SEC Takes Action Against PA Mortgage Firm Principals

The Securities and Exchange Commission (SEC) announced it recently barred Raymond P. Sobieralski, John A. D’Onofrio, Robert C. Walters, Dennis J. Oslosky and Jason J. Riley from associating with any broker or dealer, and from participating in any offering of a penny stock.

The individuals consented to the SEC’s orders of injunction as part of the settlement with the U.S. District Court in Western Pennsylvania. On Aug. 20, the Court entered a final order to permanently enjoin the National Institute Companies of America Inc. (NICA), D’Onofrio, Walters, Oslosky, and Riley from violations of certain provisions of the federal securities laws. In December 2001, the Court entered an order, by default, to enjoin Sobieralski from such violations, the SEC reported.

Sobieralski was chief executive officer and the majority shareholder of the mortgage brokerage Mortgage Bankers Holding Corp., a predecessor company of NICA of Washington, Penn., according to the SEC. D’Onofrio is an attorney and was an officer and director of Mortgage Bankers, as well as president of the company’s subsidiary, Commonwealth Capital Investment Corp. Sobieralski and D’Onofrio enlisted Walters, Oslosky and Riley to solicit investors for three fraudulent securities offerings.

The Court orders barred D’Onofrio from serving as an officer or director of a public company. Also, the Court set disgorgement against NICA, D’Onofrio, Sobieralski, Walters, Oslosky, Riley, respectively, in the amounts of $1,600,000, $287,000, $198,000, $105,000, $38,875, $23,000, in each instance together with prejudgment interest.

Based on demonstrated inability to pay, the Court waived payment of all but $75,000 of disgorgement and prejudgment interest owed by D’Onofrio and waived the whole payment for Riley and Sobieralski. Based on that same demonstration, the Court did not impose any civil penalties on either of the individuals and all consented to the entry of these judgments.

The Commission’s complaint filed in June 2000 alleges that, through Sobieralski and D’Onofrio, Mortgage Bankers devised a fraudulent scheme to raise money to apparently provide working capital for the company. The scheme involved selling unregistered shares of Mortgage Bankers’ common and preferred stock to investors, and also unregistered subordinated notes of Commonwealth Capital. In addition to soliciting and selling these investments, Sobieralski and D’Onofrio enlisted Walters, Oslosky and Riley to solicit investors, many of whom were elderly and retired, the SEC reported. Additionally, all individuals, but Riley, violated the registration provisions of the Securities Exchange Act of 1934 by failing to register as brokers or dealers prior to offering and selling the securities.

The defendants allegedly made material misrepresentations and omissions regarding things such as the risk of the investment, the financial condition of the issuers, and the use of proceeds. From August 1996 through August 1998, the defendants raised more than $2.3 million from approximately 250 investors in Western Pennsylvania and elsewhere. About $650,000 of the funds raised were used to benefit themselves, and most of the remaining portion was used to pay salaries, other business and personal expenses, and existing investors, the SEC said, adding that “little if any of the money raised was used ‘to grow’ the business of Mortgage Bankers or Commonwealth Capital as the defendants had told investors.”

An attorney of the defendants did not return a call for comment before press time.