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U.S. SECURITIES AND EXCHANGE COMMISSION

Litigation Release No. 19717 / June 5, 2006

SEC v. Marion D. Sherrill, Civil Action No. 05-21525-CIV-Martinez (S.D. FL)

The Securities and Exchange Commission announced that on May 26, 2006, the Honorable Beverly B. Martin, United States District Judge for the Northern District of Georgia, entered a Final Judgment As To Defendant Marion D. Sherrill (Sherrill). The judgment enjoined Sherrill from future violations of Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. Sherrill consented to the entry of the judgment without admitting or denying the allegations of the Commission's Complaint. The court ordered Sherrill to pay disgorgement, prejudgment interest and a civil penalty in the amounts of $381,400, $17,183 and $25,000, respectively, provided that the amounts ordered as disgorgement and interest will be reduced by any amount ordered as restitution in Sherrill's related criminal case.

The Complaint, filed on February 9, 2005, alleged that, from approximately May 2003 through January 26, 2005, Sherrill, a registered representative of an Atlanta-based broker-dealer, perpetrated a Ponzi scheme, selling over $400,000 of promissory notes to at least nineteen investors. Under the terms of these notes, Sherrill "borrowed" from his investors principal amounts ranging from $4,400 to $41,000, in exchange for a promise that he would pay monthly interest of 10% per annum and return to them the note's principal at the end of the note's term of either twelve or twenty-four months. Contrary to his representations to some investors, Sherrill did not use investor funds to expand his business operations or to purchase mutual funds. Instead, he deposited most, if not all, of the note proceeds into his personal bank account, combined those proceeds with his own money, and paid his living expenses and various operating expenses of his business from the balance. Sherrill did not disclose to the investors that he paid their monthly interest by using money from new investors and that lacked the capacity to repay the principal without raising new investments.

See also: L. R. 19076 (February 11, 2005).

 

http://www.sec.gov/litigation/litreleases/2006/lr19717.htm


Modified: 06/05/2006