UNITED STATES OF AMERICA
In the Matter of
J. CHARLES REIVES
|ORDER MAKING FINDINGS AND IMPOSING SANCTIONS BY DEFAULT AGAINST J. CHARLES REIVES|
This Order bars J. Charles Reives from association with a broker, dealer, or investment adviser.
The Securities and Exchange Commission (Commission) issued its Order Instituting Proceedings (OIP) in this matter on October 30, 2002, pursuant to Sections 15(b)(6) of the Securities Exchange Act of 1934 (Exchange Act) and 203(f) of the Investment Advisers Act of 1940 (Advisers Act). The OIP alleges that J. Charles Reives acted as an unregistered broker and investment adviser during 1998 and 1999 and was enjoined from selling unregistered securities and from violating the antifraud provisions of the Securities Act of 1933 (Securities Act) and of the Exchange and Advisers Acts. On November 14, the Division of Enforcement (Division) moved for default, pursuant to 17 C.F.R. § 201.155(a)(2), asking that Reives be barred from association with any broker or dealer or investment adviser. Through his attorney, by letter dated November 14, Reives affirmatively stated that he would not defend the proceeding and would accept a default ordering the relief that the Division seeks.
Reives is in default within the meaning of 17 C.F.R. § 201.155(a)(2) in that he affirmatively declined to defend the proceeding. Accordingly, the undersigned finds that the allegations in the OIP are true.
II. FINDINGS OF FACT
Reives was permanently enjoined from violating Sections 5(a), 5(c), and 17(a) of the Securities Act, Sections 10(b) and 15(a) of the Exchange Act and Rule 10b-5 thereunder, and Sections 206(1) and 206(2) of the Advisers Act on August 7, 2002. Securities and Exchange Commission v. Louis M. Lazorwitz, J. Charles Reives, et al., No. 1:02-CV-0112-HTW (N.D. Ga. Aug. 7, 2002). The wrongdoing that led to his injunction occurred from March 1998 until September 1999. While acting as an investment adviser and broker-dealer, Reives and others used Tri-Star Investment Group, L.L.C. (Tri-Star) to offer and sell unregistered securities to over 900 investors in at least thirty-five states and to raise over $15 million. Tri-Star initially alleged that it would invest in bank debentures typical of prime bank schemes, and later claimed it might invest in other international trade opportunities. Reives and others promoted Tri-Star directly and through agents across the United States. Tri-Star promoters led investors to expect profits of twenty percent per month. Reives and others made material misrepresentations and omissions of fact to investors concerning, among other things, the use of investor funds, the expected returns and investment risks, and caused false account statements to be issued to investors.
III. CONCLUSIONS OF LAW
Reives has been permanently enjoined "from engaging in or continuing any conduct or practice in connection with [investment adviser, broker, or dealer] activity, or in connection with the purchase or sale of any security" within the meaning of Sections 15(b)(4)(C) and 15(b)(6)(A)(iii) of the Exchange Act and Sections 203(e)(4) and 203(f) of the Advisers Act. He willfully violated Sections 5(a), 5(c), and 17(a) of the Securities Act, Sections 10(b) and 15(a) of the Exchange Act and Rule 10b-5 thereunder, and Sections 206(1) and 206(2) of the Advisers Act within the meaning of Sections 15(b)(4)(D) and 15(b)(6)(A)(i) of the Exchange Act and Sections 203(e)(5) and 203(f) of the Advisers Act. His unlawful conduct was recurring and egregious. There are no mitigating circumstances.
The Division requests that Reives be barred from association with any broker or dealer or investment adviser. These sanctions will serve the public interest and the protection of investors, pursuant to Section 15(b)(6) of the Exchange Act and Section 203(f) of the Advisers Act. It accords with Commission precedent and the sanction considerations set forth in Steadman v. SEC, 603 F.2d 1126, 1140 (5th Cir. 1979).
IT IS ORDERED that J. CHARLES REIVES IS BARRED from association with any broker or dealer or investment adviser.
Carol Fox Foelak
Administrative Law Judge
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