U.S. Securities & Exchange Commission
SEC Seal
Home | Previous Page
U.S. Securities and Exchange Commission


Litigation Release No. 16390 / December 15, 1999

Securities and Exchange Commission v. Cornerstone Prodigy Group, Inc., Gary D. Reeder, Sandra Reeder and Executive Netprofits, Inc. (Defendant Solely for Purposes of Equitable Relief) Case No. 4:99-CV-0978-Y USDC, NDTX (Dallas Division)

On December 10, 1999, Judge Terry R. Means, United States District Judge for the Northern District of Texas, ordered, pursuant to the parties agreement, the continuation of an asset freeze against Cornerstone Prodigy Group, Inc. and its principals Gary D. Reeder, a convicted felon, and Sandra Reeder, a licensed securities professional. In an agreed preliminary injunction, the court ordered the Reeders to immediately surrender their passports and prohibited them from traveling outside the continental United States. (After learning of the initial Temporary Restraining Order entered against them on November 24, 1999, the Reeders fled to Canada, but subsequently returned.) Judge Means also required the Reeders to file a sworn accounting by December 28, 1999, of 1) all money transferred to a checking account used to pay their personal expenses, 2) all accounts into which investors funds were deposited, and 3) all money from investors not deposited into accounts. The Complaint filed by the U.S. Securities and Exchange Commission (ACommission@) alleges that since early 1999, the Reeders raised over $16.5 million from over 600 investors through internet and cold-call sales in the Ponzi scheme they perpetuated.

To protect the Commissions ability to recover the funds raised in the Reeders fraudulent securities scheme, the court subjected the Reeders to a continuing duty to identify and repatriate all assets located outside the United States. The court also limited the Reeders to $5,000 per month for living expenses for a period of 90 days, with any additional amounts subject to reconsideration by the court.

The case was investigated jointly by the Commission, the Texas State Securities Board ("TSSB"), and the Federal Bureau of Investigation ("FBI"). The Commission wishes to acknowledge the very valuable assistance of both the TSSB and the FBI in this matter.