UNITED STATES SECURITIES AND EXCHANGE COMMISSION
LITIGATION RELEASE NO. 16569 / May 31, 2000
SECURITIES AND EXCHANGE COMMISSION V. PACIFIC AIR TRANSPORT, INC. AND ROBERT B. HIRSCH, Civ No. CV 00-05854 (C.D. Cal.)
The Securities and Exchange Commission filed a civil action on May 31, 2000, against Pacific Air Transport, Inc. and Robert B. Hirsch for an alleged fraudulent securities offering. The Complaint, filed in the United States District Court for the Central District of California, alleges that from November 1998 through September 1999, Pacific Air raised approximately $8 million from at least 250 investors in 22 states from the sale of nine-month "secured" promissory notes. Pacific Air marketed the notes, which promised interest rates ranging from 12% to 13%, through a sales network consisting primarily of insurance agents. In addition to promising returns in excess of similar fixed investments, Pacific Air represented that investor funds were guaranteed by an offshore insurance company.
Notwithstanding these representations, the guarantee did not exist and the majority of the Pacific Air noteholders, many of whom are elderly, have lost most, if not all, of their investment. Moreover, Pacific Air and Hirsch knowingly made several false and misleading statements to investors regarding the security of the investment, business prospects of the company, returns on investments, and the use of investor funds.
The Complaint charges the defendants with violating the securities registration and antifraud provisions of Sections 5(a), 5 (c) and 17(a) of the Securities Act of 1933, and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The Commission seeks permanent injunctive relief against Pacific Air and Hirsch, as well as disgorgement with prejudgment interest, an accounting and civil money penalties.
The Commission would like to acknowledge the invaluable assistance of the California Department of Corporations.