UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 16740 / September 29, 2000
SEC v. Lawrence B. Irwin, James D. Cooper, III and Burton Financial Management Associates, Inc., Civil Action No. 00 C 5996 (N.D.Ill.)(September 29, 2000)
On September 29, 2000, the Securities and Exchange Commission filed a complaint against Lawrence B. Irwin, an Illinois CPA, James D. Cooper, III, his business associate, and Burton Financial Management Associates, Inc. (BFMA), a company owned and controlled by Irwin, alleging violations of the antifraud and registration provisions of the federal securities laws.
The Commission's Complaint alleges, among other things, that Defendants made misrepresentations and omissions of material fact to investors in the offer and sale of unregistered promissory notes ("BFMA Notes") and certain real estate limited partnerships (the "BFMA Limited Partnerships") issued by BFMA. The Complaint alleges that contrary to Defendants' representations that the proceeds of these securities offerings would be used for real estate purchases or related investments, Irwin deposited and commingled offering proceeds in BFMA's general operating account, which he used to make purported "loans" to himself of at least $1.5 million, purported "loans" to his wife's business of at least $1.3 million, to repay other BFMA Noteholders, and to make distributions to investors in other BFMA Limited Partnerships. The Complaint further alleges that Cooper engaged in another scheme to defraud whereby he misappropriated approximately $2.3 million from approximately 15 investors for his personal use by, among other things, falsely representing that he would invest these funds in securities similar to those issued by BFMA.
The Complaint alleges that Irwin and BFMA violated Sections 5(a) and 5(c) of the Securities Act of 1933 (Securities Act); that Irwin, Cooper and BFMA violated Section 17(a) of the Securities Act, Section 10(b) of the Securities Exchange Act of 1934 (Exchange Act), and Rule 10b-5 promulgated thereunder; and that Irwin and Cooper violated Section 15(a) and 15(c)(1) of the Exchange Act and Rule 15c1-2 thereunder. The Complaint seeks the following relief against Defendants: (1) an order of permanent injunction against Irwin, BFMA and Cooper enjoining them from future violations of the federal securities laws; (2) disgorgement of all ill-gotten gains received by Irwin and BFMA including prejudgment interest; and (3) the imposition of civil penalties against Irwin and BFMA for their fraudulent acts.