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SECURITIES AND EXCHANGE COMMISSION, Plaintiff-Appellee,
v.
John D. LAUER and Clifton Capital Investors L.P.,
Defendants-Appellants.

No. 94-3210.

United States Court of Appeals,
Seventh Circuit.

Argued Feb. 13, 1995.

Decided April 12, 1995.
Rehearing Denied May 17, 1995.

 The Securities and Exchange Commission (SEC) brought action against
former director of Chicago Housing Authority's (CHA) employee benefits
program, partnership controlled by him, and creators of alleged
fraudulent mutual-fund type investment program, to freeze assets for
eventual disbursement to CHA.  The United States District Court for
the Northern District of Illinois, Wayne R. Andersen, J., 864 F.Supp.
784, granted a preliminary injunction against the individual and
partnership, and they appealed.  The Court of Appeals, Posner, Chief
Judge, held that granting of preliminary injunction was proper, as
fraudulent investment program probably constituted an "investment
contract" for purposes of securities law, and injunction was
essential to prevent dissipation of assets.

 Affirmed.

 Jacob H. Stillman, Katharine B. Gresham (argued), Lucinda O.
McConathy, Brian F. McNally, Diane V. White, S.E.C., Office of Gen.
Counsel, Washington, DC, for S.E.C.

 Susan Getzendanner, Donna L. McDevitt (argued), Skadden, Arps,
Slate, Meagher & Flom, Chicago, IL, for John D. Lauer and Clifton
Capital Investors L.P.

 Before POSNER, Chief Judge, and BAUER and RIPPLE, Circuit Judges.

 POSNER, Chief Judge.

 John D. Lauer and a company controlled by him known as Clifton
Capital Investors L.P. (CCI) appeal from the grant of a preliminary
injunction sought by the Securities and Exchange Commission in its
suit against Lauer, CCI, and others for federal securities fraud.
The appellants argue that there is no security and therefore no
jurisdiction under the federal securities laws.  The case is
surprisingly novel, involving as it does a degree of fraud so
complete and barefaced that it ordinarily would be dealt with under
the mail or wire fraud statutes or other criminal statutes not
specialized to the securities market--indeed a fraud so
thoroughgoing, pure, and barefaced as to raise the question whether
it can be considered to have involved "securities" at all.

 Lauer was the director of the Chicago Housing Authority's employee
benefits program.  In this capacity he administered a defined-benefit
pension plan for the Authority's employees and made all decisions
concerning the investment of the assets of the plan.  The other
defendants (besides Lauer's company, CCI) are individuals and
entities constituting the "Konex Roll Program," an out-and- out
fraud. The program purported to invest in "Prime Bank Instruments,
" a nonexistent high-yield security.  Konex, as we shall refer
to these defendants, invited Lauer to invest CHA pension plan
assets in the Roll Program, promising an annual return of 60
percent on the minimum investment, which was $10 million.  Konex
represented that four or five other investors, plus a substantial
trust, had already invested in the Roll Program.  In fact none
had.  Lauer bit, and invested $10 million of the pension plan
assets in the program.  His contract with Konex, however,
identified CCI rather than CHA as the investor, and Lauer and
Konex agreed that CCI would be the administrator of the entire
program and receive a fee for each trade of Prime Bank Instruments
that the program made.  Lauer later invested further millions in
the Roll Program, some or more likely all of which was directly
or indirectly the CHA's money.  And to increase CCI's fees he
wrote letters to prospective investors in the Roll Program
(fortunately none bit), full of glowing false reports about how
the program was doing.  It wasn't doing;  it was a fiction, an
illusion. Lauer, who has since been fired by the CHA and is under
investigation by a federal grand jury, never disclosed
to the CHA his personal stake (through CCI) in the Roll Program.
The preliminary injunction is designed to freeze the defendants'
assets with a view to eventual disbursement to the ultimate victim
of the fraud--the Chicago Housing Authority.

 The government calls Lauer's $10 million investment of CHA funds
in the Konex Roll Program an "investment contract."  This is a term
of art in the securities laws.  It means an interest that is not a
conventional security like a bond or a share of common stock but
that, having the essential properties of a conventional security--
being an undivided, passive (that is, not managed by the investor)
financial interest in a pool of assets--is treated as one for purposes
of these laws.  15 U.S.C. º 77b(1);  Landreth Timber Co. v. Landreth,
471 U.S. 681, 690, 105 S.Ct. 2297, 2304, 85 L.Ed.2d 692 (1985);
Wals v. Fox Hills Development Corp., 24 F.3d 1016 (7th Cir.1994).
This is a fair description of the Konex Roll Program as it was
represented to Lauer--a potentially important qualification, as we
shall see.  Investors would invest $10 million (or more) with Konex,
which would use the money to buy Prime Bank Instruments.  So Konex
would be the manager, and Lauer and the other investors would have
a passive financial interest, just as if they had bought shares of
stock in an investment bank.  Konex never represented that it would
manage each investment separately, as an investment advisor would do.
On the contrary, it represented that the investments would be combined
to purchase "Prime Bank Instruments" in denominations of $100
million and that each investor would receive a pro rata share of the
income of the instrument to the purchase of which his investment had
contributed.

 Against the conclusion that the interest he acquired was an
investment contract and therefore within the scope of the securities
laws, Lauer argues that since there was only one investor--namely
himself (technically, his company CCI)--there could not be a pooling
of investors' assets and without such a pooling there is no investment
contract.  For we have emphasized, most recently in Wals v. Fox Hills
Development Corp., supra, that for an interest to be classified as
an investment contract there must be what is called "horizontal
commonality," which means simply that each investor's interest is
pooled with that of the other investors, so that each has an undivided
share in a pool of assets rather than an individual asset. (In Wals
each investor owned a particular apartment in a condominium
development rather than an undivided share in the entire development,
so the requirement of horizontal commonality was not satisfied.)
But it is the character of the investment vehicle, not the presence
of multiple investors, that determines whether there is an investment
contract.  Otherwise a defrauder who was content to defraud a single
investor (here to the tune of some $14 million) would have immunity
from the federal securities laws.  That would not make any sense, and
is not contemplated by any of the cases that require horizontal
commonality.

 This first argument of Lauer's blends insensibly into his second,
that the securities laws do not apply to frauds so complete, so pure,
that no pooling would ever take place.  Prime Bank Instruments do not
exist.  So even if Konex had succeeded in raising money from
additional investors, it would not have pooled their money to buy
Prime Bank Instruments.  It would either have pocketed all of the
money, or, if what its masterminds had in mind was a Ponzi scheme,
have pocketed most of the money and paid the rest to the investors
to fool them into thinking they were making money and should
therefore invest more (or tell their friends to invest).  It would
be a considerable paradox if the worse the securities fraud, the
less applicable the securities laws.  Lauer overlooks the fact that
it is the representations made by the promoters, not their actual
conduct, that determine whether an interest is an investment contract
(or other security).  SEC v. United Benefit Life Ins. Co., 387 U.S.
202, 211, 87 S.Ct. 1557, 1562, 18 L.Ed.2d 673 (1967);  SEC v. C.M.
Joiner Leasing Corp., 320 U.S. 344, 351, 64 S.Ct. 120, 123-24, 88
L.Ed. 88 (1943).  A central purpose of the securities laws is to
protect investors and would-be investors in the securities markets
against misrepresentations.  Randall v. Loftsgaarden, 478 U.S. 647,
659, 106 S.Ct. 3143, 3150-51, 92 L.Ed.2d 525 (1986);  United States
v. Naftalin, 441 U.S. 768, 774-76, 99 S.Ct. 2077, 2082-83, 60 L.Ed.2d
624 (1979).  An elementary form of such misrepresentation is
misrepresenting an interest as a security when it is nothing of the
kind. Konex told Lauer that the $10 million (later $14 million) that
he was investing with Konex would be used along with investments
by other investors to purchase Prime Bank Instruments.  The effect
was to represent Lauer's interest as being an investment contract.
It was nothing of the kind.  It was the perilous deposit of money
with a fraud.

 We must now consider whether Konex actually did represent to Lauer
that his investment would be pooled with others.  We do not have to
answer the question definitively.  The case is before us on an
appeal from the grant of a preliminary injunction, and as is too
familiar to require citation such a grant is proper even if the
district judge is uncertain about the defendant's liability.  All
that is required is a degree of likelihood coupled with greater
irreparable harm from the denial of the injunction than from the
grant.  This standard is easily satisfied here and it makes no
difference that the disputed fact essential to liability--whether
Konex made representations that it would pool the investors'
contributions--was also a jurisdictional fact.  Cf. ACLU v. City
of St. Charles, 794 F.2d 265, 269 (7th Cir.1986). This is not to
say that a court could enjoin a party "to whatever extent
jurisdiction may exist," Enterprise Int'l, Inc. v. Corporacion
Estatal Petrolera Ecuatoriana, 762 F.2d 464, 471 (5th Cir.1985),
any more than it could enjoin a party to whatever extent the
plaintiff's rights may have been invaded.  The court must assess
the probability of the plaintiff's succeeding in the trial on the
merits, and one ingredient of that success is, of course,
establishing that the court has jurisdiction.  Usually that is
easily done but in the unusual case where it is not the court need
no more be certain that it has jurisdiction than it need be certain
that the plaintiff has a winning case on the merits.  It need only
have sufficient confidence about both jurisdiction and the merits
to make the issuance of a preliminary injunction a reasonable
measure for minimizing the possibility of error that is always
present when a court is asked to act on the basis of an incomplete
record.

 The preliminary injunction that the district judge issued in this
case was and is essential to prevent the dissipation of assets that
belong to the Chicago Housing Authority, and while it is possible
that the interest that Lauer acquired in the Konex Roll Program for
his millions in other people's money was not an investment contract
after all, it probably was and that is all that is required at this
stage.  There is nothing to indicate that Konex gave out that it
meant to operate as an investment advisor, investing each investor's
assets separately, and much to indicate that it represented itself
as intending to conduct a grandiose mutual-fund type of investment
business in which each investor would have the equivalent of shares.

 It may seem curious that Lauer should be a defendant, when he was
the victim-- indeed the only victim--of the scam.  But of course he
was not the victim.  The CHA was the victim.  Lauer, though initially
deceived (we may assume), was an active participant in Konex's fraud.
His fraudulent letter designed to reel in more suckers, and his
failure to disclose to the CHA his personal financial stake in the
Roll Program, violated multiple provisions of federal securities
law--as he does not deny, provided that his interest was properly
classified as an investment contract, as we believe it was.

 AFFIRMED.