SECURITIES AND EXCHANGE COMMISSION
LITIGATION RELEASE NO. 16501 / April 5, 2000
SEC v. Joseph P. Medsker, Unified Financial Services Agency Corp., and Unified Financial Services Advisory Corp., Civil Action No. C3-96-381 (USDC S.D. Ohio)(March 28, 2000)
On March 28, 2000, the Commission filed a Motion for Order Finding Unified Financial Services Agency Corp. (UFS Agency) and Joseph P. Medsker (Medsker) in Contempt, Accelerating Disgorgement, and Requiring Immediate Payment. The Commission filed the motion after UFS Agency and Medsker failed to pay the $16,666.67 that was due on December 2, 1999, as required by a December 2, 1997 order and a 1999 agreed order. The 1997 order, entered by consent against Medsker, UFS Agency and Unified Financial Services Advisory Corp. (UFS Advisory), a registered investment adviser owned and controlled by Medsker, required UFS Agency to pay $65,000 in disgorgement over 3 years due to their involvement in a scheme to defraud investors and advisory clients. UFS Advisory guaranteed payment of UFS Agency's disgorgement. UFS Agency and Medsker had previously failed to make timely payments under the 1997 order and agreed in 1999 to the relief requested by the Commission in this Motion if UFS Agency missed or defaulted on any future payments.
In the underlying action, the Commission alleged that Medsker, UFS Agency, and Unified Financial Services Advisory Corp. (UFS Advisory), a registered investment adviser, engaged in a scheme to defraud in connection with the offer, purchase and sale of more than $2.2 million in unregistered partnership interests and participated in a cover up of the scheme. In addition, the complaint alleged that Medsker churned a trading account for one of the partnerships. Finally, the complaint alleged that Medsker and UFS Agency acted as unregistered investment advisers and Medsker and UFS Advisory failed to disclose to clients that Medsker was previously sanctioned by the NASD. Medsker, UFS Agency, and UFS Advisory consented, without admitting or denying the allegations of the complaint, to be enjoined from future violations of the federal securities laws, and UFS Agency was ordered to pay disgorgement, guaranteed by UFS Advisory. Civil penalties were not ordered based on the defendants' demonstrated inability to pay. In a related administrative proceeding, Medsker was barred from the industry and UFS Advisory was censured and required to comply with certain remedial undertakings.