SECURITIES AND EXCHANGE COMMISSION
LITIGATION RELEASE NO. 17198 / October 19, 2001
SECURITIES AND EXCHANGE COMMISSION v. EARL A. ABBOTT, RICHARD L. STALVEY, GLENN PURDUE, KENNETH C. NUNN AND THOMAS J. O'KEEFFE (United States District Court for the Middle District of Florida, C.A. No. 6:01-CV-364-ORL-31-KRS)
The Commission announced today that on October 9, 2001, a judgment by default was entered in United States District Court for the Middle District of Florida against Robert E. Gerwin of Cincinnati, Ohio. The Commission's complaint in the matter, filed on March 22, 2001, alleged that Gerwin acted as a sales agent for Earl A. Abbott, a Titusville, Florida businessman by selling $300,000 of non-existent prime bank securities to investors. Gerwin, the complaint alleged, entered into a joint venture agreement promising the investors a weekly return of 16% over forty weeks, or 640%. Gerwin allegedly told the investors that the profits would be earned by trading in "medium term bank debentures" of the "top 25" western European Banks. The Commission alleged there were no bank debentures and no trading and that, as a result of Gerwin's actions, investors lost $245,000.
The Commission's complaint alleged that, in connection with this scheme, Gerwin engaged in transactions, acts, practices and courses of business which constituted violations of Section 17(a) of the Securities Act of 1933 ("Securities Act"), Section 10(b) of the Securities Exchange Act of 1934 ("Exchange Act"), and Rule 10b-5 thereunder, Section 5(a) and 5(c) of the Securities Act and Section 15(a) of the Exchange Act. The Commission sought, and the Court entered, a Permanent Injunction prohibiting Gerwin from violating the securities registration, antifraud and broker-dealer registration provisions of the Securities Act and the Exchange Act. The Commission did not allege that Gerwin received any sales commission or profits and according the Commission did not seek disgorgement. However, the Commission sought imposition of civil monetary penalties against Gerwin pursuant to Section 20(d) of the Securities Act and Section 21(d)(3) of the Exchange Act. The Court entered an order requiring Gerwin to pay a monetary penalty of $50,000.
In an earlier related action, the Commission filed a complaint in the United States District Court for the District of Massachusetts against Richard J. Briden, an Ashland, Massachusetts business consultant alleging violations of the securities registration, antifraud and broker-dealer registration provisions of the federal securities laws in connection with the offer and sale of fraudulent prime bank securities. That complaint alleged that Briden convinced seven investors, three of whom were from Massachusetts, to invest in the Abbott/Gerwin prime bank trading program. The Florida complaint alleges that Briden found the Abbott program through defendant Gerwin. For further information on the Briden action, see Litigation Release No. 16134. For further information on the Abbott/Gerwin action, see Litigation Release No. 16940.