SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 16195 \ June 25, 1999
Federal Judge Permanently Enjoins Four Defendants In Prime Bank Fraud
The Securities and Exchange Commission ("Commission") announced today that Judge Jack T. Camp of the United States District Court for the Northern District of Georgia entered an Order of Permanent Injunction and Other Relief against Clarence Wayne Cook ("Cook"), Brian E. Causey ("Causey"), Haven Quest and Cayman South International, Inc. ("Cayman"). The four defendants consented to the entry of permanent injunctions without admitting or denying the allegations of the Commissionís complaint. The complaint alleged that Cook and Causey, through their controlled entities Haven Quest and Cayman, orchestrated a fraudulent prime bank scheme.
The Commissionís complaint alleged that Cook and Causey individually and through Haven Quest and Cayman, effected the scheme by falsely promoting the purported trading programs as legitimate, virtually no-risk investments with projected returns of 900% in 20 weeks for the Cayman program and up to 500% over ten months for the Haven Quest program, when the programs touted were non-existent and they had no reasonable basis for such projections. Cook and Causey falsely represented that investor funds would be secured by bank certificates of deposit, and failed to disclose that Haven Quest would pay at least 20% of all investor funds directly to themselves as purported commissions pursuant to undisclosed agreements with Haven Quest. Cook and Causey also failed to disclose that $430,000 of funds raised from Haven Quest investors would be used to refund monies to Cayman program investors when the Cayman program failed due to an unsuccessful "trade." The complaint further alleged that while continuing their scheme, the defendants conducted offerings by use of the mails and other channels in interstate commerce to sell at least $3 million in securities in the Cayman and Haven Quest programs to investors throughout the country.
In addition to permanent injunctions to prevent future violations of Section 17(a) of the Securities Act of 1933 ("Securities Act") and Section 10(b) of the Securities Exchange Act of 1934 ("Exchange Act") and Rule 10b-5 thereunder, the Court ordered the four defendants to disgorge ill-gotten gains in the amounts of $2,010,432 (Cook); $2,006,463 (Causey); $958,195 (Haven Quest) and $484,000 (Cayman). Disgorgement amounts for Haven Quest and Cayman were waived based upon each entityís demonstrated inability to pay. Disgorgement amounts in excess of $40,000 each for Cook and Causey were waived based upon each of their demonstrated inabilities to pay beyond that amount. The Court did not impose civil penalties against any of the defendants based upon each defendantís demonstrated inability to pay.
See also: L.R. 15836 (August 8, 1998); L.R. 15853 (August 18, 1998).http://www.sec.gov/litigation/litreleases/lr16195.htm