SECURITIES AND EXCHANGE COMMISSION
LITIGATION RELEASE NO. 17258 / DECEMBER 5, 2001
SECURITIES AND EXCHANGE COMMISSION V. RICHARD COLLINS ET AL. (United States District Court for the Northern District of Illinois, 01C-3085)
The United States Securities and Exchange Commission ("Commission") announced that on November 17, 2001, the Honorable Matthew F. Kennelly of the United States District Court for the Northern District of Illinois entered an Order of Permanent Injunction and Other Equitable Relief against Jerome Coppage ("Coppage"), a resident of Schererville, Indiana, for his participation in a widespread fraudulent "prime bank" scheme known as The Gateway Association ("Gateway"). Without admitting or denying the allegations in the complaint, Coppage consented to the entry of an Order that enjoins him from violating Sections 5(a), 5(c) and 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder and orders him to disgorge his ill-gotten gains and pay civil penalties in an amount to be determined in a separate hearing by the Court.
On April 30, 2001, the Commission filed a complaint against Coppage and others based on their participation in raising over $10 million in the Gateway prime bank scheme. The Commission's complaint alleges that from about November 1997 through about March 1999, the Gateway investment scheme raised approximately $10 million from at least 400 investors who were told that their money would be invested in a purported overseas bank debenture trading program. At numerous meetings held across the country, Coppage and others promised investors a 1,250% rate of return on a ten-month, $100,000 investment. In reality, the promised high rate of return lacked a reasonable basis, since, among other things, prime bank securities described by Coppage do not exist and are inherently fraudulent. To date, Gateway has not paid investors their promised rates of return. Nor have investors received their money back. None of the investment proceeds were used to purchase or sell financial instruments. In fact, most of the money raised from investors has been spent or wired to offshore bank accounts.