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Home Previous Page SECURITIES AND EXCHANGE COMMISSION LITIGATION RELEASE NO. 17179 / OCTOBER 11, 2001 SECURITIES EXCHANGE COMMISSION V. RAMOIL MANAGEMENT LTD., ET AL., United States District Court for the Southern District of New York Civil Action No. 01 CV 9057 (October 11, 2001). SEC CHARGES FOURTEEN ENTITIES AND INDIVIDUALS, INCLUDING A LAWYER AND AN ACCOUNTANT, IN $3.3 MILLION MARKET MANIPULATION SCHEME The Securities and Exchange Commission announced today that it filed a complaint in the federal District Court for the Southern District of New York against: Ramoil Management Ltd. ("RAMO"), a Las Vegas, Nevada based company; Rodoljub "Misha" Radulovic, RAMO's former CEO; Alexander Taflevich, RAMO's former president; Edward A. Durante, a stock promoter residing in Gardiner, New York; Trevor Koenig, a former broker residing in British Columbia, Canada; Thomas Hauke, a Certified Public Accountant ("CPA") and partner at New York accounting firm Van Buren & Hauke; Moneesh K. Bakshi, an attorney residing in Middletown, New York; and certain foreign entities controlled by Durante. The Commission's Complaint alleges that from December 1999 through July 2000, Defendants engaged in a market manipulation scheme which drove RAMO's stock price from $7.0625 per share to an all-time high of $20.00 per share. The complaint alleges that Durante dumped 1.8 million RAMO shares into the market for profits of approximately $3.3 million during the course of the scheme. The complaint also alleges as follows:

In December 1999, RAMO entered into a purported stock promotion agreement with Carib Securities, an entity controlled by Durante. Pursuant to this agreement, RAMO delivered over one million shares to Durantecontrolled nominee accounts at Union Securities, Ltd., a Canadian broker-dealer. Durante then instructed Koenig, his broker for these accounts, to execute a series of manipulative public trades to create artificial price increases in RAMO stock. Radulovic and Taflevich made false public statements through press releases, SEC filings, and the Internet concerning, among other things: RAMO's purported attempts to become listed on the NASDAQ; the claim that RAMO would obtain revenues of $1.6 billion and profits of $331

million by the year 2004; and a Letter of Intent RAMO supposedly entered into to purchase 45% of a Swiss Finance Company valued at $150 million. In fact: RAMO had been told by the NASD that its NASDAQ Small Cap listing application was inadequate; RAMO's profit and revenue predictions were completely baseless; and the so-called Letter of Intent was nothing more than a one paragraph letter from Radulovic expressing a vague interest in the possibility of merging with the Swiss company. In April 2000, RAMO filed a Form 10-K for its fiscal year ending December 31, 2000. The Form 10-K also contained an audit opinion that was purportedly signed by "Charles R. Eisenstein, C.P.A." This audit opinion was a forgery prepared by Hauke, who had been paid $50,000 by Durante. No audit was ever actually done and Eisenstein never did any work for RAMO. Bakshi prepared the Form 10-K and several of RAMO's other fraudulent SEC filings. The Commission's complaint charges all of the defendants with violations of the antifraud provisions of the federal securities laws, specifically Section 17(a) of the Securities Act of 1933 ("Securities Act"), Section 10(b) of the Securities Exchange Act of 1934 ("Exchange Act"), and Rule 10b-5 thereunder. In addition, the complaint charges several of the defendants with other violations, including Sections 5(a) and 5(c) of the Securities Act, Section 15(d) of the Exchange Act, and Rules 15d-1 and 15d-13 thereunder. The Commission seeks injunctions prohibiting future violations of the securities laws, disgorgement, and civil penalties. The Commission is also seeking an order barring Radulovic and Taflevich from serving as officers or directors of any public company. The Commission acknowledges the valuable assistance of the United States Attorney's Office for the Southern District of New York, the FBI, NASD Regulation, Inc., and the British Columbia Securities Commission in

connection with this matter. http://www.sec.gov/litigation/litreleases/lr17179.htm Home Previous Page Modified: 10/12/2001

Case 1:01-cv-09057-SC Document 54 Filed 10/09/07 Page 1 of 6 UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK -----------------------------------------------------------------------------X SECURITIES AND EXCHANGE COMMISSION, v. Plaintiffs, RAMOIL MANAGEMENT, LTD., d/b/a JUMP AUTOMOTIVE EXPERTS, INC.; EDWARD A. DURANTE, a/k/a ED SIMMONS; BERKSHIRE CAPITAL PARTNERS, INC.; DOTTENHOFF FINANCIAL LTD.; GALTON SCOTT & GOLETT INC.; COMMONWEALTH ASSOCIATES, LTD.; PROVIDENT PARTNERS, LTD.; FAIRMONT CONSULTING, INC.; ZIMENN IMPORTING AND EXPORTING, INC.; TREVOR KOENIG; RODOLJUB MISHA RADULOVIC; ALEXANDER TAFLEVICH; THOMAS HAUKE; MONEESH K. BAKSHI 01 CIV 9057 (SC) ------------------------------------------------------------------------------X DEFENDANT MONEESH BAKSHI S PROPOSED FINDINGS OF LAW AND FACT In accordance with the Court s Order dated September 18, 2007, Defendant Moneesh K. Bakshi ( Bakshi ) submits the following proposed conclusions of law and findings of fact. PROPOSED CONCLUSIONS OF LAW 1. To prove that Bakshi violated Section 17(a) of the Securities Act, Section 10b of the Exchange Act, and Rule 10-b, the Commission must prove that, by... the use of any means or instrumentality of interstate commerce, Bakshi knowingly or recklessly made a materially false statement or omission in connection with the purchase or sale of a security (Section 10(b)), on in the offer or sale of a security (Section 17(a)). See 15 U.S.C. 78j(b) &

Case 1:01-cv-09057-SC Document 54 Filed 10/09/07 Page 2 of 6 77q(a); 17 C.F.R. 240.10B-5; see also SEC v. First Jersey Secs, 101 F.3d 1450, 1467 (2d Cir. 1996). 2. The Commission must also establish scienter, which is a mental state embracing [an] intent to deceive, manipulate, or defraud. Aaron v. SEC, 446 U.S. 680, 686 n.5 (1980). Scienter may be established by facts that constitute strong circumstantial evidence of conscious misbehavior or recklessness. Stevenman v. Alias Research, 174 F.3d 79, 84 (2d Cir. 1998); see also SEC v. McNulty, 137 F.3d 732, 741 (2d Cir. 1998). An inference of... recklessness... may in some cases [arise from] [a]n egregious refusal to see the obvious, or to investigate the doubtful. Chill v. GE, 101 F.3d 263, 269 (2d Cir. 1996) (quotation marks omitted). Scienter may also be established by showing knowledge of facts or access to information contradicting... public statements. Novak v. Kasaks, 216 F.3d 300, 308 (2d Cir. 2000). 3. As for materiality, a statement is material if there is a substantial likelihood that a reasonable investor would consider the information conveyed by the statement important in making an investment decision. See Basic Inc., v. Levinson, 485 U.S. 224, 231-32 (1988); SEC v. Mayhew, 121 F.3d 44, 51 (2d Cir. 1997). Further, the information does not have to be of a type that necessarily would cause an investor to change an investment decision; rather, information is material simply if the investor would have viewed it as significantly altering the total mix of information available. Mayhew, 121 F.3d at 52. 4. A statements is made in connection with the purchase or sale of a security if the statements somehow touches upon or has some nexus with any securities transaction. Rana Research, Inc., 8 F.3d at 1362. And, [w]here the fraud alleged involves public dissemination in a document such as a press release, annual report, investment prospectus or 2

Case 1:01-cv-09057-SC Document 54 Filed 10/09/07 Page 3 of 6 other such document on which an investor would presumably rely, the in connection with requirement is generally met by proof of the means of dissemination and the materiality of the misrepresentation or omission. Id. 5. Finally, a statement is made by the use of any means or instrumentality of interstate commerce if a form of interstate communication had been used simply in some phase of the transaction, which need not be the part in which the fraud occur[red]. Richter v. Achs, 962 F. Supp. 31, 33 (S.D.N.Y. 1997) (quotation marks omitted). 6. Scienter is also required to prove that Bakshi aided and abetted Ramoil s violations of Section 15(d) of the Exchange Act and Rule 15d-1 thereunder. Indeed, to establish aiding and abetting liability (under Section 20(e) of the Exchange Act), the Commission must show that: (1) the defendant acted knowingly; (2) the defendant provided substantial assistance; and (3) a primary violation of the federal securities laws occurred. See SEC v. Moskowitz, 1998 WL 524903, at *2 (S.D.N.Y. 1998); see also Armstrong v. McAlpin, 699 F.2d 79, 91 (2d Cir. 1983). 7. To establish a prima facie case of violating Section 5 of the Securities Act, the Commission must prove that: (1) the defendant offered to sell or sold a security or played a necessary part in such sale; (2) the defendant used the mails or interstate means to sell or offer the security; and (3) no registration statement was filed or was in effect as to the security. See Hill York Corp. v. American Int l Fanchises, Inc., 448 F.2d 680, 686 (5 th Cir. 1971), cited by SEC v. Hansen, [1984 Transfer Binder] Fed. Sec. L. Rep. (CCH), para. 91, 426 at 92,115 (S.D.N.Y. 1984). If the Commission establishes a prima facie case, the burden of proof shifts to the defendant to show that an exemption or safe harbor from registration was available for the offer or sale of the security. See SEC v. Ralston Purina Co., 346 U.S. 119, 126 (1953). 3

Case 1:01-cv-09057-SC Document 54 Filed 10/09/07 Page 4 of 6 8. Persons who are liable for violations of Section 5 of the Securities Act include issuers of securities, underwriters of securities, and persons who control or are controlled by the issuers of securities. Securities and Exchange Commission v. Cavanaugh, 1 F. Supp. 2d 337, 362-63 (S.D.N.Y. 1998). Those who aid and abet an issuer or underwriter s Section 5 violation may be liable if they play an indispensable role in the sale of the securities at issue, by engaging in steps necessary to the distribution of the securities which are more than de minimus. Securities and Exchange Commission v. Universal Major Industries Corp., et al., 846 F.2d 1044, 1046 (2d Cir. 1976); Securities and Exchange Commission v. Murphy, 626 F.2d 633, 652 (9 th Cir. 1980); Securities and Exchange Commission v. Softpoint, 958 F. Supp. 846, 860 (S.D.N.Y. 1997). Section 5 liability, therefore, extends beyond those who sell stock to all necessary participants in a sale of unregistered stock. However, an individual s role in the sale must be a significant one before Section 5 liability will attach. Securities and Exchange Commission v. Phan, --- F.3d ---, No. 05-55269, 2007 WL 2429365, at * 8 (9 Cir. Aug. 29, 2007). A significant role has been defined to include one who is both a necessary participant and substantial factor in the sales transaction. Id.; Securities and Exchange Commission v. th Holschuh, 694 F.2d 130, 140 n. 14 (7 Cir. 1982) required for liability in SEC enforcement actions). PROPOSED FINDINGS OF FACT As To Claims Three and Four 4 th (necessary and substantial participation 1. With regard to RAMO s March 2000 S-8 Forms, based on information provided by others, defendant Bakshi drafted the forms, which were approved unanimously by RAMO s Board of Directors, signed by defendants Radulovic and Taflevich and then forwarded to the company s Edgar agent for edgarizing and filing with the Commission. While the

Case 1:01-cv-09057-SC Document 54 Filed 10/09/07 Page 5 of 6 Commission now alleges that the forms contained materially misleading statements to the public concerning, among other things, consulting agreements purportedly entered into by RAMO, defendant Bakshi neither knowingly nor recklessly made any fraudulent statements. 2. Similarly, defendant Bakshi neither recklessly nor knowingly made materially misleading statements to the public with regard to press releases, Internet profiles and/or Commission filings that contained statements about: RAMO s attempts to be listed on the NASDAQ Small Cap market; profit and revenue predictions concerning RAMO s construction projects in the UAE; and an audit opinion concerning RAMO s 1999 year-end financial statements. Indeed, defendant Bakshi simply compiled various documents that had been drafted by others and approved by defendant Radulovic into RAMO s 1999 Form 10-K. 3. Defendant Bakshi also included in the Form 10-K an audit opinion signed by Charles R. Eisenstein, C.P.A., which had been forwarded to Bakshi by defendant Hauke. Again, defendant Bakshi neither recklessly nor knowingly included any materially misleading statements in the Form 10-K, as he did not know (nor could have reasonably been expected to know) that the audit may have been fraudulent. As To Claim Five 4. Defendant Bakshi did not violate Sections 5(a) and 5(c) of the Securities Act because, Bakshi s role in Durante s purported sale of the unregistered shares through Berkshire and Galton was de miminus. Bakshi s role in the issuance of opinion letters regarding the S-8 transactions was not a necessary and/or substantial factor in Durante s sales transactions. As To Claim Eight 5. After receiving from defendant Hauke an audit opinion signed by Charles R. Eisenstein, C.P.A., defendant Bakshi incorporated the opinion into RAMO s 1999 Form 10-K. 5

Case 1:01-cv-09057-SC Document 54 Filed 10/09/07 Page 6 of 6 In so doing, defendant Bakshi neither knowingly nor recklessly caused fraudulent material to be included in the Form 10-K. Indeed, Bakshi had no reason to know (nor could be expected reasonably to have known) that the audit opinion may have been fraudulent. Dated: New York, New York October 5, 2007 Respectfully submitted, SERCARZ & RIOPELLE, LLP By: /S/ Roland G. Riopelle, Esq. (RR-2950) Julia L. Gatto, Esq. (JG -1653) 152 W. 57 th Street, Suite 24C New York, NY 10019 (212) 586-4900 Attorneys for Defendant Moneesh Bakshi 6