U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 21279 / November 4, 2009
Securities and Exchange Commission v. David J. Hernandez and Relief Defendants NextStep Medical Staffing IL, Inc., NextStep Holdings, Inc., Spectrum Entertainment Group, Inc., The Ilumina Group, Inc., and Gina M. Hernandez, Civil Action No. 09-cv-3587(N.D. Ill.).
Court Enters Judgments Against Relief Defendants NextStep Medical Staffing IL, Inc., NextStep Holdings, Inc., Spectrum Entertainment Group, Inc. and The Ilumina Group, Inc., Ordering Them to Pay Disgorgement and Prejudgment Interest.
On October 29, 2009, the Honorable Joan Lefkow of the United States District Court for the Northern District of Illinois entered default judgments against relief defendants NextStep Medical Staffing IL, Inc. ("NextStep Medical"), NextStep Holdings, Inc. ("NextStep Holdings"), Spectrum Entertainment Group, Inc. ("Spectrum") and The Ilumina Group, Inc. ("Ilumina"). In these judgments, the Court ordered each of the relief defendants to disgorge the profits obtained as a result of the conduct alleged in the complaint and to pay prejudgment interest on those amounts. The Court ordered: NextStep Medical to pay disgorgement of $3,218,517.05 together with prejudgment interest of $122,353.56, for a total of $3,340,870.61; NextStep Holdings to pay disgorgement of $886,694.86 together with prejudgment interest of $25,360.21, for a total of $912,055.07; Spectrum to pay disgorgement of $156,500.00 together with prejudgment interest of $2,091.89, for a total of $158,591.89; and Ilumina to pay disgorgement of $271,700.00 together with prejudgment interest of $6,616.00, for a total of $278,316.00.
The SEC's complaint alleges that between at least February 2008 and the present, David J. Hernandez, a Downers Grove, Illinois resident and convicted felon, solicited investors to purchase "guaranteed investment contracts" by making false and misleading statements about his background, the existence of the company that issued the investments, the uses of investor proceeds and the safety of the investments. The complaint alleges that Hernandez, also doing business as "NextStep Financial Services, Inc.," sold the "guaranteed investment contracts" in person and through NextStep Financial's website and claimed that he had an extensive background in banking and business, including having business and law degrees, and that NextStep Financial was a successful company that invested in payday advance stores. The complaint further alleges that Hernandez told investors that their investments were safe because they were covered by insurance. According to the complaint, however, Hernandez never received the claimed degrees, his "banking experience" included a prior federal conviction for wire fraud and NextStep Financial was a defunct corporation with no financial services operations other than running this scheme. In addition, the complaint alleges that Hernandez never invested in the payday advance stores or purchased the insurance that covered investors' funds and instead used the majority of the investors' funds to pay existing investors their promised returns and diverted the remaining funds into his other business ventures, including relief defendants NextStep Medical, NextStep Holdings, Spectrum and Ilumina, and for his and his wife's personal benefit.
The SEC's civil action against Hernandez and Relief Defendant Gina Hernandez remains pending.
See also: L.R. 21085 (June 15, 2009).