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U.S. Securities and Exchange Commission

SECURITIES AND EXCHANGE COMMISSION

Litigation Release No. 16995 / May 10, 2001

SECURITIES AND EXCHANGE COMMISSION v. CAPITAL CONSULTANTS, LLC, JEFFREY L. GRAYSON, AND BARCLAY L. GRAYSON, Civil Action No. CV-00-1290 (KI)(D. Ore.)

The Securities and Exchange Commission ("Commission") announced that on April 30, 2001, the U.S. District Court in Oregon entered permanent injunctions against Capital Consultants, LLC, a registered investment adviser located in Portland, Oregon, and its principals, Jeffrey L. Grayson and Barclay L. Grayson. Capital Consultants managed over $1 billion for approximately 340 clients, principally union pension trust funds and individuals. The Commission filed its complaint on September 21, 2000 and obtained a temporary restraining order and asset freeze against Capital Consultants, Jeffrey L. Grayson and his son Barclay L. Grayson. The Commission's complaint alleged that the defendants were operating an undisclosed Ponzi-like scheme in which they used client funds to make interest payments to other clients who were invested in a $160 million loan that Capital Consultants made to Wilshire Credit Corp. Capital Consultants is currently in receivership.

Without admitting or denying the allegations contained in the complaint, Jeffrey and Barclay Grayson consented to permanent injunctions against future violations of the antifraud provisions of Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and aiding and abetting violations of the advisory antifraud provisions of Sections 206(1) and (2) of the Investment Advisers Act of 1940. Capital Consultants consented to a permanent injunction against future violations of the antifraud provisions of Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and the advisory antifraud provisions of Sections 206(1) and (2) of the Investment Advisers Act of 1940.

http://www.sec.gov/litigation/litreleases/lr16995.htm

Modified:05/11/2001