UNITED STATES OF AMERICA
SECURITIES AND EXCHANGE COMMISSION
Securities Exchange Act of 1934
Release No. 50551 / October 15, 2004
Admin. Proc. File No. 3-11710
SEC INSTITUES ADMINISTATIVE PROCEEDINGS AGAINST MICHAEL A. LOMAS AND MICHAEL L. YOUNG
Today, the Commission instituted administrative proceedings against Michael A. Lomas and Michael L. Young, based on the entry, on September 21, 2004, of an order by the United States District Court for the Northern District of Georgia, Atlanta Division, permanently enjoining them 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 Securities Exchange Act of 1934 ("Exchange Act") and Rule 10b-5 thereunder, and from aiding and abetting future violations Section 15(a) of the Exchange Act in the civil action entitled Securities and Exchange Commission v. Mobile Billboards of America, Inc., International Payphone Company, Reserve Guaranty Trust, Michael A. Lomas and Michael L. Young, Civil Action No. 1:04-CV-2763 (NDGA September 21, 2004).
The Commission's complaint alleged that defendants Lomas, Young, Mobile Billboards of America, Inc. ("Mobile Billboards"), Outdoor Media Industries ("Outdoor Media") and Reserve Guaranty Trust ("Trust") operated a Ponzi scheme involving the sale and leaseback of mobile billboards, selling more than $60.5 million of mobile billboard investments to more than 700 investors nationwide. According to the complaint, Mobile Billboards sold investors a billboard frame that attached to the sides of a truck and a GPS monitoring system for $20,000. Mobile Billboards also entered into an agreement with the investor to buy back the frame at the end of the seven-year lease for its original purchase price. The complaint alleged that Outdoor Media leased the billboard frames back from investors for seven years for monthly payments equivalent to 13.49% annually. According to the complaint, Reserve Guaranty issued "Trust Secured Certificates" that guaranteed funding for Mobile Billboards' commitment to buy back the billboard frames at full price at the end of each seven-year lease. The complaint alleged that the collective business did not generate sufficient advertising revenue to make monthly lease payments to investors and, instead, relied on new investor money to make those payments. The complaint also alleged that Lomas and Young directed the independent sales agents who sold the investment. According to the complaint, these sales agents were acting as broker-dealers without being registered with the Commission as broker-dealers.
A hearing will be scheduled before an administrative law judge to determine whether the allegations contained in the Order are true, to provide the Respondents an opportunity to dispute these allegations, and to determine what, if any, remedial sanctions are appropriate and in the public interest.
The Order requires the Administrative Law Judge to issue an initial decision no later that 210 days from the date of service of this Order, pursuant to Rule 360(a)(2) of the Commission's Rules of Practice.
See also the Order in this matter