U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 21661 / September 23, 2010
Securities and Exchange Commission v. M. Mark McAdams and R. Dane Freeman, Civil Action No. 4:10-CV-00701-TLW (D.S.C.)
The Securities and Exchange Commission ("Commission") announced that the Honorable Terry L. Wooten, United States District Judge for the District of South Carolina, entered an order permanently enjoining M. Mark McAdams ("McAdams"). The order restrained and enjoined McAdams from future violations of Section 17(a) of the Securities Act of 1933, and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. McAdams was also ordered to pay disgorgement, pre-judgment interest and a civil penalty in amounts to be resolved upon motion of the Commission at a later date, and directed that for purposes of that motion, the allegations of the Commission's Complaint shall be deemed true. McAdams consented to the entry of the order without admitting or denying the allegations of the Commission's Complaint.
The Complaint, filed on March 18, 2010, alleged fraud against McAdams and his co-defendant R. Dane Freeman ("Freeman") in connection with sales of securities interests in Global Holdings, a limited liability company organized by McAdams. Approximately $3.5 million was raised from investors during the first nine months of 2008. The Complaint alleged that McAdams and Freeman told investors orally and in writing that Global Holdings was "in the business of locating and securing high return investment opportunities for investors on international trading platforms." Most of the Global Holdings' investors executed a joint venture agreement that was prepared by McAdams and signed by either McAdams or Freeman. These joint venture agreements represented that Global Holdings would utilize those funds "for the purpose of buying and selling Standard and Poor's AAA or AA rated bonds and/or Medium Term Notes" on an "overseas trading platform." Some of the joint venture agreements stated that investors who invested $20,000 would receive $1,000,000 after 60 days, a return of 4,900%. At least one joint venture agreement stated that an investor's $500,000 would grow to $1,500,000 after 60 days, for a 200% rate of return. Most investors, if not all of them, never received either profits or a return of their principal. Instead, over $500,000 in investor funds were transferred to accounts controlled by Freeman and his family. McAdams received many questions about the high yield investment program from the outset, from investors and his own family members, to whom McAdams vouched for the existence and legality of the global trading platforms that supposedly would generate such outlandish returns. McAdams also misrepresented the success of the program. McAdams falsely misrepresented to a potential investor that Global Holdings had participated in hundreds of similar transactions that had already produced hundreds of millions of dollars for dozens of investors.
See also: L.R.-21455.