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To: RockyBalboa who wrote (11948)	8/5/2003 9:12:37 AM
From: StockDung	Respond to of 19428

more on Lancer->America's Jack Milne Moneyweb (Johannesburg) August 3, 2003 Posted to the web August 4, 2003 Shirley Kemp Johannesburg South African investors, along with a host of American and Canadian university endowment funds, have been conned out of their money by a scam that bears a dark resemblance to Jack Milne's PSC Guaranteed Growth Fund. Milne was arrested earlier this year on charges of fraud relating to his misrepresentation of the performance of the PSCGG fund. Similarly, the US Securities and Exchange Commission (SEC) charged the fund manager of the Lancer Management Group, Michael Lauer, in July with over-inflating the performances and net asset values of three hedge funds. Lauer - who recently claimed that his funds had assets worth over $1bn - used these "fraudulent manipulative trading prices and pumped-up valuations" to attract unwitting investors into his funds, says the SEC. According to the SEC, Lancer consistently manipulated the month-end closing values of shares held in its funds in order to inflate the value of their holdings "in virtually worthless companies". Lauer also provided auditors with unrealistic valuation opinions in order to get audited financial statements for one of their largest funds, the Offshore fund. Added to this, Lancer allegedly made "materially false and misleading statements and omissions in the Fund's offering and marketing materials". While Milne's fund was placed in liquidation, Lancer Partners filed for chapter 11 bankruptcy protection in June, following a decision to suspend all redemptions from the fund in January. The SEC is still in the process of trying to obtain "permanent injunctions, disgorgement of ill-gotten profits, civil money penalties and an accounting." Locally, Coronation Asset Management's International Fund of Funds has had to write its investment in the Lancer Offshore fund down to zero. The fund has undergone a substantial restructuring in the last year following a directive from the Financial Services Board (FSB) forcing it to convert its hedge fund investments into more traditional long-only investments as a result of regulatory constraints around investing in hedge funds. Unfortunately for Coronation, 12% of its International FoF was invested in the Lancer Offshore Fund - an investment worth just under R250m at the fund's peak value of R2bn prior to the beginning of the restructuring exercise. Approximately R500m flowed out of the fund following the directive from the FSB forcing the restructuring, and Pieter Koekemoer, a director of Coronation Management, says that the fund is now valued at approximately R1.2bn. Koekemoer says Coronation took the decision to write the investment down to zero after it was placed under the control of the SEC. "Any value realised through the liquidation process will be added back into the Coronation International Active Fund of Funds," says Koekemoer. Given the over-inflated value of the Lancer funds, however, Coronation investors should not expect to see much of the losses recovered. The episode highlights the dangers of investing in unregulated products, even for professionals. One other South African hedge fund of funds is believed to have a small exposure to Lancer, and a report by the New York Post said that other clients include pop star Britney Spears and former Sotheby's chairman, Alfred Taubman. Morgan Stanley Alternative Investment Partners has also filed a lawsuit against Lancer and written down the value of its investment in the fund to zero. In hindsight a directive from the FSB, which at the time may have seemed unreasonable, has probably saved Coronation from what could have been a substantially more painful experience. According to Koekemoer, Coronation's International Fund of Funds lost almost 35% in the year to June, compared to an average loss of 27% for SA foreign equity funds. "We are very upset with regards to the fund's negative short-term performance, (but) we remain committed to the philosophy behind the product," he says. Prior to the restructuring, the fund produced an annualised return of 13.65%. Hedge funds are still unregulated in South Africa and as a result they are prevented from disclosing their returns by the FSB, which says they may not solicit clients through any form of marketing - including the disclosure of performance figures.

To: RockyBalboa who wrote (11948)	8/5/2003 9:30:35 AM
From: StockDung	Read Replies (1) \| Respond to of 19428

Dont sit under the apple tree with anyone else but Michael Lauer, anyone else but Lancer Offshore funds: APPLETREE COMPANIES INC Form: S-3 Filing Date: 10/2/1996 Michael Lauer 3,183,065 (24) 2.7 3,183,065 0 0 Lancer Offshore, Inc. 5,928,571 5.2 5,928,571 0 0 Lancer Partners, L.P. 31,459,530 27.3 31,459,530 0 0 ===================================== SECURITIES AND EXCHANGE COMMISSION LITIGATION RELEASE NO. 17043 / June 20, 2001 SEC v. The AppleTree Companies, Inc., et al., Case No. 96-8675-CIV-Seitz (S.D. Fla.) FINAL JUDGMENT OF PERMANENT INJUNCTION AND OTHER RELIEF ENTERED AGAINST MICHAEL H. SALIT AND DAVID B. LOBEL, FORMER OFFICERS OF THE APPLETREE COMPANIES, INC., AND W. SCOTT LONG, FORMER OFFICER OF BROKER-DEALER On March 3, 2000, the United States District Court for the Southern District of Florida entered a Final Judgment of Permanent Injunction and Other Relief against Michael H. Salit and David B. Lobel, by consent, which enjoined them from violations of Sections 17(a) of the Securities Act of 1933, Section10(b) and 13(b)(5) of the Exchange Act and Rules 10b-5, 13b2-1 and 13b2-2 thereunder. They were ordered to pay disgorgement of $600,000, jointly and severally, plus pre-judgment interest. Payment of all but $25,000 in disgorgement and pre-judgment against Salit was waived, and no civil money penalty imposed, based upon their demonstrated financial inability to pay. On January 29, 1999, an Order of Permanent Injunction and Other Relief was entered against W. Scott Long, III - - as the president of the underwriting firm for AppleTree's 1992 Offering - - enjoining him from violations of Sections 17(a) of the Securities Act of 1933, Section10(b) of the Exchange Act and Rule 10b-5 thereunder. On March 3, 2000, the Court entered a Final Judgment Relating to Disgorgement and Civil Penalties imposing and simultaneously waiving payment of $26,000 in disgorgement, and not imposing civil penalties, based upon Long's demonstrated inability to pay. On September 30, 1996, the Commission filed a civil injunctive action against The AppleTree Companies, Inc. ("AppleTree"), Salit, Lobel and another former officer and director of AppleTree, and W. Scott Long III, the former president of the now-defunct underwriter of AppleTree's August 1992 registered offering. AppleTree, formerly known as Modami Services, Inc., was located in Boca Raton, Florida. The Commission charged the individual defendants with making material misrepresentations and omissions in connection with AppleTree's 1992 offering. Salit and Lobel were charged with making fraudulent periodic filings with the Commission during 1992 and 1993 and providing AppleTree's independent accountants with false information that caused AppleTree to fail to make and keep accurate books and records. Long (in his capacity as an underwriter) was charged with failing to cause a $250,000 loan to an unrelated company, made from the proceeds of AppleTree's 1992 registered offering, to be disclosed to prospective or actual investors in the offering. (For further information, see LR-15102 and LR-15172; SEC v. The AppleTree Companies, Inc., et al., Case No. 96-8675-CIV-Seitz (S.D. Fla.)] sec.gov Home \| Previous Page