Justice Department's indictment of Semion Mogilevich

36. Defendants MOGILEVICH, FISHERMAN, BOGATIN and TSOURA, in
order to make YBM look profitable and attractive to investors, made the following material
misrepresentations to the securities regulators and to the investment community regarding YBM’s
operation and financial condition in public filings with securities regulators, and through the
methods set forth below in paragraph 38. It was materially misrepresented at various times
between 1994 and September of 1998 that:
Core Business
(a) YBM Magnex had an established track record of profitably selling high
energy permanent industrial magnets, which it manufactured and distributed throughout
Europe, the United States and Canada from 1992 through 1994.
Operations
since 1992.
• In reality, the defendants knew YBM had no such history of significant
magnet sales in the global market, including Europe, the United States and
Canada; and further, knew that YBM MAGNEX’s predecessor and
subsidiary, ARIGON, was a European commodities trader, with a financial
history involving commodities, alcohol and food products, not industrial
magnets;
(b) The magnet manufacturing plant in Budapest, Hungary had been operational
• In reality, the defendants knew the MAGNEX RT manufacturing plant was
not operational until at least August 1994 when some magnet
manufacturing commenced and, furthermore, knew it was only marginally
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