U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 19793 / August 3, 2006
SEC v. Archie Paul Reynolds a/k/a Dr. A. Paul Reynolds and Success Trust and Holding LLC, Civil Action No. 1:06-CV-1801-RWS (NDGA August 2, 2006)
The Securities and Exchange Commission (Commission) announced today that it has filed a complaint in the United States District Court for the Northern District of Georgia against Archie Paul Reynolds a/k/a Dr. A. Paul Reynolds (Reynolds) and Success Trust and Holding LLC (Success Trust). The complaint alleges that Reynolds represents himself to be Success Trust's founder, main trustee, sole officer, and Chairman. In addition, the complaint alleges that Success Trust is a Delaware limited liability company with its principal place of business in Simpsonville, South Carolina.
The complaint further alleges that, from as early as May 2005 through the present, Reynolds and Success Trust have raised millions of dollars from at least 500 investors by fraudulently offering and selling interests in three investment programs. The complaint alleges that the investment scheme is comprised of three separate Programs -- a Real Estate Program, a Best Efforts 480% Annual Return Program, and a Private Party Loan Agreement. The largest program, the Real Estate Program, in which more than $2 million was invested, projected exorbitant returns from investments in vaguely described "banking processes" which do not in fact exist. These processes were often described in vague and confusing terms which make little or no economic sense. The complaint alleges that Reynolds and Success Trust lured investors with offering materials that falsely claim that each Program pays projected rates of return ranging from 10% to 480% per year and that investments are guaranteed or risk-free. In addition, the complaint alleges that Success Trust's Programs resemble "Prime Bank" frauds.
The Complaint alleges that the defendants have violated the registration and antifraud provisions of the federal securities laws, Sections 5(a), 5(c), and 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder.
On August 2, 2006, the Court issued an order granting the Commission's requests for (i) a temporary restraining order; (ii) an asset freeze; (iii) an accounting of all funds raised; (iv) an order requiring repatriation of any offshore funds; and (v) an order expediting discovery and preventing the destruction of documents. The Commission's complaint also seeks (i) preliminary and permanent injunctions against future violations; (ii) disgorgement of ill-gotten gains plus prejudgment interest; and (iii) imposition of civil penalties. The Court scheduled a hearing on August 9, 2006 to determine whether to issue a preliminary injunction.
The Commission thanks the State of Florida Office of the Attorney General (Division of Economic Crimes) and the State of Wisconsin Department of Financial Institutions for their assistance in this matter.