SEC NEWS DIGEST Issue 2000-249 December 29 2000 ENFORCEMENT PROCEEDINGS SEC CHARGES FORMER EAST HAMPTON INVESTMENT ADVISER AND FUND MANAGER WITH MULTIMILLION DOLLAR FRAUD The .Commission announced today that it charged Evelyn Litwok Litwok former East Hampton investment adviser with committing securities fraud in connection with the offer and sale of securities in three private investment funds and with misappropriating more than $3 million of investor funds for her personal benefit Between 1994 and 1997 Litwok raised more than $8 million from approximately 35 individuals from the sale of limited partnership interests in Kohn Investment LP-l LP Kohn Capital LP-33 LP-33 and third private investment fund Litwok misappropriated approximately $3 million of which approximately $1.3 million went to her personal friend Dalia Eilat Eilat who is named in the Complaint as relief defendant Litwok lost the remainder of investor funds through speculative trading in options Moreover in selling the investments Litwok made material misrepresentations and omissions concerning among other things her prior history as broker and investment adviser For example Litwok failed to disclose substantial judgments entered against her for prior misconduct including her misappropriation of investor funds As result of Litwoks misconduct numerous investors have lost collectively several million dollars while Litwok enriched herself The defendant and relief defendant are as follows Litwok age 49 currently resides in Freehold New Jersey and is currently working as an independent insurance sales agent From 1994 to 1998 the period of the conduct at issue Litwok resided in East Hampton New York Litwok was the principal of several corporations through which she conducted her investment advisory business including Kohn Investment Management Inc the general partner of LP-1 Kohn Capital Management Inc.-33 the general partner of LP-33 and Kohn Investment Management II Inc general partner of Kohn Investment Associates II an entity that was never formed From 1984 to 1994 Litwok was associated with various broker-dealers as registered representative and held Series Series 63 and Series 15 licenses
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SEC NEWS DIGEST
Issue 2000-249December 29 2000
ENFORCEMENT PROCEEDINGS
SEC CHARGES FORMER EAST HAMPTON INVESTMENT ADVISER AND FUND
MANAGER WITH MULTIMILLION DOLLAR FRAUD
The .Commission announced today that it charged Evelyn Litwok Litwok former
East Hampton investment adviser with committing securities fraud in connection with
the offer and sale of securities in three private investment funds and with
misappropriating more than $3 million of investor funds for her personal benefit
Between 1994 and 1997 Litwok raised more than $8 million from approximately 35
individuals from the sale of limited partnership interests in Kohn Investment LP-l LPKohn Capital LP-33 LP-33 and third private investment fund Litwok
misappropriated approximately $3 million of which approximately $1.3 million went to
her personal friend Dalia Eilat Eilat who is named in the Complaint as relief
defendant Litwok lost the remainder of investor funds through speculative trading in
options Moreover in selling the investments Litwok made material misrepresentations
and omissions concerning among other things her prior history as broker and
investment adviser For example Litwok failed to disclose substantial judgments
entered against her for prior misconduct including her misappropriation of investor
funds As result of Litwoks misconduct numerous investors have lost collectively
several milliondollars while Litwok enriched herself
The defendant and relief defendant are as follows Litwok age 49 currently resides in
Freehold New Jersey and is currently working as an independent insurance sales agent
From 1994 to 1998 the period of the conduct at issue Litwok resided in East Hampton
New York Litwok was the principalof several corporations through which she
conducted her investment advisory business including Kohn Investment Management
Inc the general partner of LP-1 Kohn Capital Management Inc.-33 the general
partner of LP-33 and Kohn Investment Management II Inc general partner of Kohn
Investment Associates II an entity that was never formed From 1984 to 1994 Litwok
was associated with various broker-dealers as registered representative and held Series
Series 63 and Series 15 licenses
age 45 is an architect currently residing in New York New York Eilat was the
president and sole shareholder of Kohn Capital Management Inc -33 the general partner
of LP-33 During most of 1995 and 1996 Eilat lived in Litwoks house in East Hampton
New York Eilat received at least $1.19 million from LP- and at least $150000 from
LP-33
The complaint alleges that From June 1994 to June 1995 Litwok raised approximately $5
million from approximately 20 investors from the sale of limited partnership interests in LP
private investment fund Litwok lost most of the money in LP- through speculative
options trading and misappropriated the rest Litwok misappropriated approximately $2.3
million of LP-ls ftinds for her personal benefit including approximately $1.19 million
which went to Eilat and businesses controlled by Eilat Nevertheless Litwok continued to
solicit new investors for LP-1 by falsely blaming LP-ls losses on the funds broker and
obtained another $525000 from two investors in January 1997
From June 1996 to April 1997 Litwok raised approximately $2.7 million from
approximately 15 investors from the sale of limited partnership interests in second
private investment fund LP-33 In offering and selling the investments in LP-33
Litwok made material misrepresentations and omissions of material fact about her prior
history as broker and an investment adviser In particular Litwok told investors that
she was very successful broker and investment adviser but failed to disclose
judgments and arbitration awards entered against her for prior misconduct including her
misappropriation of investor funds from LP- Litwok lost all of the funds in LP-3
through speculative options trading but not before she misappropriated approximately
$600000 of the funds for her personal benefit of which approximately $150000 went to
Eilats benefit
Finally in October 1997 Litwok obtained $300000 from another investor by materially
misrepresenting that she would invest the money and that Litwok and the investor would
share in the profits Again Litwok misrepresented her history as broker and an
investment adviser Litwok misappropriated $72000 of the investors money and lost
the remainder through speculative trading
The Commission alleges that as result of the foregoing Litwok violated Section 17aof the Securities Act of 1933 Section 10b of the Securities Exchange Act of 1934 and
Rule 0-b-5 thereunder and Sections 2061 and 2062 of the Investment Advisers Act
of 1940 The Commission seeks final judgment permanently enjoining Litwok
from future violations of the federal securities laws ordering Litwok to disgorge ill-
gotten gains plus prejudgment interest imposing civil penalties against Litwok
ordering Eilat to disgorge funds equal to the amount by which she was unjustly enriched
plus prejudgment interest and ordering Litwok and Eilat to provide verified written
accountings
The litigation is pending in the United States District Court for the Eastern District of
New York Evelyn Litwok and Dalia Eilat Civil Action No 00-CV-7626
USDC EDNY LR-16843
NEWS DIGEST DECEMBER 29 2000
COMMISSION OBTAINS SUMMARY JUDGMENT AGAINST DEFENDANTS IN
OFFERING FRAUD TARGETING ELDERLY
On December 22 the Honorable Virginia Phillips United States District Judge for the
Central District of California granted the Commissions motion for summary judgment
against defendants Tlsys Communications Inc Telsys Home Shopping Partners
HSP and Eleazar Heracleopolis Heracleopolis for violating the antifraud securities
registration and broker-dealer registration provisions of the securities laws Sections
5a 5c and 17ª of the Securities Act of 1933 Sections lOb-S and 15a of the
Securities Exchange Act of 1934 and Rule lOb-5 thereunder The Court permanently
enjoined the defendants from committing future violations of the securities laws and
ordered defendant Heracleopolis to disgorge $502812.67 in misappropriated investor
funds plus prejudgment interest and to pay third tier civil penalty of $110000
It was undisputed that defendants Telsys HSP and Heracleopolis raised $1142629 from
the sale of HSP general partnership interests to at least 37 investors in several states
from at least August 1996 through April 1998 Proceeds from the securities offering
were to be used by Telsys to develop and operate an internet shopping mall for HSP
In fact Heracleopolis used most of the money to pay salaries for himself and his wife
make cash gifts to his mother discharge personal liabilities owed to the Internal Revenue
Service and other creditors purchase and operate Laundromat and pay undisclosed
commissions to sales representatives Consequently only fraction of the moneys
raised were available to establish viable business Heracleopolis also selected the
elderly as targets for his scam and used deceptive means to lure investors
HOME SHOPPThIG PARTNERS TELSYS COMMUNICATIONS and
ELEAZER HERACLEOPOLIS Civil Action No ED CV 00-439 VAP CWx C.D
Cal LR-16845
SEC HALTS ALLEGED FRAUDULENT SECURITIES OFFERING BY MIAMI FLORIDA
BOILER-ROOM
The Commission announced that on December 28 it obtained emergency relief halting
an alleged ongoing fraudulent securities offering being conducted by Miami Florida
boiler-room and its principals and telemarketers Among other things the Commissions
complaint filed on December 28 2000 alleges that the boiler-room Web Hosting
Headquarters Partnership Web Hosting failed to disclose to investors that it is
controlled by individuals with prior history of defrauding investors and that it has
diverted and would continue to divert 62% of funds raised from investors to pay its
principals and telemarketers The complaint further alleges that Web Hosting and the
named individual defendants Donald Rhoades Kenneth Grossfeld Wayne
Prichason Eduardo Villar and Karyn Miller had already raised at least $2.5 million
from defrauded investors and that its fraudulent sales were ongoing
At the Commissions request the United States District Court of the Southern District of
Florida entered an order temporarily restraining Web Hosting and the individual
defendants from continuing to violate the federal securities laws by fraudulently selling
NEWS DIGEST DECEMBER 29 2000
Web Hosting securities in unregistered transactions and by acting as broker-dealers
while not registered with the Commission The Court also entered orders freezing the
defendants assets freezing the assets of relief defendants Web Hosting Headquarters
Inc National Millennium Corporation Internet Management Group Inc Intranet Inc
and Lenica Corp appointing Receiver over Web Hosting and granting other
emergency relief
The SECs complaint alleges that the defendants have raised at least $2.5 million from at
least 132 investors nationwide by making materials misrepresentations and omissions
Among other things the Commissions complaint alleges that the defendants
misrepresented the use of investor funds and Web Hostings present and likely future
success Web Hosting Headquarters Partnership et a. Case No OO-4975-CIV-
HIGHSMITH-GARBER S.D Fla LR-16846
IN VESTMENT COMPANY ACT RELEASES
AIG LIFE INSURANCE COMPANY ET AL
An order has been issued pursuant to Section 26b of the Investment Company Act to
MG Life Insurance Company MG MG Life Insurance Company Variable Account
Variable Account American International Life Assurance Company of New York
American American International Life Assurance Company of New York Variable
Account Variable Account ReliaStar Life Insurance Company of New York
ReliaStar Life Insurance Company of New York Variable Annuity Fund ReliaStar Life
Insurance Company of New York Variable Annuity Fund and Alliance Variable
Products Series Fund Inc AVP approving the substitution of securities An order also
has been issued pursuant to Section 17b of the Act to permit MG Variable Atcount
American Variable Account and AVP to effect certain of the substitutions partially in-
kind Ret IC-24799 December 27
AMERICAN UNITED INSURANCE COMPANY ET AL
An order has been issued pursuant to Section 26b of the Investment Company Act to
American United Insurance Company AUL and AUL American Unit Trust AULAccount approving the substitution of the State Street Equity 500 Index Fund series
of State Street Institutional Investment Trust for shares of the Index 500 Portfolio
series of Variable Insurance Products Fund ii currently held by the AUL Account to
support certain policies issued by AUL Rel IC-24801 December 27
ELFUN TRUSTS ET AL
An order has been issued on an application filed by Elftin Trusts et amending prior
orders granted under Section 6b of the Investment Company Act The order expands the
class of persons eligible to purchase shares of certain employees securities companies to
include certain specified immediate family members and grandchildren of eligible
NEWS DIGEST DECEMBER 29 2000
employees In addition the order permits eligible employees to transfer shares of the
employees securities companies to estate planning vehicles formed for the benefit of lineal
descendants of the eligible employees Ret IC-24803 December 27
NATIONS FUND TRUST ET AL
An order has been issued on an application filed by Nations Fund Trust et al exempting
applicants from Section 12d1GiII of the Investment Company Act The order
permits funds of funds relying on Section 12d1G of the Act to invest in certain
securities and other instruments Re IC-24804 December 27
ADVANTUS SERIES FUND ET AL
An order has been issued pursuant to Section 6c of the Investment Company Act
exempting Advantus Series Fund Fund and Advantus Capita Management Advantus
Capita from the provisions of Section 9a 13a 15a and 15b of the Act and Rules
6e-2b 15 and 6e-3Tb 15 thereunder to the extent necessary to permit shares of any
current or future series of the Fund and of any future open-end investment companies for
which Advantus Capital or any affiliated person of Advantus Capital serves as
investment adviser investment sub-adviser investment manager administrator principal
underwriter or sponsor to be sod to and hed by separate accounts funding variable
annuity and variable life insurance contracts issued by both affiiated and unaffiiated ife
insurance companies and quaified pension and retirement pans outside the separate
account context Re IC-24800 December 27
SCUDDER WEISEL CAPITAL ENTREPRENEURS FUND AND SCUDDER WEISEL
CAPITAL LLC
notice has been issued giving interested persons until January 18 2001 to request
hearing on an appication filed by Scudder Weise Capita Entrepreneurs Fund and
Scudder Weise Capital LLC for an exemption from Sections 18c and 18i of the
Investment Company Act Rue 23c-3 under the Act and pursuant to Section 17d and
Rule 17d-1 under the Act The order would permit certain registered cosed-end
management investment companies to issue rnultipe classes of shares and to impose
asset-based distribution fees and early withdrawal charges Re IC-24805
December 27
NIKE SECURITIES L.P ET AL
notice has been issued giving interested persons until January 22 2001 to request
hearing on an appication fied by Nike Securities L.P et for an order under Section
6c of the Investment Company Act that woud grant an exemption from Section
26a2D of the Act The order would permit certain unit investment trusts to deposit
trust assets in the custody of foreign banks and securities depositories Re IC-24806
December 28
NEWS DIGEST DECEMBER 29 2000
HOLDING COMPANY ACT RELEASES
SOUTHERN COMPANY ET AL
An order has been issued authorizing proposal by The Southern Company Southern
registered holding company and its public-utility subsidiary companies Alabama Power
Company Georgia Power Company Gulf Power Company Mississippi Power Company
Savannah Electric and Power Company and Southern Electric Generating Company
collectively Operating Companies for Southern to organize new subsidiary company
NewCo which will undertake the construction and ownership of certain electric power
generation or transmission systems interconnected to the Operating Companies systems
In addition the order authorizes Southern to finance the activities of NewCo up to an
aggregate amount of $1.7 billion The order also authorizes NewCo to obtain financing up
to an aggregate of $2.5 billion and to invest in exempt wholesale generators Applicants
request that the Commission reserve jurisdiction over transactions that would cause the
common equity component of NewCos consolidated capitalization to fall below 30%
any lease or sale/leaseback transaction where NewCo would transfer or sell its utility assets
to third party with an option to buy back the assets and the payment by NewCo of
dividends to Southern out of capital or unearned surplus Rel 5-27322
WISCONSIN ENERGY CORPORATION ET AL
An order has been issued approving proposal by Wisconsin Energy Corporation
WEC Wisconsin public utility holding company exempt from registration by order
under Section 3a1 of the Act and its wholly owned public utility subsidiary
Wisconsin Electric Power Company Wisconsin Electric together Applicants for
Wisconsin Electric to acquire membership interests in American Transmission
Company LLC Transco Wisconsin limited liability company and to purchase shares
of ATC Management Inc Wisconsin corporation created to manage Transco WEC
also requests an order affirming its continued exemption under Section 3al of the
Act Rel 35-27329
WPS RESOURCES CORPORATION ET AL
An order has been issued approving proposal by WPS Resources Corporation WPSRpublic utility holding company claiming exemption under Section 3al of the Act by
Rule and Wisconsin Public Service Corporation WPSC and together with WPSR
Applicants WPSRs wholly owned public utility subsidiary for WPSC or limited
liability company of which WPSC will be the sole member to acquire membership
interests in American Transmission Company LLC Transco Wisconsin limited
liability company to purchase shares of ATC Management Inc Wisconsin corporation
created to manage Transco and to engage in certain related transactions Rel 35-
27330
NEW DIGEST DECEMBER 29 2000
SELF-REGULATORY ORGANIZATIONS
DELISTING GRANTED
An order has been issued granting the application of the New York Stock Exchange to
strike from listing and registration the 7.50% Adjustable Conversion-Rate Equity
Security Units of The Seagram Company Ltd and the 8.00% Senior Quarterly Income
Debt Securities due December 31 2038 of Joseph Seagram Sons Inc effective at
the opening of business on December 28 2000 Rel 5-43774
SECURITIES ACT REGISTRATIONS
The following registration statements have been filed with the SEC under the Securities
Act of 1933 The reported information appears as follows Form Name Address and
Phone Number if available of the issuer of the security Title and the number and/or
face amount of the securities being offered Name of the managing underwriter or
depositor if applicable File number and date filed Assigned Branch and designation
if the statement is New Issue
Registration statements may be obtained in person or by writing to the Conmiissions Public
Reference Branch at 450 Fifth Street N.W Washington D.C 20549 or at the following
mail box address publicinfosec.gov In most cases this information is also available
on the Commissions website www.sec.gov
S-i CUPERTINO ELECTRIC INC 1132 NORTH 7TH STREET SAN JOSE CA 95112
408 8088000 $100000000 COMMON STOCK FILE 33352538 DEC 22
BR
5-3 CLECO UTILITY GROUP INC P0 BOX 5000 PINEVILLE LA 71361 318 484-
7400
200000000 $200000000 STRAIGHT BONDS FILE 33352540 DEC
22BR
S-3 DELTA NATURAL GAS CO INC 3617 LEXINGTON RD WINCHESTER KY 40391
606 7446171 150000 $2737500 COMMON STOCK FILE 33352542
DEC 22 BR
S-3 MPLRKEL CORP 4521 HIGHWOODS PARKWAY GLEN ALLEN VA 23060 804 747-
0136
475000000 $475000000 STRAIGHT BONDS FILE 33352544 DEC
22BR
NEWS DIGEST December 29 2000
S-8 DM1 FURNITURE INC ONE OXMOOR PL 101 BULLITT LN LOUISVILLE KY
40222
502 4264351 100000 $200000 COMMON STOCK FILE 33352546
DEC 22 BR
S-B HLM DESIGN INC 121 TRADE ST STE 2950 CHARLOTTE NC 28202