assets derived from such transfers or payments. After Herula and
   Capalbo failed to submit the accounting, the Commission filed civil
   contempt charges against them on August 8, 2002. At a hearing on
   September 16, 2002, the court ordered Herula to provide the Commission
   with certain information required by the accounting by September 23,
   2002. Herula provided the Commission with an accounting on September
   23, 2002. At the October 24 hearing, Judge Lisi held that information
   Herula provided to the Commission did not satisfy the detailed
   accounting requirements of the preliminary injunction, and ordered him
   incarcerated until such time that he complies with the accounting
   requirements. The court had previously entered final judgment by
   default against Herula, permanently enjoining him from future
   violations of the antifraud provisions of the federal securities laws.