UNITED STATES OF AMERICA
Before the
SECURITIES AND EXCHANGE COMMISSION
SECURITIES EXCHANGE ACT OF 1934
Release No. 37167 / May 3, 1996
ADMINISTRATIVE PROCEEDING
File No. 3-8997
------------------------------
: ORDER INSTITUTING PUBLIC
In the Matter of : ADMINISTRATIVE PROCEEDINGS
: PURSUANT TO SECTIONS 15(b)
LAWRENCE R. HARTZ; : AND 19(h) OF THE SECURITIES
and STEPHEN S. KNEPP : EXCHANGE ACT OF 1934,
: MAKING FINDINGS AND
: IMPOSING REMEDIAL SANCTIONS
:
-------------------------------
I.
The Securities and Exchange Commission ("Commission") deems
it appropriate and in the public interest to institute public
administrative proceedings pursuant to Sections 15(b) and 19(h)
of the Securities Exchange Act of 1934 ("Exchange Act") against
Respondents Lawrence R. Hartz ("Hartz") and Stephen S. Knepp
("Knepp").
II.
In anticipation of the institution of these proceedings,
Respondents Hartz and Knepp have submitted Offers of Settlement
("Offers") to the Commission, which the Commission has determined
to accept. Solely for the purpose of this proceeding and any
other proceeding brought by or on behalf of the Commission, or in
which the Commission is a party, and without admitting or denying
the findings contained herein, except as to the jurisdiction of
the Commission over the Respondents and over the subject matter
of this proceeding and with respect to Respondent Hartz as to
Section III.1. and III.4., and with respect to Respondent Knepp
as to Section III.2. and III. 3., which are admitted, Respondents
Hartz and Knepp by their Offers consent to the entry of findings
and remedial sanctions set forth below.
Accordingly, IT IS ORDERED that proceedings pursuant to
Sections 15(b) and 19(h) of the Exchange Act be, and they hereby
are, instituted.
III.
On the basis of this Order and the Offers submitted by
Respondents Hartz and Knepp, the Commission finds -[1]-
that:
1. During the period from in or about January 1993 until
July 1993, Respondent Hartz was associated as a Regional Vice-
President and sales agent with Premier Financial Services, Inc.
("Premier Financial"), an unregistered broker-dealer during all
relevant periods.
2. During the period from in or about January 1993 until
July 1993, Respondent Knepp was associated as an Area Vice-
President and sales agent with Premier Financial, an unregistered
broker-dealer during all relevant periods.
3. During the period from in or about November 1991 until
May 1993, Respondent Knepp was associated as a registered
representative with Chubb Securities Corporation, a broker-dealer
registered with the Commission during all relevant periods.
4. On October 17, 1995, a final judgment of permanent
injunction by consent was entered against Respondent Hartz in the
United States District Court for the Middle District of Florida,
permanently enjoining Respondent Hartz from further violations of
Sections 5(a), 5(c) and 17(a) of the Securities Act of 1933
("Securities Act"), Section 10(b) of the Exchange Act and Rule
10b-5 promulgated thereunder. Securities and Exchange Commission
v. Jon D. Aldrich, et al., USDC, M.D. Fla., Civil Action No. 94-
1737-CIV-T-17A.
5. The Commission's complaint, filed in the matter
described in Section III.4, above, alleges, among other things,
that while Respondent Hartz was associated with Premier
Financial, an unregistered broker-dealer, during a period from at
least January 1993 and continuing through at least July 1993,
Hartz offered and sold to the public certain securities, namely
"Capital Note Certificates" (the "Certificates"), issued by
Premier Benefit Capital Trust ("Premier Trust"), when no
registration statement was filed or in effect as to said
securities pursuant to the Securities Act. The complaint further
alleges that from at least January 1993 and continuing through at
least July 1993, Respondent Hartz, while actively offering and
---------FOOTNOTES----------
-[1]- The findings herein are made pursuant to
Respondents Hartz's and Knepp's Offers of
Settlement and are not binding on any other person
or entity named as a respondent in this or any
other proceeding.
==========================================START OF PAGE 2======
selling to investors and prospective investors the Certificates
issued by Premier Trust, distributed various offering materials
to investors and prospective investors which misrepresented and
omitted material facts regarding Premier Trust, its operations,
its officers and trustees, the risks involved in the investment,
and the use of investors' funds obtained from the sale of the
Certificates.
6. During the period from at least March 1993 and
continuing through at least June 1993, Respondent Knepp willfully
violated Sections 5(a) and 5(c) of the Securities Act, in that
he, directly and indirectly, made use of the means and
instruments of transportation and communication in interstate
commerce and of the mails, to offer to sell and to sell to
members of the public certain securities, namely the Certificates
issued by Premier Trust, when no registration statement was filed
or in effect as to said securities pursuant to the Securities
Act.
7. During the period from at least March 1993 and
continuing through at least June 1993, Respondent Knepp willfully
violated Section 10(b) of the Exchange Act and Rule 10b-5
thereunder, in that, in connection with the purchase and sale of
certain securities, namely the Certificates issued by Premier
Trust, by use of the means and instrumentalities of interstate
commerce and by use of the mails, Respondent Knepp, directly or
indirectly, employed devices, schemes, and artifices to defraud;
made untrue statements of material facts and omitted to state
material facts necessary in order to make the statements made, in
the light of the circumstances under which they were made, not
misleading; and engaged in acts, practices and a course of
business which would and did operate as a fraud and deceit. As
part of the aforesaid conduct, Respondent Knepp distributed
various offering brochures, advertisements and other offering
materials, and made verbal statements to investors and
prospective investors that misrepresented and omitted material
facts regarding Premier Trust, its operations, its officers and
trustees, the risks involved in the investment, and the use of
investors' funds obtained from the sale of the Certificates.
8. During the period from at least March 1993 and
continuing through at least June 1993, Respondent Knepp willfully
violated Section 17(a)(1) of the Securities Act, in that, in the
offer and sale of certain securities, namely the Certificates
issued by Premier Trust, by use of the means and instruments of
transportation and communication in interstate commerce and by
use of the mails, Respondent Knepp, directly and indirectly,
employed devices, schemes and artifices to defraud. As part of
the aforesaid conduct, Respondent Knepp engaged in acts and
practices described in Section III.7., above.
9. During the period from at least March 1993 and
==========================================START OF PAGE 3======
continuing through at least June 1993, Respondent Knepp willfully
violated Sections 17(a)(2) and 17(a)(3) of the Securities Act, in
that, in the offer and sale of certain securities, namely the
Certificates issued by Premier Trust, by use of the means and
instruments of transportation and communication in interstate
commerce and by use of the mails, Respondent Knepp, directly and
indirectly, obtained money or property by means of untrue
statements of material facts and omissions to state material
facts necessary in order to make the statements made, in the
light of the circumstances under which they were made, not
misleading; and engaged in transactions, practices and a course
of business which would and did operate as a fraud and deceit
upon the purchasers and prospective purchasers of such
securities. As part of the aforesaid conduct, Respondent Knepp
engaged in acts and practices described in Section III.7., above.
IV.
Based on the foregoing, the Commission deems it appropriate
and in the public interest to impose the sanctions specified by
Respondents Hartz and Knepp in their Offers.
Accordingly, IT IS ORDERED THAT:
1. Respondent Hartz be, and he hereby is, barred from
association with any broker, dealer, municipal securities dealer,
investment company or investment adviser provided, however, that
after a period of three (3) years subsequent to the entry of this
Order he has a right to apply to the appropriate self-regulatory
organization or, where there is none, to the Commission for
permission to become so associated.
2. Respondent Knepp be, and he hereby is, barred from
association with any, broker, dealer, municipal securities
dealer, investment company or investment adviser.
By the Commission.
Jonathan G. Katz
Secretary
==========================================START OF PAGE 4======