U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 21713 / October 29, 2010
Securities and Exchange Commission v. Elite Resources, LLC, et al., Case No. 1:10-CV-3522 (N.D. Ga)
SEC Charges Atlanta Residents with Securities Fraud
The Securities and Exchange Commission (Commission) filed a civil injunctive action in Atlanta Georgia on October 29, 2010, alleging that Patricia Diane Gruber (“Gruber”), Kadar Josey (“Josey”), and the companies they operated, Elite Resources, LLC (“Elite”) and Elite3 Holding Corp. (“Elite3”), operated a fraudulent “Prime Bank” scheme that violated the antifraud and securities and broker dealer registration provisions of the federal securities laws.
The Commission’s complaint alleges from at least April 8, 2010 through at least August 20, 2010, the defendants raised approximately $2.85 million from at least nine investors. In raising these funds, the complaint alleges the defendants represented that investors could draw upon bank issued guarantees worth millions of dollars, in one case representing a 40,000% return on investment, without having to repay the withdrawn funds. The defendants further represented that investor funds would be held in escrow until the bank guarantees were issued. The complaint alleges that both of these representations were false in that no such bank guarantees existed and the defendants used almost all of the funds for several undisclosed purposes immediately upon receipt. When investors demanded performance, the complaint alleges that the defendants provided them with a fictitious guarantee certificate purportedly issued by Barclays Bank.
In its Complaint, the Commission alleges that the defendants violated Sections 5(a) and (c) and 17(a) of the Securities Act of 1933, Sections 10(b) and 15(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder. Also on October 29, the court issued an order temporarily restraining defendants from violating these provisions, freezing their assets, providing for expedited discovery, prohibiting the destruction of documents and directing that they provide an accounting for the funds received. A hearing on the Commission’s request for a preliminary injunction will be held on a date yet to be determined.
See Also: SEC Complaint