LITIGATION RELEASE NO. 17010 / May 18, 2001
SEC v. Gorsek et al., 99 CV 3072 (C.D.Ill.) (Springfield Div.) (JES)
The Commission announced today that the Honorable Jeanne E. Scott, United States District Judge for the Central District of Illinois, entered a Judgment of Permanent Injunction and Other Relief Against Defendant Troy Justus (Justus), restraining and enjoining him from violating the antifraud provisions of the federal securities laws. Justus consented to the entry of the judgment without admitting or denying the allegations of the Commission's complaint. The Court further ordered that Justus pay disgorgement in the amount of $5,888, plus pre-judgment interest thereon. The Court, however, waived payment of the disgorgement and pre-judgment interest - and declined to impose civil penalties - based on Justus's demonstrated inability to pay.
The Commission's complaint, filed on January 7, 1999, alleged that Justus, along with co-defendants Wayne F. Gorsek, Lyndell Parks and P. Brenden Gebben, fraudulently promoted approximately 20 microcap companies through Strategic Investment Advisory, Inc. (SIA), a Springfield, Illinois-based company, in exchange for cash and securities. The Complaint alleged SIA deceived investors into believing that it was an independent securities research firm providing objective investment advice about "undiscovered" companies. In fact, the SEC alleged, SIA was merely a paid promotional firm that uncritically published glowingly optimistic recommendations of the securities of its clients in exchange for cash and securities.
The Complaint further alleged that at the same time he was engaged in SIA's promotional scheme, Justus worked as a registered representative at Strategic Investments, Inc. (SII) (a broker-dealer owned by co-defendants Gorsek and Parks). The Complaint alleged that as a registered representative at SII, Justus, Gorsek and Parks defrauded brokerage customers by recommending the purchase of securities issued by SIA clients without disclosing that they received cash and securities from the issuers of those securities.
Justus, without admitting or denying the allegations of the complaint, has agreed to a settlement whereby he would be permanently enjoined from violating Sections 17(a) and 17(b) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 (Exchange Act), and Rule 10b-5 thereunder. Justus has also agreed, upon entry of the final judgment in this action, to the issuance of a Commission order pursuant to Sections 15(b) and 19(h) of the Exchange Act that would bar him from association with any broker or dealer with a right to reapply after three years. [SEC v. Wayne F. Gorsek, Lyndell Parks, P. Brenden Gebben and Troy Justus, U.S. District Court for the Central District of Illinois, C.A. No. 99 CV 3072 (January 7, 2000)] (LR-16018).