U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 21843 / February 8, 2011
Securities and Exchange Commission v. Curtis Peterson, Eric Maher, Ronald White, and Express International, LLC, et al., Case No. CV 11-1143 ODW (JEMx) (C.D. Cal. February 7, 2011)
SEC CHARGES CALIFORNIA RESIDENTS WITH OPERATING $3 MILLION FRAUDULENT "PRIME BANK" SCHEME
The Securities and Exchange Commission today charged two California residents and the company one of them controls for operating a fraudulent, high-yield, "prime bank" investment scheme that defrauded investors out of more than $3 million. The SEC also charged a California-based attorney for aiding in the scheme.
Prime bank schemes lure investors with false promises of enormous profits and an exclusive opportunity to participate in an international investing program. The SEC alleges that Curtis Peterson and Eric Maher solicited investors nationwide in late 2009 on behalf of Express International, LLC, a Pasadena-based entity managed by Peterson and his wife. Promising exorbitant returns of as much as 1000 percent per month, Peterson and Maher falsely told investors that their investments would be pooled to purchase international bank instruments that would then be "leased" to "top 25" international banks willing to pay substantial fees for the right to place the instruments on their balance sheets for a brief period of time.
According to the SEC's complaint, filed in U.S. District Court for the Central District of California, Peterson and Maher were aided and abetted by Ronald White, a California-based attorney. White controlled the trust account into which investors were instructed to wire their monies. White then converted those funds into cashier's checks payable to Peterson, thus allowing Peterson to dissipate investor funds for undisclosed purposes.
The SEC alleges that about 20 percent of investor funds were wired to a bank in Hungary, but none of that money was ever used to purchase any international bank instruments. Peterson used the remaining 80 percent of investor funds to pay his personal expenses and to pay third parties with no legitimate claim to the investor funds.
The SEC's complaint alleges that Peterson, Maher and Express International violated Sections 5(a), 5(c), and 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder; that Maher also violated Section 15(a) of the Exchange Act; and that White aided and abetted Peterson, Maher, and Express International's violations of Section 10(b) and Rule 10b-5; and seeks permanent injunctions, disgorgement of ill-gotten gains with prejudgment interest thereon, and financial penalties, against each of them.
The SEC's complaint additionally names Peterson's wife, Ann Scott, and an entity Peterson controls â" Curtis International Express, Inc. â" as relief defendants. The SEC seeks disgorgement of all monies they have received improperly from any of the defendants since September 2009.