U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 20065 / April 2, 2007
SEC v. Steven E. Thorn, et. al, (U.S.D.C. S.D. Ohio, Civil Action 01-CV-290, filed April 2, 2001)
The Securities and Exchange Commission announced that on February 28, 2007, the Honorable Edmund A. Sargus, Jr. of the U.S. District Court for the Southern District of Ohio entered Final Judgments against defendants Steven E. Thorn (Thorn), Derrick McKinney (McKinney), Rick Malizia (Malizia) and his company, RMAZ, LLC (RMAZ), and Craig Morgan (Morgan) for their roles in raising approximately $75 million from investors in a series of fraudulent prime bank schemes and using investor funds to conduct a massive Ponzi scheme. The Court also entered a Final Judgment against Edgar Mojica (Mojica) in connection with his receipt of ill-gotten gains from the defendants during the fraudulent scheme.
In its Second Amended Complaint, the Commission alleged that from February 1998 through April 2001, the defendants and others raised approximately $75 million through the offer and sale of investments in a series of purported European bank trading programs. The defendants' programs exhibited many of the characteristics of the fraudulent prime bank schemes that the Commission, the Federal Reserve Board and other regulators have warned do not exist. The defendants told investors that the programs involved the trading of bank instruments issued by foreign banks; they promised investors returns ranging as high as 200 percent per month; they assured investors that the investments were risk free; and they warned investors that participation in the trading programs required total secrecy and confidentiality. In reality, the defendants dissipated much of the investors' funds to pay personal and business expenses, purported returns to earlier investors, payments to the relief defendants, and undisclosed salaries and fees for themselves.
The Court entered Final Judgments against Thorn, McKinney, Malizia, RMAZ and Morgan permanently enjoining them from future violations of the antifraud and broker-dealer registration provisions of the securities laws and ordering the following amounts of disgorgement, pre-judgment interest and civil penalties against the defendants: 1) defendant Thorn was ordered to disgorge $5,070,395 of ill-gotten gains plus $1,802,132 of pre-judgment interest and to pay a $1 million civil penalty; 2) defendant McKinney was ordered to disgorge $54,200 plus $16,499 of pre-judgment interest and to pay a $250,000 civil penalty in addition to being held jointly and severally liable for $1,434,757 of disgorgement and $294,632 of pre-judgment interest imposed against his company, International Trading Partners, Ltd., pursuant to a previous Court order; and 3) defendants Malizia and RMAZ were ordered to disgorge $375,700 plus $188,166.39 of pre-judgment interest and Malizia was ordered to pay a $375,700 civil penalty. The Court also entered a Final Judgment against Mojica ordering him to disgorge $416,512 plus $179,701.09 in pre-judgment interest.
The Court previously entered judgments against the following defendants and relief defendants: Global Investors Group, LLC; First Financial Ventures, LLC; Second Financial Ventures, LLC; Third Financial Ventures, LLC; International Trading Partners; Allen George; Leon Heard and his company, Alice's International Salon & Spa; Rene Sorra and his company, RLS International Investors, LLC; Roger Weizenegger; Frederick Harris and his companies, Blue Chip Investments, Inc. and Solo Ventures, LLC; Carl Jackson and his company, Redmill Holdings, LLC; and Durietha Dziorney. On March 29, 2007, the Court entered a Final Judgment against the last remaining defendants in this matter, Karen Estrada and her two companies, Fund Global, LLC and Global Equity Group, LLC.