SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 16428 / February 7, 2000
Securities and Exchange Commission v. TAC International Limited, Douglas R. Walker, Craig Southwood, Larry B. Richardson and Jan Harry "Jack" Wilde, 3:00CV54MU (GCM) (WDNC) (February 7, 2000)
SEC Sues TAC International Limited and Four Senior Officers
On February 7, 2000, the Securities and Exchange Commission filed a civil injunctive action in the United States District Court for the Western District of North Carolina, alleging that from the summer of 1996 until August of 1997, TAC International Ltd., a Bahamas corporation, and its senior officers sold fraudulent "prime bank" securities which duped U.S. investors out of millions of dollars. Charged in the action, along with TAC, are Douglas R. Walker, TAC's former president and owner, Craig Southwood, TAC's current president and owner, Larry B. Richardson and Jan Harry "Jack" Wilde, TAC's national vice presidents.
for Prime Bank Fraud
According to the Complaint, the defendants represented that by buying a Bahamian International Business Corporation ("IBC"), investors could participate in certain securities trading programs not available in the United States. These trading programs supposedly enabled investors to obtain phenomenal returns, at no risk to principal, by participating in purported trading in high yield debentures between and among banks. The Complaint alleges that the defendants did not engage in any trading, but instead used the money they procured from investors to pay for their lifestyles and personal expenses. According to the Complaint, thousands of United States residents entrusted the defendants with investments of at least $1,500 each, and the enterprise took in over $12 million.
The Complaint alleges that Walker, TAC's original owner, developed the fraudulent IBC trading program that TAC sold to investors. Under the IBC program, investors paid a minimum of $1,500 each to get access to purported debenture trading between and among banks. The Complaint alleges that TAC represented that at the end of one year, the IBC trading program could generate as much as $20,000 from the original $1,500 investment -- an annual return of over 1,300%. According to the Complaint, Southwood, TAC's present owner, supervised TAC's operations at its headquarters in the Bahamas and created a second fraudulent investment scheme which he named the "Southwood Program." Under the Southwood Program, the Complaint alleges, investors were required to wire a minimum of $50,000 to TAC. According to the Complaint, TAC promised a return of 600% within thirty days of the initial investment. The Complaint alleges that Richardson and Wilde trained TAC's United States sales force to market the fraudulent programs and supervised the marketing efforts.
The Commission's Complaint seeks a judgment from the Court permanently enjoining TAC, Walker, Southwood, Richardson and Wilde from engaging in future violations of the antifraud provisions of the federal securities laws, Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934, and Rule 10b-5 promulgated thereunder, requiring each of the defendants to account for and disgorge, with prejudgment interest, the illegal profits and proceeds they obtained as a result of their fraudulent scheme, and requiring each to pay a civil monetary penalty.
Simultaneous with the filing of the Complaint, Richardson consented, without admitting or denying the allegations of the Complaint, to the entry of a final judgment permanently enjoining him from his violative conduct, waiving disgorgement and declining to impose a civil monetary penalty based on his demonstrated inability to pay.
Also on February 7, 2000, the United States Attorney for the Western District of North Carolina announced the indictment of Walker and Southwood for 17 felony counts each, for federal conspiracy, mail fraud, wire fraud and money laundering. The Commission wishes to thank the United States Attorney's office and the Federal Bureau of Investigation for their cooperation in this matter.
The SEC is also issuing an Investor Alert concerning prime bank schemes, which can be found at the SEC's website, www.sec.gov.
Webmaster Note: The Prime Bank information section has been moved. Updated information on this topic can be found at http://www.sec.gov/enforce/pbank/pbnkhome.htm