U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 19790 / August 2, 2006
SEC v. Upshaw and Associates, L.L.C. et al., (U.S.D.C. N.D. Ill., Civil Action Number 04 C 5437, filed August 18, 2004)
The Securities and Exchange Commission announced that on July 25, 2006, Judge Samuel Der-Yeghiayan of the United States District Court for the Northern District of Illinois entered a Final Judgment against James E. Upshaw, Sr. (Upshaw), pursuant to his consent and without admitting or denying the allegations of the Commission's Complaint, permanently enjoining him from violating Sections 5 and 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The Final Judgment also orders Upshaw to pay disgorgement in the amount of $2,189,183.37 plus prejudgment interest in the amount of $68,438.78, but waives payment of those amounts and does not impose a civil penalty against Upshaw based upon his Sworn Statement of Financial Condition and the fact that Upshaw is currently incarcerated. The Circuit Court of Cook County criminally convicted Upshaw for theft and securities fraud in December 2004 and sentenced Upshaw to seven and one-half years in prison. Upshaw is not scheduled to be released from prison until July 2013.
The Commission's Complaint, filed on August 18, 2004, alleged that, from at least October 2000 to August 2004, Upshaw raised approximately $6.5 million from over 130 investors through an "affinity fraud" he conducted on members of the African-American community through his company, Upshaw and Associates, L.L.C. The Complaint further alleged that Upshaw represented to investors that he would invest their funds in large-cap U.S. stocks, Treasury bills and commercial paper, guaranteeing returns of up to 10% per month. Upshaw, however, invested little, if any, investor proceeds in the manner promised. The Commission's Complaint alleged that Upshaw instead used investor funds to pay returns to other investors, fund business ventures for himself, his wife, and his friends, and purchase a luxury home and two luxury cars. Also on July 25, 2006, the Court issued an order dismissing the remaining charges against Upshaw's company, Upshaw and Associates, L.L.C., based on Upshaw and Associates' dissolution in June 2005.
For further information, see LR-18839 (August 19, 2004).