U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 23123 / October 30, 2014
Securities and Exchange Commission v. Timothy J. Coughlin, et al., Civil Action No. 1:14-cv-00562-WTL-MJD
SEC Obtains Final Judgments Against Defendants Charged with Defrauding Investors in $12.8 Million "Credit Union" Ponzi Scheme
The Securities and Exchange Commission announced that the United States District Court for the Southern District of Indiana entered final, settled judgments against defendants Timothy J. Coughlin and two entities, OICU Ltd. and OICU Investments Corp., that did business as "Oxford International Credit Union" or "Oxford International Cooperative Union." The SEC charged the defendants with defrauding thousands of investors who collectively suffered millions of dollars in losses by investing in a fictitious, offshore credit union.
Pursuant to the judgments docketed on October 30, 2014, the court ordered OICU Ltd. and OICU Investments Corp., jointly and severally, to pay disgorgement of $10,053,234 plus prejudgment interest thereon of $1,466,479, and to each pay a civil penalty of $775,000, enjoined Coughlin and the two entities from participating in the issuance, purchase, offer or sale of any security, permanently barred Coughlin from acting as an officer or director of any public company, and permanently enjoined Coughlin and the two entities from violations of the registration and antifraud provisions of the federal securities laws. The judgment against Coughlin did not order monetary relief in consideration of the forfeiture, restitution and incarceration to which he was sentenced in the parallel criminal action, US v. Coughlin, Crim. No. 1:14-CR-221 (E.D. Va.). On October 24, 2014, Coughlin was sentenced to 90 months imprisonment and three years of supervised release and ordered to pay restitution of $10,084,625. Finally, the Court entered a judgment against relief defendants American Quality Cleaning Services, Inc. (d/b/a "Oxford Privacy Group") and Avocalon, LLC, ordering the former to pay disgorgement of $2,270,100 plus prejudgment interest thereon of $152,016, and ordering the latter to pay disgorgement of $1,823,750 plus prejudgment interest thereon of $429,659.
The SEC's complaint, filed on April 11, 2014, alleged that between June 2007 and December 2009, Coughlin and Oxford International Credit Union collected deposits exceeding $12.8 million dollars from more than 5,000 investors who believed that they were investing in a bona fide credit union but in reality were victims of a classic Ponzi scheme. According to the SEC's complaint, to facilitate and further the fraud, the defendants posted false information to members' online accounts to create the appearance that their deposits were earning substantial daily investment returns. The Oxford International Credit Union website, for example, showed investors that their deposits were purportedly earning investment returns that averaged, during the January 2007 through December 2009 period, 0.471% compounded daily. The credit union, however, was a fiction, and the defendants did not actually make investments with the members' deposits sufficient to generate the returns they boasted. Coughlin and Oxford International Credit Union also falsely claimed that member accounts were insured by a private insurance company.
The SEC's complaint further alleged that, beginning in December 2008, Coughlin began operating a successor to Oxford International Credit Union, called Oxford International Cooperative Union. Oxford International Cooperative Union's website also boasted bogus investment returns from its inception in late 2008 through December 2011.
For further information, please see Litigation Release Number 22972 (April 11, 2014).