UNITED STATES SECURITIES AND EXCHANGE COMMISSION
LITIGATION RELEASE NO. 15734 / May 7, 1998
SECURITIES AND EXCHANGE COMMISSION v. First Americans Bank Ltd. et al., Civil Action No. Civ. 98-0645 R (USDC WD Okla.)
The Commission announced today that it obtained an emergency restraining order halting the sale of securities of the Native American Free Trade Association ("NAFTA"), an Oklahoma entity, whose officers have made false statements, particularly that NAFTA is operating an FDIC-insured bank on Apache tribal land in Anadarko, Oklahoma. The Commission alleges in its complaint that the Apache tribe never authorized NAFTA to operate a bank as claimed. The Commission further alleged that in connection with the offerings, NAFTA's officers, Owen K. Stephenson and Ron Sparks, both California residents, failed to disclose to investors past enforcement actions taken against them by federal banking and securities regulatory authorities.
According to the Commission's complaint, in offering material disseminated to prospective investors nationwide, NAFTA, Stephenson, Sparks and others have falsely claimed to be operating a bank called First Americans Bank Ltd. (FAB), in which they have been offering interests since early 1997. The Commission's complaint alleges that Sparks and Stephenson raised at least $1 million from as many as 100 investors who purchased interests in NAFTA and two related entities, ANB Limited and ANB Trust. According to the complaint, investors have been promised that their funds would double at the end of two years. The complaint further alleges that Sparks and Stephenson have raised additional funds from investors in the form of purported deposits in the non-existent bank.
The Commission alleged that Sparks and Stephenson falsely claimed that FAB offered full service checking accounts and that deposits at FAB were insured by both the Federal Deposit Insurance Corporation and the Securities Investor Protection Corporation. The complaint alleges that, contrary to representations to investors, FAB has no operations in Anadarko, Oklahoma. According to the complaint, investments in NAFTA, ANB Limited and ANB Trust have been commingled with deposits of FAB, improperly used to pay personal expenses of NAFTA employees, and in part transferred offshore.
The Commission's complaint alleges that Sparks, Stephenson, NAFTA, FAB, ANB Limited and ANB Trust violated the antifraud provisions, Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities and Exchange Act of 1934 and Rule 10b-5 thereunder. The temporary restraining order, entered on May 7 , 1998, by Judge Leonard enjoins the defendants and their principals from making false statements, freezes their assets, requires them to account for investor proceeds, and requires the repatriation of assets held outside the United States. The order also freezes the funds of two relief defendants, First Americans Trust and First Americans Management, which received some of the proceeds raised from investors.