UNITED STATES SECURITIES AND EXCHANGE COMMISSION

SEC ADMIN RELEASES 33-9708; 34-74120; IA RELEASE 40-4005; / JANUARY 23, 2015: THE SECURITIES AND EXCHANGE COMMISSION DEEMS IT APPROPRIATE AND IN THE PUBLIC INTEREST THAT CEASE-AND-DESIST PROCEEDINGS BE, AND HEREBY ARE, INSTITUTED AGAINST THE RESPONDENT ALONG WITH OTHER RESPONDENTS. AFTER AN INVESTIGATION, THE DIVISION OF ENFORCEMENT ALLEGES THAT: BETWEEN 2006 AND 2012, A CORPORATION AND ITS PRINCIPAL OFFICERS RAISED AT LEAST $17.4 MILLION FROM APPROXIMATELY 440 INVESTORS NATIONWIDE THROUGH A SERIES OF FRAUDULENT, UNREGISTERED OFFERINGS OF STOCK AND BONDS. THE CORPORATION REPRESENTED THAT IT WAS PRIMARILY ENGAGED IN THE BUSINESS OF BUYING AND SELLING FRACTIONAL INTERESTS IN OIL AND GAS PRODUCING PROPERTIES AND ALSO ENGAGED IN COMMODITIES TRADING IN THE FUTURES MARKET. THE CORPORATION USED A PORTION OF THE INVESTOR FUNDS TO BUY FRACTIONAL INTERESTS IN OIL AND GAS WELLS, CATTLE, AND A HYDROGEN DEVICE THAT PURPORTED TO INCREASE GAS MILEAGE ON VEHICLES, TRADE COMMODITIES CONTRACTS, AND INVEST IN REAL ESTATE. THE CORPORATION AND ITS PRINCIPAL OFFICERS MADE MATERIAL MISREPRESENTATIONS AND OMISSIONS ABOUT THE CORPORATION'S FINANCIAL PERFORMANCE AND USE OF INDUSTRY EXPERTS AND TECHNOLOGIES IN THE CORPORATION'S OFFERING MATERIAL AND CORRESPONDENCE TO INVESTORS. ITS PRINCIPAL OFFICERS ALSO TOUTED THEIR AFFILIATION WITH A CHARITY ORGANIZATION IN THE CORPORATION'S OFFERING MATERIALS BUT THAT CHARITY NEVER HAD ANY SUBSTANTIVE CHARITABLE ACTIVITIES. STARTING IN 2009, THE CORPORATION ALSO HIRED UNREGISTERED SALES AGENTS TO SELL ITS BONDS PAYING THEM COMMISSIONS OF 5 PERCENT OR 10 PERCENT OF THE INVESTOR PROCEEDS. THE CORPORATION AND A PRINCIPAL EMPLOYED THE UNREGISTERED SALES AGENTS TO RAISE MONEY FOR THE CORPORATION EVEN AFTER RECEIVING AN EMAIL AND OTHER CORRESPONDENCE FROM THE CORPORATION'S OUTSIDE COUNSEL DETAILING THE LIMITS ON THE CORPORATION'S USE OF UNREGISTERED SALES AGENTS. THE CORPORATION'S TOP GROSSING INDEPENDENT SALES AGENTS INCLUDED KARASIK, AND HIS LIMITED LIABILITY PARTNERSHIP. COLLECTIVELY, THEY EARNED APPROXIMATELY $985,000 IN TRANSACTION-BASED COMPENSATION IN CONNECTION WITH THEIR SALES ACTIVITIES. AS A RESULT OF THE CONDUCT, KARASIK WILLFULLY VIOLATED SECTION 15(A) OF THE EXCHANGE ACT.

Order

Bar (Permanent)

see comment

7/28/2015

Cease and Desist

Civil and Administrative Penalty(ies)/Fine(s)

$3,500.00

Disgorgement

$11,300.00

disgorgement plus prejudgment interest

FINRA

WITHOUT ADMITTING OR DENYING THE FINDINGS, KARASIK CONSENTED TO THE SANCTION AND TO THE ENTRY OF FINDINGS THAT HE PARTICIPATED IN PRIVATE SECURITIES TRANSACTIONS WITH THE SALES OF A FLORIDA-BASED ENERGY COMPANY'S BONDS WITHOUT PROVIDING PRIOR WRITTEN NOTICE TO THE MEMBER FIRMS WITH WHICH HE WAS REGISTERED WHEN HE SOLD THOSE BONDS. THE FINDINGS STATED THAT KARASIK FALSELY ANSWERED "NO" ON ANNUAL BUSINESS QUESTIONNAIRES TO THE QUESTION ASKING WHETHER HE HAD ENGAGED IN PRIVATE SECURITIES TRANSACTIONS WITHOUT RECEIVING PRIOR WRITTEN APPROVAL. KARASIK ALSO FAILED TO PROVIDE ACCURATE INFORMATION TO A FIRM REGARDING AN INDEPENDENT FINANCIAL SERVICES BUSINESS, WHERE HE SERVED AS A PARTNER, AND CONCEALED ITS INVESTMENT-RELATED NATURE. KARASIK AND HIS PARTNER IN THE BUSINESS PARTICIPATED IN THE SALE OF MORE THAN $3.2 MILLION OF THE COMPANY'S BONDS TO INVESTORS, SOME OF WHOM WERE ALSO HIS BROKERAGE CUSTOMERS. KARASIK WAS COMPENSATED FOR HIS ROLE IN THESE SALES THROUGH THE PAYMENT OF A FINDER'S FEE, WHICH WAS PAID TO THE BUSINESS. KARASIK PERSONALLY WITHDREW MOST OF THE BOND COMPANY'S PROCEEDS DEPOSITED INTO HIS OUTSIDE BUSINESS BANK ACCOUNT - MORE THAN $115,000 - BY WRITING CHECKS TO HIMSELF, OFTEN A DAY OR TWO AFTER THE DEPOSIT BY THE COMPANY. THE FINDINGS ALSO STATED THAT KARASIK PROVIDED FALSE INFORMATION TO HIS FIRM FOR FORM U4 AMENDMENT, CONCERNING CUSTOMERS' ALLEGATION THAT HE MADE UNSUITABLE RECOMMENDATIONS OF THE COMPANY'S BOND AND ENGAGED IN PRIVATE SECURITIES TRANSACTIONS. KARASIK PROVIDED FALSE INFORMATION TO FINRA IN REQUEST FOR A SIGNED STATEMENT FROM HIM ADDRESSING ALLEGATIONS BY INDIVIDUALS OF UNSUITABLE RECOMMENDATIONS, MISREPRESENTATIONS, AND NEGLIGENCE IN THE SALE OF THE BONDS. IN FACT, KARASIK HAD RECOMMENDED THE PURCHASE OF THE BONDS, TO THE CUSTOMERS AND TO THE INDIVIDUALS, AND HAD BEEN PAID FINDER'S FEES IN CONNECTION WITH THE TRANSACTIONS. KARASIK ALSO PROVIDED FALSE TESTIMONY TO FINRA ABOUT HIS ROLE IN THE SALES OF THE COMPANY'S BONDS AND HIS RECEIPT OF COMPENSATION FROM THE COMPANY.

Acceptance, Waiver & Consent(AWC)

Bar (Permanent)

All Capacities

7/8/2014

MARYLAND

SOLD DEG BONDS THAT WERE NOT APPORVED BY BROKER DEALER. DID NOT DISCLOSE RISKS OR COMMISSIONS. LIED ON U4 ABOUT IT.

Consent

Bar (Permanent)

ALL

PERMANENT

4/1/2014

Cease and Desist

Monetary Penalty other than Fines

Revocation

$1,499,315 FINE WAS WAIVED.