SECURITIES AND EXCHANGE COMMISSION Litigation Release No. 16096 / March 26, 1999 SECURITIES AND EXCHANGE COMMISSION v. JAMES MICHAEL COGLEY, et al., S.D. OH; No. C2-98-802 UPON EMERGENCY MOTION OF THE COMMISSION, COURT FINDS JAMES MICHAEL COGLEY IN CIVIL CONTEMPT FOR VIOLATING PRELIMINARY INJUNCTION ORDER The Commission announced that on March 5, 1999, the United States District Court for the Southern District of Ohio found James Michael Cogley (Cogley) in civil contempt for violating provisions of an Order of Preliminary Injunction entered against him by consent on August 18, 1998. On August 11, 1998, the Commission first filed its complaint against Cogley and the Ohio Estate Group (OEG) alleging violations of, among other things, the anti-fraud provisions of the federal securities laws (Complaint). The Complaint alleged that from at least August 1997 until the Commission filed its complaint, Cogley and OEG engaged in a scheme to defraud investors by misrepresenting facts relating to the use of invested funds, the safety of those funds, and the return on the investments. Cogley and OEG received approximately $2,400,000 from at least forty-four primarily elderly and retired investors. The Complaint also alleged that less than 10% of the funds received were actually invested, while the majority of the funds were actually used to pay Cogley’s personal expenses, OEG’s business expenses and principal and interest payments to earlier investors. On August 18, 1998, the district court entered the Preliminary Injunction against Cogley and OEG. On February 24, 1999, the Commission filed an Emergency Motion for an Order to Show Cause why Cogley should not be held in civil contempt for violating a provision of the Preliminary Injunction specifically prohibiting Cogley from receiving, directly or indirectly, any funds from individuals or entities for the purpose of investment. The court ordered a civil contempt hearing for March 5, 1999. During the civil contempt hearing, evidence was put on that Cogley received approximately $60,000 from two elderly investors for investment in a company known as Shannon Road Development, Ltd., an entity that is owned, in part, by Cogley’s wife. The court found, by clear and convincing evidence, that, among other things, Cogley gave investment advice and received funds from individuals for the purpose of investment, in violation of the Preliminary Injunction. In addition, the court ordered a Criminal Contempt Hearing that is currently scheduled for April 1, 1999.