UNITED STATES SECURITIES AND EXCHANGE COMMISSION
LITIGATION RELEASE NO. 16799 / November 14, 2000
SECURITIES AND EXCHANGE COMMISSION V. DEAN C. TURNER, U.S. District Court for the Eastern District of Michigan, Civil Action No. 97-74810 (E.D. Mich. September 19, 1997)
The Securities and Exchange Commission announced today that on November 3, 2000, a judge in the U.S. District Court for the Eastern District of Michigan entered a permanent injunction by consent against Dean C. Turner (Turner), for his fraudulent sales of promissory notes while employed as a broker at the Troy, Michigan branch office of Dean Witter Reynolds, Inc. (Dean Witter, now known as Morgan Stanley Dean Witter, Inc.). The Court's Order enjoins Turner from future violations of Sections 5(a), 5(c) and 17(a) of the Securities Act of 1933 and Sections 10(b), 15(a)(1) and 15(c)(1) of the Securities Exchange Act of 1934 and Rules 10b-5 and 15c1-2 thereunder. Turner neither admitted nor denied the allegations in the Commission's Complaint (Complaint).
The Complaint alleges that, from approximately October 1992 through October 1995, Turner knowingly or recklessly made misleading statements when he sold to his Dean Witter customers at least 161 promissory notes totaling at least $13.6 million. The notes were issued by Lease Equities Fund, Inc. (Lease Equities), an equipment leasing company that was based in Milford, Michigan. According to the Complaint, Turner, when selling the Lease Equities notes, made materially false and misleading statements concerning the use of investor funds, the source of funds to be repaid to investors, the risks associated with the securities, the collateral for the securities and the returns to be realized. The Complaint alleges that approximately $10 million of principal due from the notes was not repaid. The Complaint states further that Turner received approximately $335,000 in commissions from Lease Equities. The Complaint also alleges that, at the time he sold the notes, Turner had conducted no due diligence to determine the risks and suitability of the notes. In addition, according to the Complaint, Turner failed to disclose that proceeds from the notes were being used to finance a Lease Equities affiliate, that he was an officer and a 50 percent owner of the affiliate, that he was an officer of Lease Equities, that some of the funds were being used to pay off Lease Equities bank loans and previous note purchasers, that some of the leases securing the notes were fraudulent or did not exist, and that Lease Equities did not always take steps to file the necessary documents to protect the investors' collateral. In addition, the Complaint alleges that Turner falsely led investors to believe that he was acting on behalf of Dean Witter. Based on Turner's demonstrated inability to pay, the court's order does not impose a civil penalty and waives payment by Turner of $335,136 in disgorgement, plus prejudgment interest.
On June 16, 1999, a jury in the United States District Court for the Eastern District of Michigan convicted Turner of two counts of mail fraud for submitting reports to Dean Witter and to the National Association of Securities Dealers that failed to disclose that Turner was engaged in the offer and sale of Lease Equities notes. On January 20, 2000, Turner was sentenced to 18 months imprisonment and two years of supervised release after his prison term. Turner began serving his term in April 2000.