Where is Kryder's Money?
|The Carlyle Group|
|Colorado Time Line||Indiana Main Time Line||Ohio Colonial Westfield||California Time Line||Florida Time Line||Oklahoma Time Line||The Two Towers|
Track/Reserve Foundation p.2
Capital /Reserve Links | Global B S |
More Global B.S. | Wyoming
1-5 | Countrymark Crossovers | BestBank
| Table of Systems | Railroads,
Failed Banks, & Systems | Nevada | REMAX/XAMER
| Wyoming Time Line |
A Cycle of Financial Disease
"Over and over, a cast of the same time-worn entities in the same geographic cells of the same supposedly "good guys" whose incorporations are synchronized with those of " bad guys" shows up in one wrongdoing after another. The common denominator is that good or bad, at present all link up in a San Diego operation which gives new meaning to the phrase "warehouse banking."
Probably the Mother of Abusive Trusts,
the Fort Wayne Heist has abusively converted the once wholesome and
sound Kryder Estate, invested in Roosevelt's plan for the recovery of
America, into a modern financial Typhoid
Minnie and an arsenal for secrecy and Corporate
Terrorism (CT)." -Kryder's
"I. Securities and Exchange Commission Litigation Release No. 18621 / March 11, 2004 Accounting and Auditing Enforcement Release No. 1975 / March 11, 2004 SEC FILES FRAUD CHARGES AGAINST FORMER CHIEF FINANCIAL OFFICER AND CHIEF ACCOUNTING OFFICER OF CONSECO, INC. AND CONSECO FINANCE CORPORATION CONSECO, INC AGREES TO ISSUANCE OF A CEASE-AND-DESIST ORDER Securities and Exchange Commission v. Rollin M. Dick and James S. Adams, (United States District Court for the Southern District of Indiana, Case No. 01:04-cv-0457-SEB-VSS, filed March 10, 2004) The Securities and Exchange Commission announced that on March 10, 2004 it filed civil fraud charges against Rollin S. Dick and James S. Adams, formerly Chief Financial Officer and Chief Accounting Officer of Carmel, Indiana based Conseco, Inc., and its then wholly owned subsidiary, Conseco Finance Corporation.
CONSECO FINANCE SERVICING CORP. : 100 LANDMARK TOWERS 345 ST. Peter ST., ST. PAUL, MN 55102 Creation Date: 4/24/1995 Inactive Date: 4/22/2004 Original Creation Date: 12/5/1994 Original Creation State: DE Other Names for this Entity11/4/1999 GREEN TREE FINANCIAL SERVICING CORPORATION 2/2/2000 ABC COACH FINANCE
CONSECO FINANCE LEASING TRUST: 1100 Landmark Towers, 343 St Peter St Attn Wanda Lamb-Lindow Lic/Reg Com Mgr, ST. PAUL, MN 55102: Foreign Business Trust Entity Creation Date: 8/17/1999 Inactive Date: 9/11/2003 Original Creation Date: 5/5/1997 Original Creation State: DE Other Names 11/4/1999 GREEN TREE LEASING TRUST
CONSECO, INC. : 11825 S PENN ST , CARMEL, IN 46032 Creation Date: 9/11/2003 : Original Creation Date: 3/25/2003 Original Creation State: DE
In its complaint, the Commission alleged that throughout 1999 and early 2000, Conseco and Conseco Finance made false and misleading statements about their earnings and income in filings made with the Commission and in public statements announcing their earnings, overstating their results by hundreds of millions of dollars. This massive overstatement occurred because defendants Dick and Adams conducted a fraudulent scheme to avoid huge write downs of certain assets held by Conseco Finance, known as interest-only securities. The complaint alleged that in order to avoid the charges to earnings associated with these write downs, Dick and Adams made improper adjustments to the historical basis of these securities, and also manipulated the valuation equation used to test these securities for impairments. Dick and Adams also made a number of unsupported and improper adjustments to the books and records of these companies to increase earnings. The complaint alleged that as a result of their activities, Dick and Adams violated the antifraud provisions of the federal securities laws and aided and abetted Conseco and Conseco Finance's violations of the reporting, record keeping and internal controls provisions. Specifically, the complaint alleged Dick and Adams violated Section 17(a) of the Securities Act of 1933, Sections 10(b) and 13(b)(5) of the Securities Exchange Act of 1934 (Exchange Act), and Rules 10b-5, 13b2-1 and 13b2-2 thereunder, and that Dick and Adams aided and abetted Conseco and Conseco Finance's violations of Sections 13(a), 13(b)(2)(A), 13(b)(2)(B) and 13(b)(5) of the Exchange Act and Rules 12b-20 and 13a-13 thereunder. The complaint seeks an injunction against further violations of the above provisions of the federal securities laws, disgorgement of the salaries and bonuses earned by Dick and Adams during their fraudulent scheme, civil penalties and officer and director bars. In separate administrative proceedings, the Commission ordered Conseco, Inc. to cease-and-desist from violating the reporting, record-keeping and internal controls provisions of the federal securities laws described above. Conseco, without admitting or denying the Commission's findings, agreed to the entry of the Commission's order. SEC Complaint in this matter "
RE: "Aegis" $68 million Tax Fraud
AEGIS SALES AND ENGINEERING INC : 5411 INDUSTRIAL DRIVE , FORT WAYNE, IN 46825 Creation Date: 5/18/1962 Entity Date to Expire: Entity Inactive Date:
AEGIS ACCEPTANCE CORP. Number: C1855111 Date Filed: 4/2/1993 Status: forfeited Jurisdiction: DELAWARE Mailing Address 200 N. COBB PARKWAY STE 428 MARIETTA, GA 30062 Agent for Service of Process ** RESIGNED ON 03/07/2000
AEGIS SALES, INC.: 10923 Songbird Lane , CARMEL, IN 46033 Creation Date: 11/18/1988 Inactive Date: 9/27/2000
AEGIS AMERICA FOUNDATION, INC. 6130 W FLAMINGO RD # 345 , LAS VEGAS, NV 89103 Status: Active Creation Date: 10/11/2001 Original Creation Date: 9/26/2001 Original Creation State: NV
AEGIS KEY CORP.: 5300 ALLEN K. BREED HWY , LAKELAND, FL 33811 Status: Active Creation Date: 3/17/2003 : Original Creation Date: 6/7/2002 Original Creation State: DE T Other Names 9/26/2003 AEGIS BREED CORP.
"II. COMPLAINT Plaintiff, United States Securities and Exchange Commission (the "Commission") alleges and states as follows: NATURE OF THE COMPLAINT 1. This matter involves the fraudulent offer and sale of at least $1,680,000 in securities by Philip J. Yoder ("Yoder" or "Defendant") in furtherance of two different schemes. From approximately November 2000 through March 2001, in a scheme called All the Way to the Top ("ATWTTT"), Yoder fraudulently offered and sold notes over the Internet through a website at the address www.atwttt.com. During that same time, Yoder fraudulently offered and sold "Participation Agreements" on behalf of Sebastian Corriere ("Corriere") for a fictitious prime bank trading program. 2. Yoder sold over $660,000 in unregistered securities for ATWTTT. He represented to investors that ATWTTT would invest in a "smart card" technology company called ATTM. According to Yoder, ATTM produced "smart cards" that supposedly operate as debit and telephone cards and store medical information. Yoder also promised investors that the investment was guaranteed and risk-free. In reality, Yoder could not produce the promised returns; investors never received any returns and lost their principal. In addition, the majority of the funds raised in ATWTTT were misappropriated by Yoder to pay for, among other things, two Mercedes automobiles, travel for him and his wife abroad and in the United States, and for other personal expenses. 3. Yoder raised at least $1,020,000 for Corriere's prime bank trading program from at least three investors by promising astounding weekly returns. In reality, the trading program did not exist and investors never received any returns. In addition, one investor who invested $1,000,000 in the scheme lost his principal. 4. During Yoder's solicitation of investors for ATWTTT and the prime bank scheme, Yoder made, or caused to be made, numerous material misrepresentations and omitted to state material information in connection with the offer, purchase and sale of the ATWTTT notes and the prime bank Participation Agreements, which included the following: (1) the existence of the prime bank scheme; (2) the risk and rate of return on both investments; (3) the guaranteed nature of both investments; and (4) Yoder's representations regarding his previous successes in completing similar high-yield investments. 5. Yoder, directly and indirectly, has engaged in and, unless enjoined, will continue to engage in transactions acts, practices and courses of business which constitute and will constitute violations of Sections 5(a), 5(c) and 17(a) of the Securities Act of 1933 ("Securities Act") [15 U.S.C. §§ 77e(a) and 77q(a)], Section 10(b) and 15(a) of the Securities Exchange Act of 1934 ("Exchange Act") [15 U.S.C. §§ 78j(b) and §78o(a)] and Rule 10b-5 thereunder [17 C.F.R. 240.10b-5]. There is a reasonable likelihood that Yoder, if not enjoined, will continue to engage in transactions, acts, practices and courses of business, the same as, or similar to, these set forth above, and as more fully set forth below in this Complaint, in violation of the federal securities laws. 6. Accordingly, the Commission seeks: (i) entry of a permanent injunction prohibiting Yoder from engaging in future violations of the relevant provisions of the federal securities laws; (ii) the imposition of a civil monetary penalty against Yoder due to the egregious nature of the violations; and (iii) disgorgement, including prejudgment interest, of any ill-gotten gains. JURISDICTION 7. The Commission brings this action to enjoin such transactions, acts, practices and courses of business pursuant to Section 20(b) of Securities Act [15 U.S.C. § 77 t(b)] and Sections 21(d) and (e) of the Exchange Act [15 U.S.C. §§ 78u(d) and (e)]. 8. This Court has jurisdiction over this action pursuant to Section 22(a) of the Securities Act [15 U.S.C. § 77v(a)], Section 27 of the Exchange Act [15 U.S.C. § 78aa], and 28 U.S.C. § 1331. 9. Yoder, directly and indirectly, made use of the mails and means and instrumentalities of interstate commerce in connection with the transactions, acts, practices, and courses of business alleged herein. DEFENDANT 10. Philip J. Yoder, age 25, resides at 3350 Bay Street in Sarasota, Florida, where he lives with his wife, Bobbie Jean Yoder, and his parents. During his solicitation of investors for these schemes, however, Yoder resided in various locations in Goshen, Indiana.
P.J. YODER'S CONSTRUCTION, INC. Entity Address: , , IN Creation Date: 8/16/1991 Inactive Date: 4/27/1994
ACRA TIRE SERVICE CENTER INC : 2310 FOUNDATION DRIVE , SOUTH BEND, IN 46628 Creation Date: 7/20/1978 Inactive Date: 4/27/1994 Other Names 7/20/1978 ATM SERVICES (Assumed / St. Joseph Co County
YODER GRAIN FEEDLOTS COMPANY State: WY Initial Filing: 07/13/1994 Status: ACTIVE Defunct Date: 08/18/2000: P.O. BOX 550 TORRINGTON, WY 82240 Registered Agent: BOB COTTIER County: GOSHEN : HWY. 85 SOUTH TORRINGTON, 82240
YODER GRAIN ELEVATORS, INC. DBA: State: WY Initial Filing: 01/30/1995 Status: ACTIVE : PO BOX 1114 TORRINGTON, WY 82240 Registered Agent: LARRY COTTIER County: GOSHEN: HWY 85 SOUTH TORRINGTON, 82240
THE YODER GROUP, INC. : PO Box 10 , ELKHART, IN 46515 Status: Active Creation Date: 7/17/1995 :
MILLER-YODER FUNERAL HOME, INC. : 1911 South Main Street , GOSHEN, IN 46526 Creation Date: 12/4/1995 Inactive Date: 4/13/2000 Other Names 12/4/1995 MILLER FUNERAL HOME
YODER DISTRIBUTION SERVICES LLC : 2204 California Road , ELKHART, IN 46515 Creation Date: 11/26/1996 Inactive Date: 9/27/2000 Other Names 12/2/1996 YODER DISTRIBUTING SERVICES LLC
YODER CONCRETE, LLP : 13520 COUNTY ROAD 36 , GOSHEN, IN 46528 Status: Active Creation Date: 2/14/2000:
YODER CAPITAL, INC. DBA: : WY Initial Filing: 12/27/2001 Defunct Date: 12/11/2002 Mailing Address: REGISTERED AGENCY SERVICES INC. 1912 CAPITOL AVENUE CHEYENNE, WY 82001-3660 : President: ROY E HAHN 703 MARKET ST #1200 SAN FRANCISCO CA 94103
RELATED PARTIES 11. Sebastian Corriere, age approximately 65, resides in Accra, Ghana, on the continent of Africa. From at least November 2000 to March 2001, Corriere resided in Clearwater, Florida.
ACCRA-PAC INC : P O BOX 878 , ELKHART, IN 46516 Status: Active Creation Date: 7/21/1967 : Entity Inactive Date:
Florida Profit SUN BAY GROUP, INC1389 MISSOURI AVE SOUTH CLEARWATER FL 34616 Changed 09/08/1989 Date Filed 09/15/1988 State FL DISSOLUTION 11/09/1990 Agent DIJAN, SIME 1389 MISSOURI AVE S. CLEARWATER FL 34616 Name Changed: 09/08/1989 Officer/Director DIJAN, SIME 1389 MISSOURI AVE. SO. CLEARWATER FL PD FERNANDEZ, CARLOS M. 1824 SHORE DR. SO. ST PETERSBURG FL. S CORRIERE, SEBASTIAN 1761 KENESAW LN. CLEARWATER FL V DELOACH, DENNIS ***RESIGNED 02/08/1990*** SEMINOLE FL D LUKER, WILLIAM 104 76TH ST TROPEZ TAMPA FL
Florida Profit SUN BAY REAL ESTATE AND DEVELOPMENT CO. INC. C/O SEBASTIAN CORRIERE 1761 KENESAW LANE Date Filed 11/13/1989 State FL DISSOLUTION 10/09/1992
Florida Profit QUANTUM EQUITIES, INC.849 MANDALAY AVE. CLEARWATER FL 34630 Date Filed 07/08/1991 State FL DISSOLUTION 08/23/1996 Agent Name CORRIERE, SEBASTIAN 849 MANDALAY AVE. CLEARWATER FL 34630 Address Changed: 12/28/1994 Officer/Director CORRIERE, SEBASTIAN 849 MANDALAY AVE. CLEARWATER FL 34630 D CORRIERE, IXA 849 MANDALAY AVE. CLEARWATER FL 34630
cf QUANTUM EQUITIES, INCORPORATED Filed: 3/8/1994 Status: suspended Jurisdiction: California 19200 VON KARMAN STE 700 IRVINE, CA 92715 Agent WILLIAM ALBERT NELLES, JR. 19200 VON KARMAN, STE 700 IRVINE, CA 92715
ACCRA TOOL, INC. : 2620 Adams Center Rd. , FT. WAYNE, IN 46803 Status: Active Creation Date: 6/7/1995:
SEBASTIAN SPORTS, INC. Entity Address: , , IN Status: Active Creation Date: 7/27/2000
SEBASTIAN, LLC Entity Address: , , Status: Active Creation Date: 6/14/2002
ACCRA PAC, LLC Entity Address: , , Status: Active Entity Creation Date: 9/25/2002
ACCRA FORM, LLC : 754 C.R. #3 , ELKHART, IN 46514Status: Active Creation Date: 4/29/2003
SEBASTIAN ENTERPRISES, LLC Entity Address: , , IN Status: Active Entity Creation Date: 8/4/2003:
Florida Profit PROFIT FOR PROPHETS INC 4175 E BAY DR STE 104 CLEARWATER FL 33764 Date Filed 11/03/2003 State FL Registered Agent CORRIERE, IXA 4175 E BAY DR STE 104 CLEARWATER FL 33764
Since at least October 2000, Corriere has raised millions of dollars in investor funds for so-called "high-yield private placement programs involving the trading of medium term notes." These programs are also known as prime bank schemes. In April 2002, the Commission sought and obtained a temporary restraining order against Corriere for his ongoing solicitation of investors for non-existent prime bank trading programs in the United States District Court for the Middle District of Florida. SEC v. Corriere, et.al, 02-CV-666-T17EAJ (M.D. Fla. 2002). In June 2002 the Commission obtained a preliminary injunction against him and later an entry of default in January 2003. 12. ATTM is a subsidiary of an Oregon privately held corporation, World Innovation Netcomm Services, Inc. ("WINS"). WINS and ATTM are located in Salem, Oregon and purportedly offer ATTM "smart-cards" over the Internet. The "smart-cards" supposedly look similar to regular credit cards, but have the ability to store vast amounts of information. These smart cards supposedly operate as personal ATM and telephone cards, offer access to cable and satellite programs, and contain medical information. FACTS Offer and Sale of All the Way to the Top ("ATWTTT") Notes 13. From at least November 2000 through March 2001, Yoder offered and sold notes to investors for ATWTTT. Yoder raised at least $660,000 for this scheme. 14. Yoder raised funds for ATWTTT from approximately 82 investors from the United States, Canada, and the Philippines. The vast majority of the funds raised were from investors located in the United States. 15. Yoder, through e-mail, Internet chatrooms, and a website, solicited investors to make a $2,500 or $5,000 investment, guaranteeing a risk-free monthly return. 16. According to the ATWTTT website drafted by Yoder, formerly located at www.atwttt.com, a $5,000 investment would produce a 50% monthly return and a $2,500 investment would produce a 40% monthly return for three years. Thus, a $5,000 investment would pay out $90,000 over three years. The website touted the investment as the "...newest and best way of making a guaranteed monthly return on your money." 17. Investors entered into ATWTTT by signing an agreement with Yoder, which investors downloaded off the ATWTTT website. Yoder called this agreement a contract. The agreement contained, among other things, the promised guaranteed return and the length of the agreement, which was for three years. 18. To participate in ATWTTT investors either wired their funds or sent a check to Yoder. Yoder received funds in three different accounts:
(1) First Source Bank ("First Source"),
Note: Was there a First Source Bank? The only First Source Bank in the FDIC Database of Active and Inactive Institutions anywhere in the U.S. is
First Source Bank 2171 Judicial Drive Germantown,TN 38138 FDIC Certificate #: 57552 Date Established: 5/19/2003 Bank Charter Class: Federal Reserve Non-member Date of Deposit Insurance: 5/19/2003 Primary Federal Regulator: Federal Deposit Insurance Corporation
(2) Elkhart County Farm and Bureau Credit Union ("Elkhart"),
and (3) E-Gold. E-Gold, Ltd. is an Internet company that converts currency, such as U.S. dollars, into electronic currency, which is valued by different precious metals. Anyone can maintain an E-Gold account, which operates similar to a bank account. An owner of an E-gold account can freely transfer funds into and out of their E-gold account via wire transfer. Yoder received approximately $418,000 of investor funds via his personal checking accounts at First Source and Elkhart. Both of these accounts were jointly maintained with his wife, Bobbie Jean Yoder. Yoder also received $250,000 of investors' funds through his E-gold account. 19. As part of the ATWTTT program, Yoder made misrepresentations and generated materials, which described the existence and safety of this program. These material misrepresentations were disseminated by him and others to investors and included, but are not limited to, the following statements: a. Yoder promised investors through the website contract that he would never miss a monthly payment and guaranteed investors a monthly percentage return of 40% or 50% depending upon the amount invested; b. Yoder claimed that this investment was safe and risk free; c. Yoder told most investors that their money would be pooled or commingled with other investors' money to invest in so-called "smart-card" technology. Yoder claimed that he had provided $3 million in venture capital to a company called ATTM, that ATWTTT investors' funds would be invested in ATTM, and that investors would be paid from the profits of ATTM's business. In some instances, Yoder claimed that the federal government backed ATTM's "smart-card" business and claimed that the venture was a "sure thing;" d. Yoder told other investors he was pooling or commingling their funds to invest in an unidentified high-yield trading program, which would produce the promised returns; and f. Yoder represented to many investors that he had previously completed similar high-yield investments and received millions in returns. 20. Additionally, Yoder, in connection with his solicitation of investors, omitted material information. These material omissions included, but are not limited to, the following: a. Yoder never told investors that he would use investors' funds for personal use, including, among other things, the purchase of Mercedes vehicles for himself and his wife; and b. Yoder never told investors that any investment in ATTM was risky and was not a "sure thing." 21. These misrepresentations and omissions are material and go to the heart of the investment. A reasonable investor would want to know that the investment was not risk-free, that they may lose their principal, that the investment would not generate returns, that Yoder had not previously completed any similar high-yield investments, and that investor funds would not be used for the represented purpose. 22. In total, Yoder only invested $240,000 of the over $660,000 he raised for ATWTTT in ATTM. While Yoder did have an agreement with ATTM to provide them with $3 million, ATTM did not guarantee any returns on the investment. Contrary to his own representations, Yoder never gave ATTM $3 million. In addition, the agreement between Yoder and ATTM states that any investment was not guaranteed and there was a risk of complete loss. Despite these warnings, Yoder solicited ATWTTT investors promising risk-free guaranteed monthly returns of 40% to 50%. To date, Yoder has received only a few hundred dollars from the ATTM investment. 23. Yoder also invested $205,000 of the ATWTTT investors' funds in Corriere's prime bank scheme. According to offering materials, an investment in the prime bank scheme would produce a 100% return for eleven weeks. Yoder wired the $205,000 to an attorney in Canada who held the funds for Corriere. Yoder never received any of the promised returns. In March 2001, Yoder asked Corriere for the return of his investment. The Canadian attorney, on Corriere's direction, eventually returned $145,000 in ATWTTT investor funds to Yoder. Yoder misappropriated the $145,000 and never returned these funds to investors. The remaining $60,000 of the ATWTTT investors' funds remains unaccounted as the majority of the funds raised in Corriere's prime bank scheme were transferred to China to an account controlled by a Hong Kong businessman. 24. Yoder misappropriated at least $372,000 of ATWTTT investor funds, including the $145,000 returned to Yoder in March 2001. Yoder used these funds to purchase, among other things, a Mercedes sports utility vehicle and a Mercedes sports car. In addition, Yoder spent at least $40,000 of investors' funds on travel, including trips to Switzerland, the Bahamas, Boca Raton and Clearwater, Florida, Los Angeles, California, and Las Vegas, Nevada. Yoder also used the funds to make various purchases at retail outlets. 25. Contrary to Yoder's representations, none of the investors who invested in ATWTTT received a return on their investment or a refund of their principal. Offer and Sale of Participation Interests in Non-Existent Trading Program 26. From at least December 2000 through March 2001, Yoder fraudulently offered and sold participation interests to investors on behalf of Corriere for a non-existent trading program involving the trading of medium term notes or "MTNs." For this scheme, Yoder successfully raised at least $1,020,000. 27. Yoder, through e-mail, facsimile, and the telephone, solicited investors to enter into a "Participation Agreement" with Corriere to place funds in the high-yield trading program. 28. The Participation Agreement claimed that Corriere had a contractual agreement with a Hong Kong businessman, to enter a $200 million high-yield private placement project for the trading of MTNs. According to the agreement, for every $1.5 million in investor funds that Corriere raised, the Hong Kong businessman would supposedly put up $100 million of his own funds to be used by a trader of medium term notes in Canada. Investors expected their returns to be generated by the efforts of Corriere, the Hong Kong businessman, and the trader in Canada. These programs, however, are in the nature of "prime bank" programs and do not exist. 29. The Participation Agreement stated that investors could expect a return of 100% per week for the duration of the trading agreement, which was expected to last eleven months. Thus, a $10,000 investment could be expected to yield $440,000 over the course of the eleven months. 30. In order to participate in the trading program, Corriere instructed investors to wire their funds to the Bank of Montreal in Vancouver, British Columbia, Canada, to an attorney's trust account. 31. Of the $1,020,000 raised, Yoder sent $20,000 from two investors to the attorney trust account in January 2001. The remaining $1,000,000 was wired to the attorney trust account by a third investor in January 2001. In late January 2001, Corriere directed the funds be transferred to the Hong Kong businessman to an account in Shanghai, China. 32. As part of the trading program, Yoder made misrepresentations to investors, which described the existence and safety of the MTN program. These material misrepresentations, included, but are not limited to, the following statements: a. Yoder promised some investors that the returns were guaranteed and that their principal could not be lost; b. Yoder told investors that these trading programs are "safe" investments and actually exist; and c. Yoder represented to investors that he had experience in completing similar trading programs and that he had recently successfully closed on a trade that yielded him millions in profits. 33. These misrepresentations are material and go to the heart of the investment. A reasonable investor would want to know that the scheme in which he or she invested did not exist, that the investment was not risk-free, that they may lose their principal, that the investment would not generate returns, and that Yoder had not previously completed any similar high-yield investments. 34. For his efforts, Yoder was to receive a commission from the investors. For the investor who invested $1,000,000, Yoder was to receive 50% of the investor's returns as a commission. According to the Participation Agreement, this should have amounted to $22 million in returns over the course of the trading program. Other investors in this program also represented that Yoder was to receive a commission for soliciting them for the investment. These investors did not specify an amount. As this prime bank trading program did not exist, Yoder never received any commissions. 35. Throughout his solicitation of investors, Yoder held himself out to the public as a so-called "trader" or "facilitator" of high-yield investments. 36. None of Yoder's investors received any of the promised returns in Corriere's scheme. In addition, Yoder's investor who put in $1,000,000 never received his principal back. The location of the $1,000,000 is currently unknown. As for the remaining $20,000 invested by Yoder's investors, Yoder returned that money in March 2001. COUNT I Violation of Section 5(a) and (c) of the Securities Act Act [15 U.S.C. § 77e(a) and (c)] 37. The Commission realleges and repeats its allegations set forth at paragraphs 1-36, of this Complaint as if fully restated herein. 38. During the period at least from November 2000 through March 2001, and possibly other times, Yoder, directly and indirectly, and notwithstanding that there was no applicable exemption: (i) made use of means or instruments of transportation or communication in interstate commerce or of the mails to sell, through the use or medium of a prospectus or otherwise, securities as to which no registration statement was in effect; (ii) for the purpose of sale or delivery after sale, carried and/or caused to be carried through the mails or in interstate commerce, by means or instruments of transportation, securities as to which no registration statement was in effect; and (iii) made use of means or instruments of transportation or communication in interstate commerce or of the mails to offer to sell, through the use or medium of a prospectus or otherwise, securities as to which no registration statement had been filed. 39. No registration statement was filed with the Commission in connection with Yoder's sale of the ATWTTT notes. 40. By reason of the activities described herein, Yoder violated Sections 5(a) and (c) of the Securities Act [15 U.S.C. § 77e(a) and (c)]. COUNT II Violations of Section 17(a)(1) of the Securities Act [15 U.S.C. § 77q(a)(1)] 41. The Commission realleges and repeats its allegations set forth at paragraphs 1-36 of this Complaint as if fully restated herein. 42. At all relevant times, Yoder, in the offer and sale of securities in the form of the ATWTTT notes and the Participation Agreements for Corriere's scheme, by the use of the means and instruments of transportation and communication in interstate commerce and by the use of the mails, directly and indirectly, has employed devices, schemes and artifices to defraud, as more fully described above. 43. At all relevant times, Yoder made false and misleading statements of material fact or omitted to state material facts to investors and prospective investors concerning, among other things, the guaranteed nature of the investors' expected returns, the use of investor proceeds, the risk of the investment, and the very existence of the trading programs operated by Corriere. 44. At all relevant times, Yoder knew, or was reckless in not knowing, that the statements or omissions described herein were materially false or misleading. 45. By reason of the activities described herein, Yoder violated Section 17(a)(1) of the Securities Act [15 U.S.C. § 77q(a)(1)]. COUNT III Violations of Section 17(a)(2) and 17(a)(3) of the Securities Act [15 U.S.C. § 77q(a)(2) and § 77q(a)(3) 46. The Commission realleges and repeats its allegations set forth at paragraphs 1-36 of this Complaint as if fully restated herein. 47. At all relevant times, Yoder, in the offer and sale of securities in the form of the ATWTTT notes and the Participation Agreements for Corriere's scheme, by the use of the means and instruments of transportation and communication in interstate commerce and by the use of the mails, directly and indirectly, has obtained property by means of untrue statements of material fact or omissions to state material facts necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading, and have engaged in transactions, practices or courses of business which have operated as a fraud and deceit upon purchasers of securities. 48. By reason of the activities described herein, Yoder violated Sections 17(a)(2) and 17(a)(3) of the Securities Act [15 U.S.C. §§ 77q(a)(2) and 77q(a)(3)]. COUNT IV Violations of Section 10(b) of the Exchange Act [15 U.S.C. §78j(b)] and Rule 10b-5 [17 C.F.R. 240.10b-5] thereunder 49. The Commission realleges and repeats its allegations set forth at paragraphs 1-36 of this Complaint as if fully restated herein. 50. At all relevant times, Yoder, in the connection with the purchase and sale of securities in the form of the ATWTTT notes and the Participation Agreements for Corriere's scheme, directly and indirectly, by the use of the means and instrumentalities of interstate commerce or of the mails, employed schemes and artifices to defraud; made untrue statements of material fact and has omitted to state material facts necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading; and engaged in acts, practices and courses of business which operated, and are operating, as a fraud and deceit upon the investors. 51. At all relevant times, Yoder knew or was reckless in not knowing that the statements or omissions described herein were materially false or misleading. 52. By reason of the activities described herein, Yoder violated Section 10(b) of the Exchange Act [15 U.S.C. §78j(b)] and Rule 10b-5 [17 C.F.R. §240.10b-5] thereunder. COUNT V Violations of Section 15(a) of the Exchange Act [15 U.S.C. §78o(a)] 53. The Commission realleges and repeats its allegations set forth at paragraphs 1-36 of this Complaint as if fully restated herein. 54. From approximately November 2000 through March 2001, Yoder made use of the mails or means or instrumentalities of interstate commerce in order to effect transactions in, or induce or attempt to induce the purchase or sale of securities without being registered with the Commission as a broker or dealer. 55. By reason of the activities described herein, Yoder violated Section 15(a) of the Exchange Act [15 U.S.C. §78o(a)]. RELIEF REQUESTED WHEREFORE, the Commission respectfully requests that the Court enter a judgment: A. permanently enjoining Yoder from future violations of Section 5(a) and (c), Section 17(a)(1), (a)(2), and (a)(3) of the Securities Act, Sections 10(b) and 15(a) of the Exchange Act and Rule 10b-5 thereunder; B. ordering Yoder to pay a third-tier civil monetary penalty in the amount of $110,000 pursuant to Section 20(d) of the Securities Act [15 U.S.C. § 77t(d)] and Section 21(d)(3) of the Exchange Act [15 U.S.C. § 78u(d)(3)]; C. ordering Yoder to pay disgorgement of any ill-gotten gains, including prejudgment interest; D. retaining jurisdiction over this action to implement and carry out the terms of all orders and decrees that may be entered; and E. granting such other and additional relief as this Court deems just and proper. Dated: June 9, 2003 Respectfully submitted, _____________________ Joseph M. Mannon Illinois Bar No. 06275428 David J. Medow Illinois Bar No. 06192840 Attorneys for Plaintiff THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION 175 W. Jackson, Suite 900 Chicago, IL 60604 Telephone: (312) 353-7390 Facsimile: (312) 353-7398
III. UNITED STATES OF AMERICA Before the SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 _________________________ : In the Matter of : : IRA WILLIAM SCOTT : INITIAL DECISION : September 9, 1997_________________________:_ APPEARANCES: Peter K.M. Chan and David J. Medow for the Division of Enforcement, Securities and Exchange Commission Ira William Scott, pro se BEFORE: Brenda P. Murray, Chief Administrative Law Judge The Securities and Exchange Commission ( Commission ) initiated this proceeding on September 27, 1996, to determine whether the Division of Enforcement s ( Division ) allegations are true that on December 1, 1992,
EVANSVILLE HOTEL CORPORATION: PO Box 887 , EVANSVILLE, IN 47706 Status: Active Entity Type: Creation Date: 12/1/1992:
the Superior Court of Porter County, Indiana, entered a judgment of conviction against Ira William Scott on nine counts of felonies involving the sale of securities, including fraud in connection with the sale of a security, and four counts of felonies for theft, for the illegal activities spelled out in the criminal information filed with the court, and, if so, what remedial action was appropriate in the public interest pursuant to Section 203(f) of the Investment Advisers Act of 1940 ( Advisers Act ).<(1)> Mr. Scott filed an answer on October 25, 1996. I conducted a teleconference on October 11, 1996, and because the respondent lacked the financial resources to travel to Washington, D.C., I held the public hearing in Hammond, Indiana, on November 20, 1996. (PH Tr. 8-9; Answer.) The Division did not call any witnesses at the hearing, but introduced seven exhibits that I accepted into evidence. Mr. Scott <(1)> At the hearing, I granted the Division s unopposed request to amend the Order Instituting Proceedings ( OIP ) by replacing references to March 11 in parts I.A. and I.B. of the OIP with May 16. (Tr. 6-7; see Commission Rules of Practice, Rule 200(d)(2), 17 C.F.R. 201.200(d)(2) (1996).) ======END OF PAGE 1====== appeared pro se, testified on his own behalf, and introduced three exhibits, one of which I accepted into evidence.<(2)> The Division filed its Post-Hearing Brief and its Proposed Findings of Fact and Conclusions of Law on December 26, 1996, Mr. Scott filed his Response to the Post-Hearing Brief of the Division of Enforcement and Proposed Findings of Fact ( Response ) on January 14, 1997, and the Division filed its Post-Hearing Reply Brief on February 6, 1997. Findings of Fact My findings and conclusions are based on the record. I applied preponderance of the evidence as the applicable standard of proof. I have considered all proposed findings and conclusions and all contentions, and I accept those that are consistent with this decision. Respondent Mr. Scott studied business, accounting, finance, and economics at Purdue University and Valparaiso University in 1980-84, however, he did not graduate or receive a degree from either institution. (Tr. 39-40; Div. Ex. 1.) At the time of the hearing in November 1996, Mr. Scott was employed as a [j]ourneyman, heavy equipment mechanic. (Tr. 40.) Mr. Scott has been employed as a business financial consultant. (Id.) He does not hold any securities licenses from the State of Indiana and he is not registered with the National Association of Securities Dealers. (Id.) From May 16, 1986,
TRI-STATE PROPANE INC : PO BOX 402 , HAMILTON, IN 46742 Status: Active Creation Date: 5/16/1986 : Original Creation State: OH
until August 12, 1988, Ira William Scott was registered as an investment adviser doing business as Ira W. Scott, a sole proprietorship, pursuant to Section 203 of the Advisers Act.<(3)> (Div. Exs. 1, 2.) The filed investment adviser application which Mr. Scott signed on March 3, 1986, indicates that he was a consultant who held the designations Certified International Financier/International Society of Financiers. (Div. Ex. 1; Form ADV, at 1 and at Sch. D page 2.) On May 1, 1987, Sprint Telecommunications ( Sprint ) activated an account which Mr. Scott opened in the name of Global Finance Corporation ( GFC ),
GLOBAL FINANCE CORPORATION : BOX 105 , VALPARAISO, IN 46383 : Control Number: 198511-177 Creation Date: 11/6/1985 Entity Inactive Date: 4/30/1990
GLOBAL FINANCE CORPORATION Date Filed: 7/30/1987 Status: dissolved Jurisdiction: California 3250 WILSHIRE BLVD #1610 LOS ANGELES, CA 90010 Agent DAVID M MIYOSHI 3250 WILSHIRE BLVD #1610 LOS ANGELES, CA 90010
a private corporation of which he was president and sole <(2)> I will refer to pages of the prehearing transcript as PH Tr. __, to pages of the hearing transcript as Tr. __, to the Division s exhibits listed on Counsel s Exhibit Number 1 as Div. Ex. __, and to Mr. Scott s exhibit as Resp. Ex. 2. <(3)> The Commission received Mr. Scott s Form ADV-W, Notice of Withdrawal from Registration as Investment Adviser, on June 13, 1988, and the regulations provide that withdrawal shall become effective on the 60th day after filing with the Commission or within such shorter time as the Commission may determine. (Div. Ex. 2; Tr. 16; OIP II.A.; 17 C.F.R. 275.203-2.) ======END OF PAGE 2====== shareholder.<(4)> (Div. Ex. 6 at 2; Tr. 30.) Sprint issued Mr. Scott eleven credit cards with access codes. (Div. Ex. 6 at 2.) When Mr. Scott opened the Sprint account, he owed MCI Telecommunications $15,000. (Id. at 6.) In May 1987, Mr. Scott contacted Thomas Sutherland about purchasing shares of Value Plus Communications, Inc. ( VPC ), a corporation Mr. Scott established and managed which he claimed was in the business of purchasing long-distance time from telephone companies and reselling that time.
VALUE PLUS COMMUNICATIONS, INC. : BOX 105 , VALPARAISO, IN 46384 : Control Number: 198705-828 Creation Date: 5/26/1987 Inactive Date: 10/30/1989
<(5)> (Id. at 2-3.) Mr. Scott was not a registered broker, dealer, agent, or investment advisor with the State of Indiana, and VPC securities were not registered with the state. (Id. at 3.) Mr. Scott assured Mr. Sutherland that he would not lose his initial investment in VPC of $5000, that he could sell the stock back to VPC at any time, and that stock dividends would be thirty to thirty-five percent of the investment. (Id. at 2.) He told this investor that he would receive free long-distance telephone service and provided him with an access code that Sprint had issued to GFC to use when making calls. (Id.) In May 1987, Mr. Scott solicited Deborah Cristea, Mr. Sutherland s daughter, and assured her that her investment in VPC would increase in value and that she could get back her initial $1500 investment at any time. (Id.) Mr. Scott provided Ms. Cristea with an access code for making long- distance telephone calls. (Id. at 2-3.) In November 1987, Mr. Scott told Charles and Lorraine Hroma that they could get their investment in VPC back at any time, that they would receive interest payments on their investments at regular intervals in an amount equaling fifteen and one half percent of their investment, that returns on investments in VPC had been good, and that they would receive free long- distance telephone service. (Id. at 3.) The Hromas invested $1000 in a convertible debenture with Mr. Scott. (Id.) Mr. Scott falsely assured Mr. Sutherland, Ms. Cristea, and Charles and Lorraine Hroma that VPC was an on-going business; although Mr. Scott had collected approximately $60,000 from investors, VPC had no assets from which it could generate dividends or interest. (Id. at 7-8.) Mr. Scott failed to make any payments on the Sprint account even though a Sprint representative made several attempts to collect the monies owed. (Id. at 6.) When Sprint closed the account on December 17, 1987, Mr. Scott owed $42,067.59. (Id.)
Sprint found that Mr. Scott had 117 stolen access codes that belonged to Sprint, and that VPC investors had <(4)> Mr. Scott claimed that GFC was a private corporation, an investment banking company, and a general partnership. (Tr. 30- 31.) <(5)> Mr. Scott alleges that during this period, All the business I did was under [GFC] as far as commercial investment banking and some under Standard Mortgage Services. (Tr. 8, 27.) Mr. Scott was president of Standard Mortgage Services which he claimed was a limited partnership managed/operated by the general partnership, GFC.
cf STANDARD MORTGAGE SERVICE Date Filed: 5/29/1962 Status: suspended Jurisdiction: California Mailing Address 22 BATR 412 SAN FRANCISCO, CA 94111
cf STANDARD MORTGAGE SERVICE COMPANY, INC. Date Filed: 3/8/1984 Status: suspended Jurisdiction: California Mailing Address 28395 CARRIAGE HILL DRIVE HIGHLAND, CA 92346 Agent R. W. STEILER 28395 CARRIAGE HILL DRIVE HIGHLAND, CA 92346
STANDARD MORTGAGE SERVICES CORPORATION: 3120 Devonshire Circle , CROWN POINT, IN 46307 : Control Number: 198710-815 Creation Date: 10/23/1987 Inactive Date: 7/24/2003
cf STANDARD MORTGAGE, INC. Date Filed: 1/11/1999 Status: active Jurisdiction: California Mailing Address 20501 VENTURA BLVD RM 108 WOODLAND HILLS, CA 91364 Agent EMILY AFTANDILIANS 20501 VENTURA BLVD RM 108 WOODLAND HILLS, CA 91364
cf STANDARD MORTGAGE, INC. : 11212 BAY PINES COURT , FORT WAYNE, IN 46814 : Control Number: 2003030600071 Status: Active Creation Date: 2/24/2003
SCOTT INVESTMENT SERVICES, LLC: WY Initial Filing: 06-07-2000 Defunct Date: 06-10-2003 : 7173 CONSTRUCTION CT. SAN DIEGO, CA 92121 Registered Agent: GLOBAL BUSINESS SOLUTIONS, INC. : 1605 PEBRICAN AVENUE CHEYENNE, WY 82001
(Tr. 30-31.) ======END OF PAGE 3====== several of the access codes that Sprint had issued to GFC. (Id. at 3.) Mr. Scott opened an account with All-Net, another long-distance telephone company, after Sprint closed his account. (Id. at 6.) His pattern of behavior was to establish accounts with providers of long-distance telephone service and then fail to make payments on the account. (Id.) The State of Indiana charged in a criminal information filed with the Superior Court of Porter County, Indiana, that between May 13 and December 17, 1987, Mr. Scott, who was not registered with the Indiana Securities Division as an agent of VPC, knowingly effected the offer and sale of unregistered VPC securities, which were not exempt from registration, and, while doing so, knowingly engaged in acts, practices, and courses of business which operated as a fraud or deceit on investors by failing to disclose VPC s true financial condition, failing to disclose the background of the company, and guaranteeing that VPC would (1) earn returns of thirty- five percent and fifteen and one half percent interest; (2) pay the money back within a year; (3) not lose money; and (4) return an investor s funds at any time, and that he knowingly or intentionally exerted unauthorized control over the property of these investors and Sprint. (Div. Ex. 3; Indiana v. Scott, Information, 64D01-8805-CF-76 (1988).) A jury found Mr. Scott guilty of thirteen felony counts on September 11, 1992, and the superior court entered a judgment of conviction and sentenced Mr. Scott on December 1, 1992. (Tr. 9; Div. Ex. 6 at 4.) The superior court sentenced Mr. Scott to fifteen months of home detention, ten and one half years of formal probation, and ordered him to pay restitution in the amount of $49,349.<(6)> (Div. Ex. 5; Indiana v. Scott, Order Modifying Sentencing, 64D01-8805-CF-76 (July 17, 1995).) The Court of Appeals of Indiana, Third District, affirmed the trial court s judgment on September 29, 1994. (Div. Ex. 6; Scott v. Indiana, 64A03-9303-CR-00098 (Sept. 29, 1994).) The Supreme Court of Indiana denied Mr. Scott s petition for transfer of his appeal on March 9, 1995. (Div. Ex. 7; Scott v. Indiana, Denial of Petition for Transfer (March 9, 1995).) It appears that Mr. Scott also filed a habeas corpus petition which was denied. (PH Tr. 14-15.) Mr. Scott admitted that the superior court entered judgment of conviction against him on a total of thirteen felony counts - nine counts involved the sale of securities and four counts were for theft. (PH Tr. 12; Tr. 36, 41; Div. Ex. 4; Indiana v. Scott, Sentencing Order, 64D01-8805- CF-76 (Dec. 1, 1992).) I ruled that the doctrine of collateral estoppel and legal precedent precluded Mr. Scott from disputing the validity of his conviction.<(7)> (PH Tr. 14-16; Tr. 13, 21, 39.) <(6)> The original sentence was for one and a half years incarceration on each of the four theft counts, with the sentence suspended, and four years for three of the counts involving securities crimes, with three and a half years suspended. (Div. Exs. 3- 4.) <(7)> See FDIC v. Daily (In re Daily), 47 F.3d 365, 368-69 (Bankr. 9th Cir. 1995) ( It is implicit in the doctrine of collateral estoppel that, where a party has been accorded a full and fair (continued...) ======END OF PAGE 4====== Conclusions of Law I reject Mr. Scott s defense that the Commission has no jurisdiction because he did not commit the actions which were the basis of his conviction while doing business as an investment adviser as alleged in part II.B. of the OIP. (Tr. 9, 27, 36.) Section 202(a)(17) of the Advisers Act defines the term any person associated with an investment adviser as any partner, officer, or director of such investment adviser (or any person performing similar functions), or any person directly or indirectly controlling or controlled by such investment adviser. Mr. Scott was associated with an investment adviser during the relevant period because he controlled and was president of Ira W. Scott, a sole proprietorship registered as an investment adviser. Moreover, the Commission has proceeded against individuals who were neither registered investment advisers nor persons associated with registered investment advisers based on the nature of their activities. See Alexander V. Stein, 59 SEC Docket 1493 (June 8, 1995); Joseph P. D Angelo, 46 S.E.C. 736 (1976), aff d without opinion, 559 F.2d 1202. Mr. Scott s activities come within the statutory definition of an investment adviser in that, for compensation, he engaged in the business of advising members of the public as to the value of securities or as to the advisability of investing in, purchasing, or selling securities. Advisers Act Section 202(a)(11). Issue Section 203(f) of the Advisers Act requires that the Commission sanction any person associated with an investment adviser if such person has been convicted of offenses that involve theft and misappropriation of funds, the purchase or sale of any security, or that arise out of the conduct of the business of an investment adviser, within ten years of the commencement of the administrative proceeding, if such a sanction is in the public interest. See Advisers Act Section 203(e)(2). In view of Mr. Scott s conviction, the only issue is what, if any, sanction is appropriate in the public interest. Public Interest Certain criteria for assessing the public interest are well established: the egregiousness of the defendant's actions, the isolated or recurrent nature of the infraction, the degree of scienter involved, the sincerity of the defendant's assurances against future violations, the defendant's recognition of the wrongful nature of his conduct, and the likelihood that the defendant's occupation will present opportunities for future violations. <(7)>(...continued) opportunity to litigate an issue in a prior proceeding, due process is not violated by denying the party a further opportunity to litigate the same issue in a subsequent proceeding. ) and Lamb Brothers, Inc., 46 S.E.C. 1053, 1058 n.22 (1977). ======END OF PAGE 5====== Steadman v. SEC, 603 F.2d 1126, 1140 (5th Cir. 1979), aff'd on other grounds, 450 U.S. 91 (1981). The severity of a sanction depends on the facts of each case and the value of the sanction in preventing a recurrence. Berko v. SEC, 316 F.2d 137, 141 (2d Cir. 1963); Richard C. Spangler, Inc., 46 S.E.C. 238, 254 n.67 (1976); Leo Glassman, 46 S.E.C. 209, 211-12 (1975). By statute an investment adviser is a fiduciary, and as such has an affirmative duty of utmost good faith, and full and fair disclosure of all material facts, as well as an affirmative obligation to employ reasonable care to avoid misleading his clients. SEC v. Capital Gains Bureau, Inc., 375 U.S. 180, 194 (1963). This Commission and the courts have acknowledged that the position of investment adviser is an occupation that can cause havoc unless engaged in by those with appropriate background and standards. Benjamin Levy Securities, Inc., 46 S.E.C. 1145, 1147 (1978); Joseph P. D Angelo, 46 S.E.C. at 737; Marketlines, Inc. v. SEC, 384 F.2d 264, 267 (2d Cir. 1967), cert. denied, 390 U.S. 947 (1968). Measured against these criteria, Mr. Scott s conduct, beliefs, and attitude indicate that it is in the public interest to impose the most severe sanction permissible under the statute with the objective of preventing him from ever participating in the securities industry. Mr. Scott knowingly engaged in a course of fraudulent conduct over a period of several months that was so serious and outrageous as to be criminal, and he either does not understand or is feigning understanding of this fact. The court of appeals found that Mr. Scott s representations were false, that Mr. Scott promised investors performance for their investments which he knew he could not perform, that investors would not have invested their money with Mr. Scott had he not made these representations, and that, from the evidence, the superior court jury could have reasonably inferred that Scott personally received the investments and that money was spent by him and two other individuals. (Div. Ex. 6 at 7.) The court of appeals noted that, [a]lthough there was evidence that Mr. Scott had collected approximately $60,000.00 in investments, [VPC] had no assets. (Id.) Mr. Scott did not return investors funds despite their requests that he do so. (Id. at 3.) Mr. Scott does not recognize that his conduct was wrong and has provided no assurance that he will not violate the law in the future. (Tr. 38-39.) In his testimony in this proceeding, Mr. Scott displayed no remorse or appreciation that his conduct was illegal and that it damaged public investors: The main thing I m concerned about is the fact that if I was barred from dealing with investments [sic] firms in the future, if any opportunities did come up with -- to make money with like accredited investors, I wouldn t want to be barred from the opportunity. I have no interest in individual investors and I never have as far as advising them on stocks and bonds and things of that nature. [Sic] Only interest I ever had actually was large commercial equity placement. (Tr. 36-37.) ======END OF PAGE 6====== Mr. Scott s response to his conviction, which resulted from a jury trial, and an appellate court s findings that the evidence and law supported that result, is one of denial and defiance. According to Mr. Scott, The reason why the public is not in danger is because I, in fact, never did steal anyone s money. I never committed the act of theft and the act of fraud or the act of selling unregistered securities. (Tr. 38-39.) In similar situations where it has found a bar to be appropriate, the Commission has noted that when past misconduct involves fraud, fidelity to the public interest requires consideration of the fact that the securities business is one in which opportunities for dishonesty recur constantly. Alexander V. Stein, 59 SEC Docket at 1501 n.20 (citing Richard C. Spangler, 46 S.E.C. at 252-53). Mr. Scott has taken several positions that are inconsistent and/or unintelligible. In the face of felony convictions that involved several individuals, Mr. Scott inexplicably attempts to avoid responsibility for his illegal action with the claim that he never really did anything with individual investors, only as an officer of the corporation seeking capitalization of that corporation. (PH Tr. 20-21; Tr. 35-38.) The OIP used the designation IWS to refer to Ira W. Scott, the sole proprietorship registered as an investment adviser. Mr. Scott s answer stated that he did not do business as Ira W. Scott and not IWS. This record, and my observation of Mr. Scott s demeanor at the hearing, indicate that it is almost certain that Mr. Scott will commit future violations of the securities laws if he is allowed to participate in the securities industry in the future. (Tr. 37-39, 41; see also Mr. Scott s Response.) There are no mitigating circumstances. For all the reasons, I find that it is in the public interest to bar Mr. Scott from being associated with an investment adviser.<(8)> Record Certification Pursuant to Rule 351(b) of the Commission's Rules of Practice, 17 C.F.R. 201.351(b) (1996), I certify that the record includes the items set forth in the record index issued by the Secretary of the Commission on January 16, 1997. Order Based on the findings and conclusions set forth above, I ORDER, pursuant to Section 203(f) of the Investment Advisers Act of 1940, that Ira William Scott is barred from being associated with an investment adviser. <(8)> I deny the Division s request that I bar Mr. Scott from association with any broker, dealer, municipal securities dealer, or investment company because these measures are beyond those authorized by Section 203(f) of the Advisers Act which the Commission cited as the basis for this proceeding. (OIP III.B.; Division s Post-Hearing Brief at 8.) ======END OF PAGE 7====== This order shall become effective in accordance with and subject to the provisions of Rule 360 of the Commission's Rules of Practice, 17 C.F.R. 201.360 (1996). Pursuant to that rule, a petition for review of this initial decision may be filed within twenty-one days after service of the decision. It shall become the final decision of the Commission as to each party who has not filed a petition for review pursuant to Rule 360(d)(1) within twenty-one days after service of the initial decision upon him, unless the Commission, pursuant to Rule 360(b)(1), determines on its own initiative to review this initial decision as to any party. If a party timely files a petition for review, or the Commission acts to review as to a party, the initial decision shall not become final as to that party. __________________________ Brenda P. Murray Chief Administrative Law Judge
II. FOR IMMEDIATE RELEASE 11/5/2002 November 5, 2002 INDICTMENT OF ALLEGED OFFSHORE TAX EVASION SCHEME SHELTER PROMOTERS WASHINGTON, D.C. - Eileen J. OConnor, Assistant Attorney General for the Justice Department Tax Division, and John W. Suthers, United States Attorney for the District of Colorado, along with David B.Palmer, IRS Chief, Criminal Investigation, today announced that three operators of Tower Executive Resources, an alleged promoter of illegal tax evasion schemes, were indicted by a federal grand jury in Denver on various tax fraud charges.
TOWER EXECUTIVE RESOURCES, LTD. Filing Date: 12/01/1995 Status: REVOKED State of Incorporation: FC; PO BOX 2553 LITTLETON CO 80161 Inactive Date: 06/01/2002
Failed 4/8/1993 April 8 12 (i)PREMIER BANK, NORTHRIDGE, CALIFORNIA. Total assets $74.3 million. Total deposits $69.7 million in 4,700 accounts. Insured deposits assumed by Trans-World Bank, Sherman Oaks, California. Advance dividend 57 percent of uninsured claims. FDIC outlay $49.8 million (PR-33-93).
PAUL D. HARRIS and LESTER R. RETHERFORD, residents of Colorado,
TRANSBAY DESIGN AND ENGINEERING SERVICES, INC. Filing Date: 11/14/2000 Status: DISSOLVED State of Inc: CO Inactive : 01/01/2004 Agent : HARRIS PAUL : 37110 TIMBER DR ELIZABETH Colorado 80107
YOUR ONLY YOUNG TWICE, LTD. Filing Date: 03/20/2000 Status: GOOD State of Incorporation: CO Last Report: 03/10/2003 Agent Name: HARRIS PAUL D : 37110 TIMBER DR ELIZABETH Colorado 80107 PO Box: PO BOX 2410 ELIZABETH None 80107
PATRA SERVICES, INC. Filing Date: 03/08/1995 Status: GOOD State of Incorporation: CO Term: Last Report: 03/10/2003 Agent Name: RETHERFORD LES ROY Physical Address: 113 LATIGO LANE STE D408 CANON CITY Colorado 81212
together with ROBERT N. BEDFORD, a resident of Florida,
Florida Profit PROFESSIONAL ECONOMIC RESOURCES CORPORATION 3754 CENTRAL AVE SAINT PETERSBURG FL 33711 US Changed 05/14/2002 PO BOX 48295 ST PETERSBURG FL 33745-8295 Date Filed 10/28/1992 State FL Status ACTIVE Agent Name & Address BEDFORD, ROBERT N 17680 OAK AVE. SEMINOLE FL 33772 Address Changed: 05/04/1999
Florida Profit VICTORY FINANCIAL GROUP, INC.25 SECOND STREET N. STE. 203 ST. PETERSBURG FL 33701 P.O. BOX 48295 ST. PETERSBURG FL 33743 Date Filed 02/05/1998 State FLDISSOLUTION 09/24/1999 KEELING, RONALD C 25 SECOND STREET N. STE. 203 ST. PETERSBURG FL 33701
Florida Profit SIGNATURE HOMES OF WEST CENTRAL FLORIDA, INC. 3754 CENTRAL AVE SAINT PETERSBURG FL 33711 Changed 05/01/2001 P O BOX 48295 ST. PETERSBURG FL 33743 Date Filed 02/11/1999 State FL DISSOLUTION10/04/2002 KEELING, RONALD C 3754 CENTRAL AVE SAINT PETERSBURG FL 33711 Officer/Director Detail HERRINGTON, TIMOTHY R 11680 OAK AVE SEMINOLE FL 33772 PD BEDFORD, ROBERT N 11680 OAK AVE SEMINOLE FL 33772 VD KEELING, RONALD C 2826 BOCA CIEGA DR. N. ST. PETERSBURG FL 33710
Florida Profit OMEGA TELECOM OF WEST CENTRAL FLORIDA, INC.7194 SEMINOLE BLVDMAILING ADDRESS 7194 SEMINOLE BLVD. SEMINOLE FL 33772 Date Filed 11/01/1999 State FL DISSOLUTION 09/22/2000 Registered Agent KEELING, RONALD C 7194 SEMINOLE BLVD. SEMINOLE FL 33772
Florida Profit M.S.W.- ONE OF LAKELAND, INC. 7194 SEMINOLE BOULEVARD SEMINOLE FL 33772 Date Filed 11/08/1999 State FL DISSOLUTION 09/22/2000 Registered Agent Name & Address KEELING, RONALD C 7194 SEMINOLE BOULEVARD SEMINOLE FL 33772 Articles executed 11/3/1999
Florida Limited Liability PENTASTAR ASSET MANAGEMENT COMPANY, L.L.C. 3754 CENTRAL AVENUE ST. PETERSBURG FL 3371 3754 CENTRAL AVENUE ST. PETERSBURG FL 33711 D Date Filed 11/20/2000 State FL DISSOLUTION 10/04/2002 Agent Name KEELING, RONALD C 3754 CENTRAL AVENUE ST. PETERSBURG FL 33711 - BEDFORD, ROBERT N 11680 OAK AVENUE SEMINOLE FL 33772 MGRP KEELING, RONALD C 2826 BOCA CIEGA DR N ST PETERSBURG FL 33710 PTR DAVIS, JERRY 3754 CENTRAL AVE ST PETERSBURG FL 33711
were charged with conspiring to defraud the United States. Additionally, HARRIS and RETHERFORD were charged with 26 counts of aiding and assisting the filing of false income tax returns for the years 1996 through 1999. In addition, HARRIS was charged with filing false Reports of Foreign Bank and Financial Account for 1997 and 1998; and RETHERFORD was charged with filing a false Foreign Bank and Financial Report for 1997 and failing to file the report for 1998. The Department of Justice is working with the IRS to identify and prosecute criminals who use offshore bank accounts and credit cards to commit tax evasion. One of our highest priorities is to shut down tax evasion schemes and prosecute their promoters to the full extent of the law, said Assistant Attorney General Eileen J. OConnor. According to the indictment, HARRIS, RETHERFORD, and BEDFORD set up shell corporations for small business owners that were used to conceal nearly $9 million in taxable income in secret accounts in the Turks and Caicos Islands and other foreign countries from 1992 through 1999. The indictment further alleges that although the defendants made it appear as though these offshore transfers were payments for consulting services, most of the Tower members used debit cards and loans to spend the money they had secreted offshore. To make use of this service, many members allegedly paid an initiation fee of $50,000, according to the indictment.
On June 28, 2002, in Massachusetts, John Mikutowicz was convicted on charges of conspiracy, tax evasion and filing false corporate tax returns, in conjunction with his membership in Tower.
"Foreign bank accounts, and the subsequent use of credit and debit cards, established for the purpose of evading taxes pose a serious threat to tax administration. Such actions undermine public confidence in the Service's ability to administer the tax laws fairly and effectively," said David B. Palmer, IRS Chief, Criminal Investigation. The ongoing investigation is being conducted by the Internal Revenue Service, Criminal Investigation Division. The prosecution is being handled jointly by attorneys from the Tax Divisions Criminal Enforcement Section and the United States Attorneys Office. Conspiracy to defraud the United States government, in violation of Title 18 United States Code, Section 371, carries with it a maximum penalty of five years in prison, a $250,000 fine and/or three years of supervised release. Aiding and assisting the preparation or filing of a false income tax return, in violation of Title 26 United States Code, Section 7206(2), carries a maximum penalty of three years in prison, a $250,000 fine and/or one year supervised release. Failure to file, or filing a false Report of Foreign Bank and Financial Account, in violation of Title 31 United States Code, Sections 5314 and 5322, carries a maximum penalty of ten years in prison, a $500,000 fine and/or three years supervised release. These charges are only allegations. In the American justice system, a person is presumed innocent unless and until he or she is proven guilty in a court of law.
III. FOR IMMEDIATE RELEASE February 26, 2004 CFO AND CONTROLLER OF NOW DEFUNCT VARI-L CHARGED WITH FALSIFYING SEC FILINGS TO INFLATE EARNINGS DENVER
FAR WEST VENTURES LLC Filing Date: 12/13/2000 Status: GOOD State of Incorporation: CO Last Report: 02/26/2004 Agent Name: TRAN TONI Physical Address: 333 S FEDERAL BLVD STE 203 DENVER Colorado 80219
John Suthers, United States Attorney for the District of Colorado, Kathleen Roberts, Postal Inspector In Charge in Denver, and Phillip B.J. Reid, Special Agent in Charge of the Federal Bureau of Investigations Denver Office, today announced that two executives of the now defunct Denver based Vari-L Company, Inc.
06/27/1985 VRY COMPANY, INC. 2 19871647177 MRGDOF 11/27/1985 n/a VARI-L COMPANY, INC
VL DISSOLUTION CORPORATION Filing Date: 06/27/1985 Status: DISSOLVED State of Incorporation: CO Inactive Date: 12/01/2004 Last Report: 08/26/2003
have been charged with falsifying information to inflate the companys revenue. Both executives were charged today by way of separate Informations, after each waived the right to be indicted by a federal grand jury. JON CLARK, age 57, of Navajo Dam, New Mexico, formerly Vari-Ls Chief Financial Officer,
INTEGRITY MORTGAGE SERVICES, LLC Filing Date: 09/03/2003 Status: GOOD State of Incorporation: CO Registered Agent Name: CLARK JON Physical Address: 5018 W 6TH ST R GREELEY Colorado 80634
was charged with one count of making a false statement in a report filed with the United States Securities and Exchange Commission (SEC). If convicted, he faces up to 10 years in federal prison. SARAH HUME, age 55, of Aurora, Colorado, formerly Vari-Ls Controller, was charged with one count of falsifying corporate books and records. If convicted, she faces up to 10 years in federal prison. According to each of the criminal Information documents filed today, Vari-L was a publicly traded company that marketed a range of signal processing components that were used in communications equipment and systems, such as cellular telephones and base stations. As a public company, Vari-L was required to comply with regulations of the SEC to ensure that the companys financial information is accurately recorded and disclosed to the investing public. JON CLARK, in his various positions at Vari-L, including Chief Financial Officer, was responsible for supervising the controller and overseeing the accounting functions and financial books, and also for reviewing and signing quarterly and annual reports filed with the SEC. SARAH HUME, in her various positions at Vari-L, including Controller, was responsible for supervising accounting department employees, posting and maintaining the financial books and records of the company, and preparing the financial statements of the company for inclusion in the quarterly and annual filings with the SEC. From January 1997 through December 1999, Vari-L maintained false books and records that reflected two types of improper revenue. The fraudulent revenue entries were allegedly made in order to manage the companys earnings and to falsely achieve certain earnings levels. HUME, as the Controller, allegedly maintained falsified books, records, and accounts for Vari-L. Specifically, she falsified and caused to be falsified Vari-Ls revenue on its accounting records, and later converted such falsely claimed revenue into a fixed asset on Vari-Ls books. CLARK, as the Principal Financial and Accounting Officer of Vari-L, is alleged to have knowingly and willfully caused to be made false statements to the SEC in a 1998 annual report filed with the SEC, in which Vari-Ls financial statements included fraudulent revenue, and further omitted to disclose the fraudulent accounting entries to convert improperly claimed revenue into a fixed asset. Fraudulent corporate accounting practices, such as those alleged today, not only shake investor confidence, but also undermine our countrys economic foundation, United States Attorney John Suthers said. Corporate corruption cases must be pursued to ensure the integrity of our economy. As a member of the National Corporate Fraud Task Force, the U.S. Postal Inspection Service is committed to the investigation and prosecution of those individuals who seek to deceive investors and undermine the integrity of our financial markets. Our primary objective is to protect consumers and to hold those responsible for accurate financial reporting accountable for their actions, noted Postal Inspector In Charge Kathleen Roberts. The Vari-L case was investigated by the U.S. Postal Inspection Service, the Federal Bureau of Investigation (FBI), and the Securities and Exchange Commission. The case is being prosecuted by Assistant U.S. Attorney Patricia Davies. Following their initial appearances, the respective cases against HUME and CLARK will be assigned to a federal district judge and scheduled for further proceedings. These charges are only allegations, and the defendants are presumed innocent unless and until proven guilty.
IV. FOR IMMEDIATE RELEASE WEDNESDAY, MARCH 24, 2004 WWW.USDOJ.GOV TAX (202) 514-2007 TDD (202) 514-1888 IRWIN SCHIFF AND TWO ASSOCIATES INDICTED FOR TAX FRAUD WASHINGTON D.C.
CARLYLE GROUP LLC Number: 200408610040 Date Filed: 3/24/2004 Status: active Jurisdiction: CALIFORNIA Principal Address 7083 HOLLYWOOD BLVD STE 180 LOS ANGELES, CA 90028 Agent for Service of Process WALKER CARLISLE WATSON 922 SOUTH SIERRA BONITA AVE LOS ANGELES, CA 90036
- Eileen J. OConnor, Assistant Attorney General for the Tax Division, United States Department of Justice; Daniel G. Bogden, U.S. Attorney for the District of Nevada; and Nancy Jardini, Chief, Internal Revenue Service Criminal Investigation Division announced today that in Las Vegas, Nevada, a federal grand jury returned a thirty-three (33) count indictment charging Irwin Schiff, Cynthia Neun, and Lawrence Cohen with conspiracy (18 U.S.C. §371), and aiding and assisting in the preparation and filing of fraudulent federal income tax returns (26 U.S.C. §7206(2)). Messrs. Schiff and Cohen are also charged with income tax evasion (26 U.S.C. §7201). Ms. Neun is also charged with willfully failing to file federal income tax returns (26 U.S.C. §7203), Social Security disability fraud (42 U.S.C. §408) and theft of government property (18 U.S.C. §641). If convicted, Mr. Schiff faces maximum potential sentences totaling forty-three years in jail and $3.25 million in fines; Ms. Neun, fifty-one years in jail and $3.4 million in fines; and Mr. Cohen, twenty-seven years in jail and $1.5 million in fines. There is no magic way out of paying taxes, said Assistant Attorney General Eileen J. OConnor. If you fall for a scheme to cheat the IRS, you may lose your money to a con artist. You may wind up in federal prison. In the end, you will still owe taxes, and you may also owe interest and penalties. The indictment today reminds us that fulfilling individual tax obligations is a legal requirement and those who willfully evade that responsibility will be prosecuted, stated Nancy Jardini, Chief, IRS Criminal Investigation. We should not forget that the ultimate victims in tax fraud cases are the people of the United States. Those taxpayers who diligently file tax returns each year. Count one of the indictment alleges that the defendants conspired to file and cause other persons to file fraudulent tax returns, including more than 4,950 tax returns that fraudulently reported no income, a scheme the defendants referred to as a zero return. Counts two through sixteen of the indictment charge the three defendants with allegedly aiding and assisting in the preparation and filing of fraudulent zero returns. The indictment alleges that the fraudulent zero returns reported zeroes on every line of a federal income tax return related to income and expenses, and often claimed a full refund of all federal taxes withheld or paid over to the IRS. It also alleges the defendants promoted the zero return scheme through written materials and audiotapes sold through a business known as Freedom Books; and during seminars, radio shows such as Freedom Now (co-hosted by Mr. Schiff and Ms. Neun), and personal consultations with clients. The indictment further alleges that after filing zero returns, many of the defendants clients faced IRS audits and collection of taxes due. Mr. Schiff, who has owned Freedom Books since at least 1995, together with his co-defendants, allegedly encouraged clients to pay for additional products that were supposed to help the clients handle their problems with the IRS. The indictment alleges that Mr. Schiff and Ms. Neun charged clients for writing responses to IRS correspondence, drafting court pleadings, and representing them at administrative hearings before the IRS or in judicial proceedings. Between 1997 and 2002, Freedom Books allegedly generated gross business receipts of approximately $3,726,000. Despite owning the lucrative business, the indictment alleges Mr. Schiff did not report any income on any federal income tax return filed with the Internal Revenue Service for calendar years 1987 through 2002. The indictment also charges Mr. Schiff with allegedly evading the payment of $1,369,000 in federal taxes, interest, and penalties due for the years 1979 through 1985. It alleges that he hid income and assets in an offshore bank account, using wire transfers and debit cards to bring the money back as needed; opened bank accounts using fictitious tax identification numbers; tried to hide the true ownership of his car by placing it in the name of a Pennsylvania-based business; and conducted financial transactions through anonymous warehouse banking services offered by the Christian Patriot Association. On June 7, 2002, after trial in the United States District Court in Oregon, leaders of the Christian Patriot Association, including Richard and Dorothy Flowers, were convicted of tax crimes in connection with a warehouse bank scheme designed to eliminate records customarily made in financial transactions.
The charges contained in the indictment are only allegations. In the American justice system, a person is presumed innocent unless and until he or she is proven guilty in a court of law.
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