SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 16393 / December 16, 1999
In re Alliance Leasing Corporation, Case No. 98-14142-B11 (Bankr. S.D. Cal.)
SEC v. Alliance Leasing Corporation and Prime Atlantic, Inc., Case No. 98 CV 1810J CGA (S.D. Cal.).
The Securities and Exchange Commission ("Commission") announced today that a federal bankruptcy court approved a plan to return money to defrauded investors in Alliance Leasing Corporation ("Alliance"). On December 15, 1999, United States Bankruptcy Judge Peter W. Bowie confirmed a reorganization plan proposed by David T. Cleary (the Chapter 11 Trustee appointed over Alliance) and a creditors' committee. Under the plan, the Trustee will distribute at least $20 million to more than 1,600 individual investors throughout the United States within several weeks. The plan calls for the Trustee to make additional distributions to investors based on the Trustee's ability to recover investor funds through continued litigation.
The money which the Trustee will distribute to investors was originally frozen by court order on the request of the Commission as part of its civil enforcement action in this matter. On October 7, 1998, the Commission obtained a temporary restraining order from the United States District Court against Alliance and Prime Atlantic, Inc. ("Prime") to stop the sales of fraudulent, unregistered equipment leasing investments to investors. In addition, United States District Judge Napoleon A. Jones, Jr. ordered that more than $22 million in Alliance and Prime assets be frozen. The Commission has alleged that Alliance, Prime, and the principals of these companies violated the securities registration and antifraud provisions of the federal securities laws, and that Prime additionally violated the broker-dealer registration provisions. The Commission's action against the principals of Alliance and Prime continues. The Commission's motion for summary judgment against these defendants is currently scheduled for hearing before Judge Jones in January 2000.