UNITED STATES OF AMERICA
In the Matter of
JOHN E. BRINKER, Jr. and
|ORDER INSTITUTING |
TO SECTION 15(b) OF THE
SECURITIES EXCHANGE ACT
OF 1934, MAKING FINDINGS,
AND IMPOSING REMEDIAL SANCTIONS
The Securities and Exchange Commission ("Commission") deems it appropriate and in the public interest that public administrative proceedings be and hereby are instituted pursuant to Section 15(b) of the Securities Exchange Act of 1934 ("Exchange Act") against John E. Brinker, Jr. ("Brinker") and Gary J. Bentz ("Bentz") (collectively "Respondents").
In anticipation of the institution of these proceedings, Respondents have submitted Offers of Settlement to the Commission that the Commission has determined to accept. Solely for the purposes of these proceedings and any other proceedings brought by or on behalf of the Commission or in which the Commission is a party and without admitting or denying the findings contained in this order, except as to the entry of the permanent injunction described in paragraph II.H. below and the Commission's jurisdiction over them and over the subject matter of this proceeding, which are admitted, Respondents consent to the institution of public administrative proceedings, and the findings and remedial sanctions set forth below.
On the basis of this Order and the Offers of Settlement submitted by Respondents, the Commission finds that:
A. Brinker, age 54, resides in Cincinnati, Ohio. He worked as a registered representative of three registered broker-dealers during 1992-98. Since then, Brinker has not been affiliated with any registered broker-dealer or registered with the Commission in any capacity.
B. Bentz, age 44, resides in Loveland, Ohio. He worked as a registered representative for two registered broker-dealers during 1994-99. Since then, Bentz has not been affiliated with any registered broker-dealer or registered with the Commission in any capacity.
C. Castlerock Consulting LLC ("Castlerock") is an Ohio limited liability company. Brinker is Castlerock's manager. Bentz is also a Castlerock employee. Castlerock has never been registered with the Commission in any capacity.
D. Wellington Capital Holdings, Ltd., Inc. ("Wellington Capital Nevada") and Wellington Capital Holdings, Ltd. ("Wellington Capital Bahamas") (collectively "Wellington Capital") were incorporated in Nevada and the Bahamas respectively. Brinker and Bentz are the officers of Wellington Capital Nevada and the directors of Wellington Capital Bahamas. Neither Wellington entity has ever been registered with the Commission in any capacity.
E. During the period of June 1998 through February 27, 2001, Castlerock and Wellington Capital engaged in the business of effecting transactions in securities for the accounts of others and Brinker and Bentz were associated with Castlerock and Wellington Capital.
F. On February 27, 2001, the Commission filed a complaint in the United States District Court for the Southern District of Indiana against Brinker, Bentz, Castlerock, Wellington Capital Nevada, Wellington Capital Bahamas, and several other entities, captioned SEC v. John E. Brinker, et al., Civil Action No. IP01-0259 C-H/G.
G. The Commission's complaint alleges as follows: From at least June 1998 through the date of the complaint, Brinker, Bentz, and others violated federal securities laws by engaging in a Ponzi scheme that raised at least $7.1 million from over 200 investors. In the scheme, Brinker, Bentz, and others offered and sold securities in a trading program that they represented would generate annual returns of 50% or more through trading in prime bank instruments. Brinker, Bentz, and others misrepresented and omitted material facts regarding the use of investor funds, the safety of investor funds, the existence of prime bank trading programs, guarantees regarding the investment, and the existence of insurance on the investment. Castlerock was the nerve center through which Brinker and Bentz transacted business with investors. Wellington Capital corresponded with investors and provided them forms to process their investments. Wellington Capital Nevada received investor funds in its bank account, which Brinker and Bentz controlled. Of the $7.1 million in investor funds raised and deposited in the Wellington Capital Nevada account, Brinker and Bentz transferred at least $5.4 million to themselves, Castlerock, investors, and other individuals and entities with no apparent involvement in any trading program. The complaint further alleges that Brinker and Bentz violated antifraud provisions of the federal securities laws, and that Castlerock and Wellington Capital violated, and Brinker and Bentz aided and abetted violations of, the broker-dealer registration provisions of the federal securities laws.
H. On February 27, 2001, in SEC v. Brinker, the Honorable David F. Hamilton entered an order permanently enjoining Brinker and Bentz from violations of Sections 5(a), 5(c), and 17(a) of the Securities Act of 1933 and Sections 10(b), 15(a), and 15(c)(1) of the Exchange Act and Rules 10b-5 and 15c1-2 thereunder. Brinker and Bentz consented to the order without admitting or denying the above-described allegations in the complaint.
In view of the foregoing, the Commission deems it appropriate and in the public interest to accept the Offers of Settlement of Respondents.
Accordingly, IT IS ORDERED that Respondents John E. Brinker, Jr. and Gary J. Bentz are barred from association with any broker or dealer.
By the Commission.
Jonathan G. Katz
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