U.S. Securities and Exchange Commission

Litigation Release No. 21619 / August 6, 2010

Securities and Exchange Commission v. CJ's Financial and Candice D. Campbell, Case No. 2:10-cv-13083 (E.D. Michigan, filed August 4, 2010)

The Securities and Exchange Commission today announced fraud charges and an asset freeze against CJ's Financial (CJF) and Candice Campbell (Campbell), a resident of Canton, Michigan. At the SEC's request for emergency relief, the Hon. Stephen J. Murphy, III, United States District Court, Eastern District of Michigan, issued a temporary restraining order against Campbell and CJF and an order freezing all assets under the control of Campbell and CJF, in addition to granting other emergency relief.

The SEC's complaint, filed in the United States District Court for the Eastern District of Michigan, alleges that from approximately May 2009 through June 2010, Campbell and CJF obtained approximately $1,057,400 from more than 60 investors, for a supposedly guaranteed trading program, but invested less than 10% of the proceeds. Campbell solicited funds in person and through a website, cjsfinancial.com.

As recently as of July 9, 2010, CJF portrayed itself on its website as an "independent investment firm dedicated to putting your money to work for you!" The complaint alleges that Campbell told investors that she was a day trader who would invest their funds in the stock market. The complaint further alleges that CJF and Campbell specifically informed potential investors, among other things, that their "initial investment will NEVER go down in value;" that CJF guaranteed "[a]t least a 10% return monthly on your investment;" and that there will be "NO PENALTIES OR TAXES to pay when you withdraw your money, because CJ's Financial pays your Capital Gains taxes!"

According to the complaint, Campbell's representations to investors regarding her use of investor funds and trading profits were all false. Specifically, the complaint alleges that Campbell invested only a small portion of the investor funds that she raised. Instead, Campbell used at least $540,000 of investor funds to pay personal expenses, including approximately $127,000 for travel expenses, more than $100,000 to car dealerships, approximately $33,046 at several jewelry retailers, approximately $28,350 at sporting goods retailers, and approximately $29,124 at furniture stores. Campbell used approximately $376,640 to pay other investors in Ponzi scheme fashion. Out of approximately $1,057,400 raised by Campbell, only $58,000 was transferred into a trading account.

The complaint further alleges that when some investors requested the return of their investments, Campbell, through an assistant, tried to conceal the scheme by claiming the SEC was investigating her and CJF and had frozen its assets and bank accounts. As alleged in the SEC's complaint, this was simply false, as the Commission had not frozen CJF's or Campbell's bank accounts, trading accounts, or other assets. Instead, the complaint alleges this was a lie meant to conceal the fact that the defendants could not return investors' funds.

According to the SEC complaint, Campbell and CJF violated Section 17(a)(1), 17(a)(2), and 17(a)(3) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and Sections 206(1) and 206(2) of the Investment Advisers Act of 1940.

The SEC's investigation of this matter is continuing.

The SEC acknowledges and appreciates the assistance provided by the Financial Industry Regulatory Authority in this matter.

See Also: SEC Complaint

 
http://www.sec.gov/litigation/litreleases/2010/lr21619.htm

Last modified: 8/06/2010