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U.S. Securities and Exchange Commission


Litigation Release No. 21085 / June 15, 2009

Securities and Exchange Commission v. David J. Hernandez, also doing business as “NextStep Financial Services, Inc.,” Civil Action No. 09-cv-3587 in the United States District Court for the Northern District of Illinois, Eastern Division.


The Securities and Exchange Commission announced that on June 15, 2009, it filed an emergency civil action in the United States District Court for the Northern District of Illinois against Downers Grove, Illinois-resident David J. Hernandez, also doing business as “NextStep Financial Services, Inc.,” for conducting a Ponzi scheme which raised more than $11 million from investors in at least 12 states with false promises that their investments would earn guaranteed returns of 10% to16% per month with no risks. The Honorable Samuel Der-Yeghiayan, United States District Court Judge for the Northern District of Illinois, granted the Commission’s motion for emergency relief, including an order temporarily restraining Hernandez from committing further violations of the registration and antifraud provisions of the federal securities laws and an order freezing Hernandez’s assets and the assets of several relief defendants.

The SEC’s complaint alleges that between at least February 2008 and the present, Hernandez, a convicted felon, solicited investors to purchase “guaranteed investment contracts” by making false and misleading statements about his background, the existence of the company that issued the investments, the uses of investor proceeds and the safety of the investments. The complaint alleges that Hernandez sold the “guaranteed investment contracts” in person and through NextStep Financial’s website and claimed that he had an extensive background in banking and business, including having business and law degrees, and that NextStep Financial was a successful company that invested in payday advance stores. The complaint further alleges that Hernandez told investors that their investments were safe because they were covered by insurance. According to the complaint, however, Hernandez never received the claimed degrees, his “banking experience” included a prior federal conviction for wire fraud and NextStep Financial was a defunct corporation with no financial services operations other than running this scheme. In addition, the complaint alleges that Hernandez never invested in the payday advance stores or purchased the insurance that covered investors’ funds and instead used the majority of the investors’ funds to pay existing investors their promised returns and diverted the remaining funds into his other business ventures and for his and his wife’s personal benefit.

The SEC’s complaint charges Hernandez with violating Sections 5(a), 5(c) 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 SEC seeks injunctive relief, disgorgement plus prejudgment interest and civil penalties against Hernandez. The SEC also seeks to recover assets from several relief defendants — Hernandez’s wife Gina Hernandez, and several other companies that Hernandez owns and controls, NextStep Medical Staffing IL, Inc., NextStep Holdings, Inc., Spectrum Entertainment Group, Inc. and The Ilumina Group, Inc. — based on the claim that they received investor money through the misconduct.

SEC Complaint in this matter




Modified: 06/15/2009