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U.S. Securities and Exchange Commission

United States of America
before the
Securities and Exchange Commission

Securities Exchange Act of 1934
Release No. 48069 / June 20, 2003

Administrative Proceeding
File No. 3-11162


In the Matter of

PAUL E. BRODHAGEN

Respondent.


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ORDER INSTITUTING ADMINISTRATIVE PROCEEDINGS PURSUANT TO SECTION 15(b) OF THE SECURITIES EXCHANGE ACT OF 1934, MAKING FINDINGS, AND IMPOSING REMEDIAL SANCTIONS

I.

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").

II.

In anticipation of the institution of these proceedings, Respondent Paul E. Brodhagen ("Brodhagen" or "Respondent") has submitted an Offer of Settlement (the "Offer") which the Commission has determined to accept. Solely for the purpose of these proceedings and any other proceedings brought by or on behalf of the Commission, or to which the Commission is a party, and without admitting or denying the findings herein, except as to the Commission's jurisdiction over him and the subject matter of these proceedings, and the findings contained in Section III.2 below, which are admitted, Respondent consents to the entry of this Order Instituting Administrative Proceedings Pursuant to Section 15(b) of the Securities Exchange Act of 1934, Making Findings, and Imposing Remedial Sanctions ("Order"), as set forth below.

III.

On the basis of this Order and Respondent's Offer, the Commission finds that:

1. Brodhagen is a resident of Lincoln, Nebraska. During 1998 and 1999, Brodhagen acted as an unregistered broker.

2. On February 20, 2003, an order of permanent injunction and other relief was entered by consent against Brodhagen, permanently enjoining him from future violations of Sections 5(a), 5(c), and 17(a) of the Securities Act of 1933 ("Securities Act"), Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, and Section 15(a) of the Exchange Act, in the civil action entitled Securities and Exchange Commission v. James L. George, Paul E. Brodhagen and Michael J. Wright, Civil Action File Number 1:02-CV-3310-HTW, in the United States District Court for the Northern District of Georgia. The order of permanent injunction against Brodhagen directed that Brodhagen shall pay disgorgement, prejudgment interest thereon, and a civil penalty in amounts to be resolved upon motion of the Commission at a later date. The order of permanent injunction also provides that for purposes of disgorgement, prejudgment interest and the civil penalty, the allegations of the Commission's complaint shall be deemed to be true, and Brodhagen may not, by way of defense, contend that the disgorgement, prejudgment interest and the civil penalty should not be imposed.

3. The Commission's complaint alleged that, during the period from in or about early 1998 to in or about late 1999, Brodhagen and others, while acting as Facilitators in Tri-Star Investment Group, L.L.C. ("Tri-Star"), fraudulently offered and sold securities in unregistered transactions, as part of a larger scheme in which Tri-Star and its promoters sold Tri-Star securities to over 900 investors in at least 35 states, and raised over $15 million. The complaint further alleged that Tri-Star and its promoters initially represented that Tri-Star would invest in bank debentures and later claimed that it might invest in other international trade opportunities. The complaint also alleged that Brodhagen and others offered and sold Tri-Star securities directly and led investors to expect profits of 20% per month in so-called 13-month trading programs, after an initial 90-day waiting period, and that Brodhagen and others lacked a reasonable basis to project such profits. The complaint alleged that Brodhagen thereby violated Sections 5(a) and 5(c) of the Securities Act [15 U.S.C. §§ 77e(a) and 77e(c)], Section 17(a) of the Securities Act [15 U.S.C. § 77q(a)], Section 10(b) of the Exchange Act [15 U.S.C. § 78j(b)] and Rule 10b-5 thereunder [17 C.F.R. § 240.10b-5], and Section 15(a)(1) of the Exchange Act [15 U.S.C. § 78o(a)(1)]. Brodhagen consented to the entry of the order of permanent injunction without admitting or denying the allegations contained in the Commission's complaint, except as to jurisdiction and venue.

IV.

In view of the foregoing, the Commission deems it appropriate and in the public interest to impose the sanctions specified in Respondent Brodhagen's Offer.

Accordingly, it is hereby ORDERED:

Pursuant to Section 15(b)(6) of the Exchange Act, that Respondent Brodhagen be, and hereby is barred from association with any broker or dealer.

For the Commission, by its Secretary, pursuant to delegated authority.

Jonathan G. Katz
Secretary

 

http://www.sec.gov/litigation/admin/34-48069.htm


Modified: 06/23/2003