UNITED STATES SECURITIES AND EXCHANGE COMMISSION

LITIGATION RELEASE NO. 16355 / November 16, 1999

SECURITIES AND EXCHANGE COMMISSION V. ORACLE TRUST FUND; JUBILEE TRUST FUND; ELKOSH TRUST FUND; JEROME L. DEFRIES and KEVIN S. MCQUEEN, Defendants, and ROGER PEARSON, individually and d/b/a BIZ ENTERPRISES, Defendant Solely for the Purpose of Equitable Relief

Case No. 99-1483MLB, USDC, DISTRICT OF KANSAS, WICHITA DIVISION

The U.S. Securities and Exchange Commission ("Commission") announced today that Monti L. Belot, U.S. District Court for the District of Kansas, Wichita Division, issued various emergency orders sought by the Commission to halt a $7.4 million affinity fraud which targeted, among others, members of Christian churches in rural Kansas, Nebraska and Missouri towns. According to the Commission's complaint, the defendants raised funds from at least 125 investors, supposedly to trade in high-yield foreign bank instruments in a secret "prime bank" trading market. The defendants represented to investors that they would receive a monthly return of 20% for 12 to 18 months, and that the return of the investors' principal was fully guaranteed. In reality, the prime bank trading program does not exist and investor funds have been transferred by the defendants to several offshore entities and used for unauthorized purposes. The Commission's complaint alleges that the defendants also conducted a "Ponzi" scheme by making principal and interest payments to early investors with funds raised from later investors to give the false illusion that the investment was successful.

The Commission alleges that the investment scheme is a classic "affinity fraud," in which the defendants preyed on various church communities. To establish credibility within the church communities, defendants gave the investments various names with Biblical connotations, such as Jubilee Trust Fund, Oracle Trust Fund and Elkosh Trust Fund (collectively, the "three funds"). They also proclaimed their status as so-called "born-again" Christians and suggested that the investment would fulfill a religious "duty" or "prophecy." Moreover, they informally enlisted members of various church communities to proselytize on behalf of the investment funds. Consequently, investors, most of whom are unsophisticated investors, invested in the trading programs on trust and faith, rather than adequate information.

According to the Commission's complaint, the scheme was devised, and/or participated in, by Jerome L. DeFries ("DeFries"), Kevin S. McQueen ("McQueen") and Roger Pearson ("Pearson").

DeFries, age 53, is a resident of Bonner Springs, Kansas. DeFries controls the Jubilee, Oracle and Elkosh Trusts, and is responsible for all their business activities.

McQueen, age 35, is a resident of Lee's Summit, Missouri. McQueen raised money from investors for the three funds.

Pearson is a resident of Nebraska, doing business as Biz Enterprises, a Nebraska company which he controls. From December 1998 through March 1999, Pearson received approximately $1.3 million from defendant DeFries through an account maintained by Biz Enterprises. Pearson was named in the lawsuit only as a defendant for the purpose of equitable relief.

The Commission further alleges that DeFries and McQueen have obstructed the Commission's investigation in a number of ways. They have attempted to persuade investors not to cooperate with the staff by requiring them to sign confidentiality agreements and falsely telling them that cooperation with the government will cause them to not receive a return on their investment. They are also reported to have destroyed records after learning of governmental investigations.

In its lawsuit, filed today, the Commission sought and the Court granted emergency orders: (1) freezing the assets of Oracle, Jubilee, Elkosh, DeFries and McQueen; (2) freezing the assets of Pearson, individually, and d/b/a Biz Enterprises, which he received, directly or indirectly, from the activities described in the Commission's Complaint; (3) requiring Oracle, Jubilee, Elkosh, DeFries, McQueen and Pearson to separately furnish an accounting, including an accounting of monies raised from investors; (4) prohibiting the destruction of documents; (5) authorizing expedited discovery; (6) requiring Oracle, Jubilee, Elkosh, DeFries, McQueen and Pearson to repatriate assets held offshore; (7) requiring DeFries and McQueen to surrender their passports and prohibiting them from leaving the Continental United States; and (8) appointing a receiver to recover assets for the benefit of investors.

In its complaint, the Commission alleges that Oracle, Jubilee, Elkosh, DeFries and McQueen violated Sections 5(a), 5(c) and 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. In addition to the emergency relief described above, the Commission is seeking preliminary and permanent injunctions restraining future violations of the antifraud provisions of the federal securities laws against Oracle, Jubilee, Elkosh, DeFries and McQueen; an order requiring Oracle, Jubilee, Elkosh, DeFries, McQueen and Pearson to disgorge all wrongfully obtained profits plus prejudgement interest and civil penalties against Oracle, Jubilee, Elkosh, DeFries and McQueen.

The case was investigated jointly by the Commission and the Office of the Securities Commissioner for the State of Kansas. The Commission wishes to acknowledge the assistance of the State of Kansas in this matter.

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The SEC today also issued an investor alert to provide investors tips on how to avoid being a victim in an affinity fraud. The "Affinity Fraud" alert tells investors how to spot an affinity investment scam and describes actions taken by the Commission to stop such scams. The investor alert can be found on the SEC's web site, at www.sec.gov.