1999-09-30 sec-litreleases litigation_release 65 KB 3,217 chars

SEC v. Jeffrey S. Richman; and Stephen P. Erlich, No. LR-16320, Southern District of Florida (Sept. 30, 1999) — Press Release

raw: Jeffrey S. Richman and Stephen P. Erlich

Jeffrey S. Richman and Stephen P. Erlich, No. LR-16320 (Sept. 30, 1999)

Caption: SEC v. Jeffrey S. Richman, et al.

summary

The SEC sued Jeffrey S. Richman and Stephen P. Erlich for operating boiler-room telemarketing schemes that sold over $5.5 million in unregistered Friendly Power securities to elderly investors through fraudulent misrepresentations, with Richman settling by paying $398,966.80 in disgorgement (partially via asset surrender) and Erlich facing active litigation for injunctions, disgorgement, and penalties.

paragraph

The SEC alleged that Jeffrey S. Richman and Stephen P. Erlich operated boiler-room operations selling over $5.5 million in unregistered Friendly Power securities to unsophisticated, primarily elderly investors between November 1997 and July 1998, using deceptive claims about risk, profitability, and urgency. Richman received $398,966.80 in ill-gotten gains and settled by consenting to a permanent injunction and disgorgement, surrendering over $131,000 in assets, with the remainder waived due to financial hardship and no civil penalties imposed. Erlich earned over $325,000 in commissions in eight months and remains subject to active SEC litigation seeking disgorgement, civil penalties, and permanent injunctive relief for violations of Sections 5(a), 5(c), 17(a) of the Securities Act and Sections 10(b), 15(a) of the Exchange Act and Rule 10b-5.

narrative

The SEC filed a civil complaint against Jeffrey S. Richman and Stephen P. Erlich for operating boiler-room telemarketing operations that sold over $5.5 million in unregistered securities of Friendly Power Company to elderly and unsophisticated investors between November 1997 and July 1998. Both men, through their respective companies Rich Management and LGS, Inc., allegedly made egregious misrepresentations regarding the investment’s risk, profitability, and the need for immediate action, violating Sections 5(a), 5(c), and 17(a) of the Securities Act and Sections 10(b), 15(a) of the Exchange Act and Rule 10b-5. Erlich earned more than $325,000 in commissions in just eight months, while Richman received $398,966.80 in ill-gotten gains. Richman settled without admitting or denying the allegations, agreeing to a permanent injunction and full disgorgement of $398,966.80, partially satisfied by relinquishing over $131,000 in assets held by Rich Holdings, Inc., with the remainder waived due to demonstrated financial inability to pay and no civil penalties sought. The SEC’s case against Erlich remains active, seeking permanent injunctive relief, disgorgement of his ill-gotten gains, and civil penalties. The litigation followed a prior court order in the same case requiring Friendly Power’s principals to pay $2.6 million in disgorgement and penalties. The SEC emphasized the predatory nature of the scheme, targeting retirement funds of vulnerable individuals through high-pressure, fraudulent telemarketing tactics.

Enriched metadata

Scheme: boiler-room (100%)
Court: Southern District of Florida
Outcome: settled
Disgorgement: $398,967
Victim loss: $325,000
Entity: Jeffrey S. Richman and Stephen P. Erlich

Classified boiler-room(confidence 100%). EDGAR detection: forms Form D· recall 50% / precision 4%. detection rule →

Extracted insights

Dollar amounts 5

$5.50M $5.5 million $1M–$10M
$2.60M $2.6 million $1M–$10M
$399K $398,966 $100K–$1M
$325K $325,000 $100K–$1M
$131K $131,000 $100K–$1M

Entities 9

company assets held by rich holdings, inc.
person federal securities laws
company fraudulent telemarketing of unregistered securities
person jeffrey s. richman
person judge james l. king
company rich management corp. and lgs, inc.
agency sec action
agency Securities and Exchange Commission
person stephen p. erlich

Triples 11

SEC Filed Suit Against Jeffrey S. Richman and Stephen P. Erlich
Jeffrey S. Richman and Stephen P. Erlich Participated In Fraudulent Telemarketing of Unregistered Securities
Judge James L. King Ordered Principals of Friendly Power to Pay $2.6 Million
Jeffrey S. Richman and Stephen P. Erlich Operated Boiler-Room Telemarketers
Rich Management Corp. and LGS, Inc. Raised Over $5.5 Million
Jeffrey S. Richman and Stephen P. Erlich Made Misrepresentations To Investors
Stephen P. Erlich Received Commissions of More Than $325,000
Jeffrey S. Richman and Stephen P. Erlich Violated Federal Securities Laws
Jeffrey S. Richman Agreed to Settle SEC Action
Jeffrey S. Richman Will Pay Disgorgement of $398,966.80
Jeffrey S. Richman Will Relinquish Assets Held by Rich Holdings, Inc.

View original SEC litigation releasesec.gov

Extracted body text (3,217c)

SECURITIES AND EXCHANGE COMMISSION Litigation Release No. 16320 / September 30, 1999 SEC Files Suit Against Two Sales Agents in Friendly Power Case Securities and Exchange Commission v. Jeffrey S. Richman and Stephen P. Erlich, Case No. 99-2620-CIV-KING (S.D. Fla.) The Securities and Exchange Commission (SEC) announced that on September 29, 1999, it filed a civil complaint against two individuals who it alleges participated in the fraudulent telemarketing of unregistered securities in Friendly Power Company (Friendly Power). The SEC's lawsuit comes less than five months after United States District Judge James L. King ordered the principals of Friendly Power to pay $2.6 million in disgorgement and penalties for their roles in the Friendly Power scheme. The SEC alleges that Jeffrey S. Richman (Richman) of Coral Springs, Florida, and Stephen P. Erlich (Erlich) of Hollywood, Florida, operated boiler-room telemarketers that sold unregistered Friendly Power securities to the public between November 1997 and July 1998. According to the SEC's complaint, Richman's boiler-room, Miami Lakes, Fla.-based Rich Management Corp. (Rich Management), and Erlich's boiler-room, LGS, Inc., also based in Miami Lakes, raised over $5.5 million by selling the Friendly Power securities to investors, many of whom were elderly and unsophisticated individuals that used retirement funds to pay for their investments. The SEC alleges that in connection with those sales, Richman and Erlich made, or instructed sales agents they employed to make, egregious misrepresentations to investors regarding, among other things, Friendly Power's risk, profitability, the need to invest quickly and investors' returns. The SEC alleges that in return for selling the Friendly Power securities, Erlich received commissions of more than $325,000 in just eight months. The SEC alleges that through their conduct, Richman and Erlich violated the securities and broker-dealer registration provisions and the antifraud provisions of the federal securities laws. Specifically, the SEC alleges that Richman and Erlich violated 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 and Rule 10b-5 thereunder. The SEC's action seeks, among other things, permanent injunctive relief, disgorgement and penalties against Richman and Erlich. The SEC also announced that simultaneously with the filing of its complaint, Richman agreed to settle the action against him by consenting, without admitting or denying any of the allegations contained in the SEC's complaint, to the entry of a permanent injunction from future securities law violations. Richman will also pay disgorgement of $398,966.80 in ill-gotten gains. Under the terms of the settlement, Richman will partially satisfy payment of the disgorgement amount by relinquishing possession of all bank accounts and other assets held by Rich Holdings, Inc., a company that Richman established to receive his commission payments from Rich Management. Those assets amount to more than $131,000. The remaining disgorgement amount will be waived, and the SEC will not seek civil penalties, due to Richman's financial inability to pay.

OCR text (3,217c · plain-text · 99% conf)