SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 16889 / February 6, 2001
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)
SEC FILES ADDITIONAL CHARGES AGAINST BRYAN J. EGAN AND BRYCAR FINANCIAL CORPORATION
On February 6, 2001, the Securities and Exchange Commission filed an amended complaint against BryCar Financial Corporation and its president, Bryan J. Egan, adding claims against BryCar and Egan for violations of the anti-fraud provision of the Investment Advisers Act of 1940, and the prohibition against selling unregistered securities contained in the Securities Act of 1933.
The SEC initially commenced this action on September 19, 2000, alleging that Egan and BryCar were operating a fraudulent Ponzi scheme in which they collected millions of dollars from hundreds of investors with guarantees that, among other things, their "risk free" investments in so-called "pre-IPO" stock and other securities would generate 500% returns. The SEC's complaint also alleged that BryCar illegally offered and sold securities without being registered with the SEC as a broker-dealer. For a full description of the SEC's initial claims, see Litigation Release No. 16713 (September 20, 2000). On September 20, 2000, the Honorable Lloyd D. George of the U.S. District Court for the District of Nevada issued a temporary restraining order prohibiting BryCar and Egan from engaging in fraudulent activities and offering or selling securities while failing to be registered with the SEC as a broker-dealer. The Court also froze all of the assets of BryCar and Egan, and certain of the assets of Carol A. Egan, who is Egan's wife and the corporate secretary of BryCar. On September 26, 2000, the Court entered a preliminary injunction, with the defendants' consent, continuing in effect the orders entered on September 20 until completion of a trial on the SEC's claims. See Litigation Release No. 16726 (September 27, 2000).
On November 13, 2000, the Court entered an order appointing Las Vegas attorney John E. Ham as temporary receiver for BryCar, and on December 8, 2000, the Court confirmed Mr. Ham as BryCar's permanent receiver. See Litigation Release No. 16810 (November 28, 2000).
The SEC's amended complaint also sets forth additional factual allegations concerning the defendants' fraudulent scheme. Among other things, it is alleged that BryCar and Egan falsely told investors in BryCar's "long term" program that their initial investments were never at risk because they were guaranteed by bonds issued by Lloyds of London Bank and held in escrow by the SEC, that BryCar was an offshore corporation and subject only to a 3% tax liability on its trading profits, and that BryCar would pay all capital gains taxes on behalf of investors. Moreover, the amended complaint alleges that BryCar and Egan told investors that their funds had been used to purchase shares of AT&T Wireless stock in an IPO when, in fact, no such shares were ever purchased. It is further alleged that the payouts to some BryCar investors of profits relating to the sale of AT&T Wireless stock were sham transactions funded with money invested by more recent BryCar investors.
The SEC's amended complaint alleges that BryCar never had a securities trading account in its name in which publicly traded securities were purchased for or on behalf of BryCar investors, although some securities were purchased with BryCar investors' funds in trading accounts held exclusively in Egan's name. It is also alleged that, on numerous occasions, the Egans looted investor funds from BryCar to support their lavish lifestyle. According to the SEC's amended complaint, BryCar investor funds were used to pay for Egan family vacations, artwork for the Egans' home, luxury automobiles and recreational vehicles, and other personal expenses. Additionally, it is alleged, $75,000 of BryCar investors' funds was used to make an initial deposit on a $1.5 million home in a country club residential development in Florida to which Egan planned to move his family.
The SEC's amended complaint seeks permanent injunctions barring the defendants from future violations of the anti-fraud provisions of the Securities Act of 1933 (Section 17(a)), the Securities Exchange Act of 1934 (Section 10(b) and Rule 10b-5), and the Investment Advisers Act of 1940 (Section 206(1) and (2)), the broker-dealer registration provisions of the Exchange Act (Section 15(a)), and the registration provisions of the Securities Act of 1933 (Section 5(a) and (c)), disgorgement of all illegal profits, plus prejudgment interest, and the imposition of civil money penalties against Egan.
Investors or other interested parties may direct questions concerning their BryCar investments to BryCar's court-appointed receiver, John E. Ham, Esq., at Santoro, Driggs, Walch, Kearney, Johnson & Thompson, 3773 Howard Hughes Parkway, Suite 290N, Las Vegas, NV 89109. The receiver may be reached by telephone at (702) 791-0308 ext. 100, or by e-mail addressed to TDriggs@nevadafirm.com.