SECURITIES AND EXCHANGE COMMISSION
LITIGATION RELEASE NO. 17078 / July 25, 2001
UNITIED STATES v. LARRY WAYNE ELLIS, 301-CR-020-X, USDC, NDTX (Dallas Division)
SECURITIES AND EXCHANGE COMMISSION v. LARRY W. ELLIS, Civil Action No. 3-00CV1040-P, USDC, NDTX (Dallas Division)
On July 23, 2001, Judge Joe Kendall sentenced Larry Wayne Ellis ("Ellis"), the former operator of ATM Technology Systems, a Dallas-based business, to serve 46 months plus three years probation. Ellis pleaded guilty to one count of securities fraud on May 9, 2001.
Ellis' plea and sentencing stems from a January 24, 2001 grand jury indictment charging him with one count of securities fraud and 28 counts of mail fraud. The indictment charged that Ellis, from approximately March 1995 through April 2000, induced investors to loan funds to him to operate his ATM machines by making such false and misleading claims as:
- That he was wealthy and expected to make $20 million through his ATM loan program;
- That he owned an ATM manufacturing facility;
- That the investors' funds were guaranteed to earn 12 percent interest annually; and
- That the investors would earn additional income from the fees generated from the operation of their specific ATM machine.
The indictment also charged that Ellis failed to disclose that investor funds would be misapplied and converted to his personal use and that, in a typical Ponzi-type pattern, investors would be, and were, paid interest from other investor funds.
The federal indictment was based upon the same conducted alleged in the Commission's civil complaint against Ellis filed on May 17, 2000. In the Commission's civil fraud action, Ellis was enjoined from violations of the securities laws and subjected to an asset freeze. In its action, the Commission alleged that Ellis had fraudulently raised nearly $1 million from the offer and sale of promissory notes to investors. The Commission charged Ellis with violations of the anti-fraud 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.
[Lit. Rel. 16560, May 22, 2000]