U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 21516 / May 5, 2010
Securities and Exchange Commission v. CFO-5, LLC, Trinity International Enterprises, Inc., Stanley W. Anderson, Edwin A. Smith, Charles L. Kennedy, Michael D. Norton, individually and d/b/a Global Asset Services, and Nicholas R. Fair, (U.S. District Court for the District of Colorado, Civil Action No. 08-cv-1594-PAB-MEH)
SEC Obtains Permanent Injunctions and Orders to Pay Disgorgement, Prejudgment Interest, and Civil Penalties Against Defendants in Prime Bank Fraud Scheme
The Commission announced that the United States District Court for the District of Colorado entered orders of injunction by consent against defendants Stanley W. Anderson, Edwin A. Smith, Charles L. Kennedy, Michael D. Norton, and Nicholas R. Fair on May 4, 2010. The orders permanently enjoin the defendants from violating Sections 5 and 17 of the Securities Act of 1933 and Sections 10(b) and 15(a) and Rule 10b-5 of the Securities Exchange Act of 1934. The orders against Anderson and Smith hold them jointly and severally liable for payment of $3,197,222, which represents disgorgement of profits from the conduct alleged in the complaint and prejudgment interest. Anderson and Kennedy are also ordered to pay $130,000 civil penalties. The order against Kennedy holds him liable for a total of $434,704.93, which includes disgorgement of profits, prejudgment interest, and a $130,000 civil penalty.
The Court also entered default judgments against CFO-5, LLC and Trinity International, LLC. The judgments enjoin the companies from violating federal securities law and hold them jointly and severally liable with Anderson and Smith for payment of $3,197,222.
The Commission began this action by filing a complaint on July 28, 2008 alleging that the defendants sold unregistered securities in a prime bank fraud scheme. The complaint alleged that the securities, which the defendants described as European medium term notes that paid nearly immediate returns ranging from 200 to 1000 percent, did not exist. The complaint further alleged that the defendants raised over $5.1 million from at least 100 investors nationwide and that investors' funds were misappropriated or used for unauthorized purposes. Anderson, Smith, Kennedy, Norton, and Fair settled the Commission's charges without admitting or denying the allegations in the complaint.
See Also: SEC Complaint