UNITED STATES SECURITIES AND EXCHANGE COMMISSION
LITIGATION RELEASE NO. 16452 / February 24, 2000
SECURITIES AND EXCHANGE COMMISSION v. First Americans Bank Ltd. et al., Civil Action No. Civ. 98-0645-R (USDC WD Okla.)
The Commission announced today that it filed an application seeking an order of civil contempt against Ron Sparks for violating asset freeze orders and an order to repatriate funds from foreign bank accounts. The Commission alleges that Sparks dissipated assets totaling $680,000 in violation of six Court orders and failed to return to the United States funds in bank accounts in Anguilla and Hong Kong. The repatriation order and orders freezing Sparks' assets, and the assets of companies he controlled, have been in effect since May 7, 1998, when the Commission filed an action alleging that Sparks and other fraudulently sold interests in Native American Free Trade Association, an Oklahoma entity which referred to itself as "NAFTA" and claimed to operate First Americans Bank Ltd., a purported sovereign bank operating under the auspices of the Apache tribe.
The Commission's complaint, filed in May 1998, alleged that Sparks and the other defendants conducted a securities fraud by selling investment interests and accepting deposits in purported bank checking and savings accounts of First Americans Bank. Sparks and the other defendants made false and misleading statements concerning: (1) the existence and nature of a charter or authority to engage in banking in Indian Territory; (2) that investor funds and deposits were federally and privately insured; (3) that funds deposited at First Americans Bank would be completely "liquid" at all times; (4) that a bank was in operation on Indian territory and offered checking account privileges; and (5) that shares of stock and investments in NAFTA and other defendant entities would be redeemed at double their original value. Contrary to representations to investors and depositors about the intended use of proceeds, Sparks and co-defendant Owen Stephenson steadily used such proceeds to fund their personal expenses, pay the operating costs of entities they owned or controlled, including First Americans Bank, and operate a "Ponzi scheme" by effecting transfers or "debits" for the benefit of earlier depositors.
The Court granted emergency orders between May 1998 and September 1998 sought by the Commission to prevent Sparks and others from transferring or liquidating any funds and to halt the ongoing fraudulent statements being made in connection with the offer and sale of securities. The Court also ordered the defendants to account for investor proceeds and to repatriate assets held outside the United States. The Commission's action was stayed while Sparks and Stephenson were criminally prosecuted for their conduct. On April 29, 1999, Sparks and Stephenson were found guilty of 26 and 25 counts, respectively, of mail fraud, wire fraud, conspiracy and money laundering in connection with their fraudulent operation of First Americans Bank. On October 8, 1999, Sparks was sentenced to serve 11 years and 3 months and pay $6.8 million in restitution. Stephenson did not appear for sentencing on October 15, 1999, and a warrant was issued for his arrest.
In the contempt application filed today, the Commission alleges that Sparks controlled an account in Anguilla, British West Indies which held proceeds from investors and depositors who were victims of the fraud. Through at least 13 transactions, Sparks transferred $680,000 out of that account in violation of the asset freeze and repatriation provisions, including transferring $460,000 to an account in Sparks' name at a bank in Hong Kong. The Commission is seeking to have the funds returned for use in repaying the victims of the fraud and to have Sparks sanctioned for his contempt of the prior Court orders.
For further information see Litigation Release Nos. 15969 (Nov. 6, 1998) and 15734 (May 7, 1998).