U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 20427 / January 10, 2008
SEC v. Bryan S. Behrens, et al., Civil Action No. 8:08CV13 (D. Nebraska)
SEC Obtains TRO to Halt Fraudulent Ponzi-like Scheme
On January 10, 2008, the Securities and Exchange Commission obtained an order temporarily restraining Bryan S. Behrens and a private entity controlled by him, National Investments, Inc., from continuing to engage in the fraudulent offer and sale of securities. The Honorable Joseph F. Bataillon of the United States District Court for the District of Nebraska also froze the defendants' assets, ordered that discovery be accelerated and that defendants be prohibited from destroying documents, ordered the defendants to promptly provide sworn accountings of investor funds and other assets, and ordered that a preliminary injunction hearing be held on January 16, 2008 to determine if the interim relief should be continued.
The Commission's Complaint, filed on January 10, alleges that Behrens, a resident of Omaha, Nebraska, and National Investments have engaged in securities fraud in the offer and sale of promissory notes over a period extending back at least five years. Behrens was previously a principal at a broker-dealer registered with the Commission. According to the Complaint, the defendants fraudulently raised approximately $6.5 million from approximately 20 investors, including senior citizens. The Complaint further alleges that the defendants offered promissory notes to investors falsely claiming that the interest payable on the notes, approximately 9% interest per annum, would be generated from lending investors' money to others at a higher rate of interest. The actual uses to which the monies were put were allegedly not disclosed to investors. According to the Complaint, Behrens, through National Investments, operated a Ponzi-like scheme by using proceeds obtained from new investors to make payments to early investors. Behrens is further alleged to have misappropriated approximately $3.5 million for personal use, including financing renovations to his two homes, purchasing luxury vehicles, and transferring money to another company that Behrens owns.
The Complaint alleges that Behrens and National Investments violated Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. In addition to emergency and preliminary relief, the Commission's Complaint seeking permanent injunctions, disgorgement and civil penalties.