SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 16713 / September 20, 2000
SECURITIES AND EXCHANGE COMMISSION V. BRYCAR FINANCIAL CORPORATION AND BRYAN J. EGAN, DEFENDANTS, AND CAROL A. EGAN, RELIEF DEFENDANT, Civil Action No. CV-S-00-1125-LDG-LRL (D. Nev.)(LDG) (September 19, 2000)
SEC Freezes Assets of Unregistered Broker-Dealer Brycar Financial Corporation To Protect Investor Funds
On September 19, 2000, the Securities and Exchange Commission filed an emergency action in the U.S. District Court for the District of Nevada and on September 20, 2000 obtained a Temporary Restraining Order prohibiting a Las Vegas, Nevada company, BryCar Financial Corporation and its president, Bryan J. Egan ("Egan"), from engaging in fraudulent activities and offering or selling securities while failing to be registered with the Commission as a broker-dealer. The action also freezes the assets of BryCar, Egan and relief defendant Carol A. Egan, the secretary of BryCar. BryCar conducted many of the activities that are the subject of this action over its Internet websites.
The Commission's complaint alleges that although neither defendant is registered to deal in securities, Egan purports to offer long- and short-term investment programs to consumers in several states through BryCar. Under BryCar's "long-term" program, investor funds are to be pooled for the purchase of securities from three sources: initial public offerings, commonly known as "IPOs"; "pre-IPO shares," and shares of private placements. The defendants require a minimum investment of $2,500 for participation in this program. Under BryCar's "short term" program, investor funds are to be pooled and used for day trading, in a practice in which publicly-traded securities are held for a limited time in an attempt to profit on market swings. The defendants require a minimum investment of $1,000 for investment in this program. The Complaint alleges that throughout this year, the defendants have held seminars at Las Vegas hotels, during which prospective customers were given dinner and then exhorted by Egan to invest in the BryCar programs. The Complaint alleges that Egan's sales pitch contained numerous materially false and misleading statements concerning BryCar and its purported investment programs. In at least one such presentation, according to the Complaint, Egan repeatedly told prospective customers that BryCar guaranteed its investments, that investors cannot lose money, and that BryCar's investments are both "risk free" and "tax free." According to the Complaint, however, securities transactions involve risk and are generally subject to taxation.
The Complaint alleges that Egan disseminated, or caused dissemination of, promotional literature that also contained false claims of BryCar's ability to provide risk-free, high-yield investments. For example, one brochure described in the Complaint promises investors "an average return of 500% in an 8 -12 week period, without the RISK to you ...." Similarly, Egan's business card proclaims BryCar's investment programs "risk free."
In addition, according to the Complaint, the defendants have operated a website at , on which the phony investment programs were promoted and which allowed customers to access equally fictitious account information. In one BryCar posting, titled "A word from our President," Egan describes BryCar as "[a]n Investment Firm that provides "Risk Free" investing, high returns...."
The Complaint also alleges that on numerous occasions, Egan and Carol Egan have looted investor funds from BryCar's checking account to pay for consumer purchases, repeatedly transferred substantial sums from BryCar's account into bank and trading accounts in Egan's name, and made ATM withdrawals from BryCar's account. The Complaint alleges that on September 14, 2000, at or around 9:00 a.m. (PDST), Egan ordered BankAmerica to wire transfer $380,000 from BryCar's account to a personal account maintained in his name at WingspanBank.com. According to the Complaint, this transaction left BryCar's account with a zero balance.
As relief, the Commission sought a temporary restraining order, an asset freeze, an accounting and other emergency relief. The Commission also seeks a permanent injunction against future violations of the anti-fraud provisions of the Securities Act of 1933 (Section 17(a)) and the Securities Exchange Act of 1934 (Section 10(b) and Rule 10b-5), and the broker-dealer registration provisions of the Exchange Act (Section 15(a)), disgorgement, plus prejudgment interest, and the imposition of civil money penalties.
The Commission wishes to thank the Securities Division of the Nevada Secretary of State for its valuable assistance in this matter.
Investors are encouraged to report suspicious Internet offerings (or other suspicious offerings) via e-mail to email@example.com. A user-friendly form to assist you in making a report is available at the SEC Home Page www.sec.gov. Investors can also mail a report to SEC's Enforcement Complaint Center, Mail Stop 8-4, 450 Fifth Street, N.W., Washington, D.C. 20549. Investors are advised to read the SEC's brochure entitled "Internet Fraud: How to Avoid Internet Investment Scams" before purchasing any investment promoted on the Internet. The free publication, which alerts investors to the telltale signs of online investment fraud, is available at http://www.sec.gov/investor/pubs/cyberfraud.htm . It can also be obtained by calling 800-SEC-0330.