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U.S. Securities and Exchange Commission

UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF ALABAMA SOUTHERN DIVISION


UNITED STATES SECURITIES

AND EXCHANGE COMMISSION,

Plaintiff,

v.

TIMOTHY R. HEYMAN and

HEYMAN INTERNATIONAL, INC.,

Defendants.


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CIVIL ACTION NO.

COMPLAINT

Plaintiff, United States Securities and Exchange Commission ("Commission"), alleges and states as follows:

NATURE OF THE COMPLAINT

1. From at least 2001 through the present, Timothy R. Heyman ("Heyman"), has raised at least $10 million from approximately 150 investors by offering and selling securities issued by Heyman International, Inc. ("Heyman International"). Heyman represents to investors, most of whom live in and around Birmingham, Alabama, that he will pay them a minimum of 10% per month on their investment generated by depositing their funds in "high yield depository accounts." These representations are false and misleading. In reality, the Heyman International offering is a fraud, because Heyman is operating a Ponzi scheme. Heyman uses new investors' funds to pay previous investors the 10% monthly "interest" payments that he promised to make. He also uses a significant amount of investor funds to pay for his personal expenses, such as luxury cars and expensive trips abroad. Of the $10 million Heyman received from investors, he has used at least $1.3 million for personal expenses.

2. Accordingly, the Commission seeks against the defendants (a) a temporary restraining order, an order of preliminary injunction and an order of permanent injunction enjoining defendants from current and future violations of certain federal securities laws, (b) an asset freeze to avoid dissipation of assets pending the resolution of this action, (c) an accounting, (d) expedited discovery, (e) repatriation of assets, (f) an order prohibiting the destruction, mutilation, concealment, alteration or disposition of books and records, (g) disgorgement of all ill-gotten gains and (h) civil penalties, and for such other ancillary and equitable relief as is sought herein and may be appropriate.

DEFENDANTS

3. Timothy R. Heyman, is 33 years old and last resided in Findlay, Ohio. Heyman offers and sells investments issued by Heyman International. Heyman controls all of the Heyman International bank accounts into which he deposits and withdraws investor funds he raises from the Heyman International offering. Heyman is President, Treasurer and Secretary of Heyman International.

4. Heyman International, Inc., a Nevada corporation, was incorporated in 2000. Heyman International is controlled by Heyman who is the corporation's President, Secretary and Treasurer. Heyman International purports to be in the "business of financing, and asset growth management." Heyman International has no business purpose other than offering investments in the form of "Depository Agreements." No registration statement has been filed or is in effect with the Commission in connection with the securities offered and sold by Heyman and Heyman International.

JURISDICTION

5. This Court has jurisdiction over this action pursuant to Section 22(a) of the Securities Act of 1933 [15 U.S.C. 77v(a)] and Sections 21(e) and 27 of the Securities Exchange Act of 1934 [15 U.S.C. 78aa] and 28 U.S.C. 1331. Venue is proper in this Court pursuant to Section 22(a) of the Securities Act of 1933 [15 U.S.C. 77v(a)] and Section 27 of the Securities Exchange Act of 1934 [15 U.S.C. 78aa].

6. The acts, transactions, practices, and courses of business constituting the violations alleged herein occurred within the jurisdiction of the United States District Court for the Northern District of Alabama and elsewhere.

7. Defendants, directly and indirectly, have made, and are making, use of the means and instrumentalities of interstate commerce, the means and instruments of transportation and communication in interstate commerce, and the mails, in connection with the acts, transactions, practices, and courses of business alleged herein.

FACTS

The Heyman International Offering

8. From at least 2001 through the present, Heyman has raised at least $10 million from at least 150 investors.

9. Heyman raised these funds from investors by offering and selling securities in the form of a written "Depository Agreement" issued by Heyman International. 10. The majority of Heyman International investors live in and around Birmingham, Alabama.

11. Heyman International has also offered and sold Depository Agreements to residents of Arizona, Florida, Georgia, Illinois, Indiana, Kentucky, Maryland, Michigan, New Jersey and Tennessee.

12. Often, the investors are elderly and have limited experience with securities and investments. Investors have withdrawn retirement savings, sold land and used business assets in order to fund their investment with Heyman International.

13. Heyman, on behalf of Heyman International, and each investor execute a Depository Agreement that describes Heyman's representations to investors. Investors receive no other written information regarding their Heyman International investment.

14. Heyman represents to investors through the Depository Agreement that he has access to "certain proprietary high yield depository accounts, and trading programs in the United States and elsewhere." Heyman further represents to investors that their funds will be deposited in these accounts to "increase the overall yield of the accounts" and that, as a result, investors will earn a minimum of 10% per month on their principal investment. He also represents that investor funds are fully refundable.

15. After receiving investor funds, Heyman pools the funds in non-interest bearing bank accounts under the name of Heyman International (hereinafter referred to as "Heyman International Bank Accounts"). Heyman alone controls these accounts.

16. In reality, Heyman is operating a Ponzi scheme by using new investors' funds to make "interest" payments to previous investors. He pays "interest" out of the investor funds that he pooled in the non-interest bearing Heyman International Bank Accounts. Out of the $10 million Heyman International raised from investors, he used nearly $7 million to pay investors their "interest."

17. Heyman also uses investor funds from the Heyman International Bank Accounts to pay for his personal expenses, such as luxury cars and expensive trips abroad. Of the $10 million Heyman received from investors, he has used at least $1.3 million for personal expenses.

18. Contrary to the representations that he made in the Depository Agreements, Heyman may have invested, at most, a de minimus amount of investor funds. Any investments that Heyman may have made did not earn the interest that Heyman tells investors they will receive.

19. Heyman does not disclose to investors that instead of investing their funds, he uses their funds to pay other investors and Heyman's personal expenses.

20. Contrary to the representations that Heyman made in the Depository Agreement, Heyman International cannot fully repay the investors' principal. Heyman International's Bank Accounts do not have funds sufficient to repay the amount investors have given to him. Heyman International's Bank Accounts contain approximately $1 million remaining of the $10 million invested with Heyman International since 2001.

21. The fact that Heyman uses investor funds to pay previous investors and his personal expenses and that Heyman International's accounts do not have sufficient funds to fully refund investors is information that would be highly important to investors because they would not have invested with Heyman International if they were informed of these facts.

22. Heyman continues to raise funds from investors based on the misrepresentations in the Depository Agreement. He also continues to pay investors their monthly "interest" payments.

23. No registration statement has been filed or is in effect with the Commission in connection with the securities offered or sold by Heyman and Heyman International.

COUNT I

Violations of Section 5(a) and (c) of the Securities Act of 1933 [15 U.S.C. 77e(a) and (c)]

24. Paragraphs 1 through 23 above are realleged and incorporated herein by reference.

25. By their conduct, Heyman and Heyman International, directly or indirectly: (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 or caused to be carried through the mails or in interstate commerce, by any means or instruments of transportation, securities as to which no registration statement was in effect; and (iii) made use of any means or instruments of transportation or communication in interstate commerce or of the mails to offer to sell or offer to buy, through the use or medium of a prospectus or otherwise, securities as to which no registration statement had been filed.

26. No valid registration statement was filed or was in effect with the Commission in connection with Heyman and Heyman International's offer and sale of Heyman International "Depository Agreements."

27. By reason of the foregoing, Heyman and Heyman International have violated and are violating 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 of 1933[15 U.S.C. 77q(a)(1)]

28. Paragraphs 1 through 23 above are realleged and incorporated herein by reference.

29. By their conduct, Heyman and Heyman International, in the offer or sale of Heyman International securities, by the use of any means or instruments of transportation or communication in interstate commerce and by the use of the mails, directly or indirectly, have employed devices, schemes or artifices to defraud, as more fully described in Paragraph 25.

30. Heyman and Heyman International knew, or were severely reckless in not knowing, the facts and circumstances described in this Complaint.

31. By reason of the foregoing, Heyman and Heyman International violated and are violating Section 17(a)(1) of the Securities Act [15 U.S.C. 77q(a)(1)].

COUNT III

Violations of Sections 17(a)(2) and 17(a)(3) of the Securities Act of 1933 [15 U.S.C. 77q(a)(2) and 77q(a)(3)]

32. Paragraphs 1 through 23 above are realleged and incorporated herein by reference.

33. By their conduct, Heyman and Heyman International, in the offer or sale of Heyman International securities, by the use of any means or instruments of transportation and communication in interstate commerce and by the use of the mails, directly or indirectly, have obtained money or 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; or have engaged in transactions, practices or courses of business which have been or are operating as a fraud or deceit upon purchasers of Heyman International securities.

34. By reason of the foregoing, Heyman and Heyman International violated and are violating 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 Securities Exchange Act of 1934 [15 U.S.C. 78j(b)] and Rule 10b-5 thereunder [17 C.F.R. 240.10b-5]

35. Paragraphs 1 through 23 above are realleged and incorporated herein by reference.

36. By their conduct, Heyman and Heyman International, in connection with the purchase or sale of securities of Heyman International, by the use of any means or instrumentalities of interstate commerce or by the use of the mails, directly or indirectly: (a) employed a device, scheme or artifice to defraud; (b) made untrue statements of material fact and 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 (c) engaged in an act, practice, or course of business which has been or is operating as a fraud or deceit upon other persons, including purchasers and sellers of such securities.

37. Heyman and Heyman International knew, or were severely reckless in not knowing, the facts and circumstances described in this Complaint.

38. By reason of the foregoing, Heyman and Heyman International have violated and are violating 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].

hRELIEF REQUESTED

WHEREFORE, the Commission respectfully requests that the Court:

1. Find that the Defendants committed the violations alleged in this Complaint.

2. Enter a Temporary Restraining Order, Order of Preliminary Injunction, and Order of Permanent Injunction, in forms consistent with Rule 65(d) of the Federal Rules of Civil Procedure, restraining and enjoining:

    (a) Heyman and Heyman International, their officers, agents, servants, employees, attorneys, and those persons in active concert or participation with them who receive actual notice of the Temporary Restraining Order, Order of Preliminary Injunction, and Order of Permanent Injunction by personal service or otherwise from directly or indirectly engaging in the acts, practices or courses of business described above, or in conduct of a similar purport and object from violating Sections 5(a) and (c) of the Securities Act [15 U.S.C. 77e(a) and (c)];

    (b) Heyman and Heyman International, their officers, agents, servants, employees, attorneys, and those persons in active concert or participation with them who receive actual notice of the Temporary Restraining Order, Order of Preliminary Injunction, and Order of Permanent Injunction by personal service or otherwise from directly or indirectly engaging in the acts, practices or courses of business described above, or in conduct of a similar purport and object, in violation of Section 17(a) of the Securities Act [15 U.S.C. 77q(a)];

    (c) Heyman and Heyman International, their officers, agents, servants, employees, attorneys, and those persons in active concert or participation with him who receive actual notice of the Temporary Restraining Order, Order of Preliminary Injunction, and Order of Permanent Injunction by personal service or otherwise from directly or indirectly engaging in acts practices or courses of business described above, or in conduct of a similar purport and object, in violation 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.

3. Order defendants to disgorge any and all ill-gotten gains, plus prejudgment interest.

4. Issue the following orders, as more fully described in the Plaintiff's Ex Parte Motion for Temporary Restraining Order and Other Emergency Relief:

    (a) Freezing the assets of Heyman and Heyman International in accordance with this Court's Order Freezing Assets;

    (b) Requiring defendants to repatriate assets in any non-United States location;

    (c) Granting expedited discovery;

    (d) Prohibiting defendants from destroying documents; and

    (e) Requiring defendants to provide the Court an accounting of their assets and liabilities, among other things.

5. Impose civil penalties against Heyman and Heyman International 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].

6. Grant such other and further relief as may be necessary and appropriate.

7. Retain jurisdiction over this action to implement and carry out the terms of all orders and decrees that may hereby be entered, or to entertain any suitable application or motion by the Commission for additional relief within the jurisdiction of this Court.

Respectfully submitted,

s/___________________________
Allison M. Sawyer
One of the Attorneys for Plaintiff
U.S. SECURITIES AND EXCHANGE COMMISSION
175 West Jackson Boulevard
Chicago, Illinois 60604
Telephone: (312) 353-4945
Facsimile: (312) 353-7398
E-mail: SawyerA@sec.gov
Illinois Bar No.: 06281486

  

s/_______________________
Steven L. Klawans
One of the Attorneys for Plaintiff
U.S. SECURITIES AND EXCHANGE COMMISSION
175 West Jackson Boulevard
Chicago, Illinois 60604
Telephone: (312) 886-1738
Facsimile: (312) 353-7398
E-mail: KlawansS@sec.gov
Illinois Bar No.: 06229593

Dated: April ___, 2004.

 

http://www.sec.gov/litigation/complaints/comp18659.htm


Modified: 04/07/2004