Litigation Release No. 17201 / October 23, 2001
SEC v. Robert L. Bentley, Entrust Group and Bentley Financial Services, Inc., Civ. Action No. 53-66 (Eastern District of Pennsylvania)
Today, the Securities and Exchange Commission filed suit in the United States District Court for the Eastern District of Pennsylvania against Robert L. Bentley, his d/b/a, Entrust Group, and Bentley Financial Services, Inc., all of Paoli, Pennsylvania. The Commission alleged that the defendants are committing fraud in the sales of securities to hundreds of financial institutions, including banks and credit unions, and to individual investors nationwide. Specifically, the Commission alleged that the defendants are representing to investors that they are selling bank-issued, federally insured certificates of deposit ("CDs"). In fact, unbeknownst to these investors, they are buying uninsured securities issued by the defendants rather than insured CDs issued by banks. Although the defendants are using at least some investor funds to buy CDs, the terms of the CDs often vary substantially from those of the securities defendants are selling. Moreover, the Commission alleged that in many cases, investors must rely on the defendants' ability to attract new investors in order for previous investors to receive repayment of their principal. Accordingly, investors are not buying the low-risk, federally-insured CDs that they were promised. Rather, they are buying higher risk securities issued by defendants, whose business is uninsured, unaudited and unregulated. Investors currently have over $300 million invested with the defendants.
The Commission also alleged that the defendants are defrauding investors by leading them to believe that their investments are being made through a brokerage firm registered with the Commission and insured by the Securities Investor Protection Corporation. In fact, none of the defendants' sales of purported CDs to investors is made through such a firm.
The Commission alleged that the defendants are violating the broker-dealer registration and the antifraud provisions of the federal securities laws set forth in Section 17(a) of the Securities Act of 1933 and Sections 10(b) and 15(a) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The Commission's action seeks permanent injunctions prohibiting future violations of these provisions and others, disgorgement of the defendants' ill-gotten gains plus prejudgment interest, and civil penalties against each defendant. Additionally, the Commission's action seeks emergency injunctive and equitable relief consisting principally of a temporary restraining order, an order freezing each defendant's assets and an order appointing a receiver. The Commission gratefully acknowledges the assistance of the National Association of Securities Dealers-Regulation, the Federal Deposit Insurance Corporation, the Office of Thrift Supervision, the National Credit Union Administration, the Office of Comptroller of the Currency and the Board of Governors of the Federal Reserve System in bringing this action.