SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 17526 / May 21, 2002
Securities and Exchange Commission v. Starcash, Inc., Infinity Consulting Services, Inc., Jean B. Leclercq, Kip Marsique, Frederick J. Shapiro (Defendants) and Starcash Consulting, Inc., Starcash Industries, Inc., and Starcash Media, Inc. (Relief Defendants), Case No. 02-80456-CIV. MIDDLEBROOKS (S.D. Fla.) (May 16, 2002)
Securities and Exchange Commission v. American-Inc.com, Inc., National Business Concepts, Inc. d/b/a Americash, Norman Benjamin (Defendants) and World Business Systems LLC d/b/a World Business Systems, Inc. (Relief Defendant), Case No. 02-80457-CIV-HURLEY (S.D. Fla.) (May 16, 2002)
SEC OBTAINS EMERGENCY ORDERS SHUTTING DOWN STARCASH AND AMERICASH, TWO FRAUDULENT PAYDAY ADVANCE SCHEMES
The Securities and Exchange Commission (SEC or Commission) announced that on May 16, 2002, it filed two separate emergency federal civil actions seeking to halt two fraudulent securities offerings. The first action was filed against defendants Starcash, Inc., Infinity Consulting Services, Inc., Jean B. Leclercq, Kip Marsique and Frederick J. Shapiro (The Starcash defendants) and relief defendants Starcash Consulting, Inc., Starcash Industries, Inc. and Starcash Media, Inc. The Starcash defendants are headquartered in Boca Raton and Ft. Lauderdale. The second action was filed against defendants Americash-Inc.com, Inc., National Business Concepts, Inc. d/b/a Americash and Norman Benjamin (the Americash defendants) and relief defendant World Business Systems LLC, d/b/a World Business Systems, Inc. The Americash defendants are headquartered in Boca Raton. The SEC alleged that the defendants in both schemes were conducting a fraudulent unregistered offering to raise investor funds for the purported purpose of funding payday advances in the form of short term loans.
On May 16, 2002, the Honorable Daniel Hurley, United States District Judge for the Southern District of Florida, entered, among other things, a temporary restraining order, a freeze of the defendants' assets and an appointment of a receiver in the Americash offering. (SEC v. Americash-Inc.com, Inc., et al., Case No. 02-80457-CIV-HURLEY). On May 17, 2002, the Honorable Donald Middlebrooks, United States District Judge for the Southern District of Florida entered identical relief against the defendants in Starcash. (SEC v. Starcash, Inc., et al., Case No. 02-80456-CIV-MIDDLEBROOKS).
The Commission alleged that the Americash defendants, through a boiler room, raised approximately $1.2 million from more than 45 investors to fund a purported business providing an instant short term cash advance (of up to $500) available up to two weeks before a person's payday. In raising money for this enterprise from investors, the Americash defendants falsely represented that the investment was low risk, that a 36% return was guaranteed and that all monies were lent out to Americash customers. According to the SEC complaint, Americash in fact operated as a Ponzi scheme, paying interest to existing investors with new investor monies, and spending investor funds on salaries, commissions, and expenses to operate its boiler room.
With regard to Starcash, the Commission alleged that the Starcash defendants raised at least $6 million from investors through a network of boiler rooms to allegedly fund short-term payday loans. According to the SEC's complaint, the Starcash defendants falsely represented that investor funds would be used to fund advance payday loans, and that the investments were virtually risk free and were secured by the purported loans. In fact, Starcash paid exorbitant commissions to the boiler rooms from investor monies, and the loans were unsafe and grossly undersecured. In addition, Starcash has made baseless predictions to investors that its payday advance business could generate up to $80 million in revenue a year.
The Commission's complaint charges both the Starcash and Americash defendants with violating the antifraud and registration provisions of the federal securities laws. Specifically, the Commission alleges that the defendants in both Starcash and Americash violated Sections 5(a), 5(c) and 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder. The complaint against the Starcash defendants also alleges that they violated Section 15(a) of the Securities Exchange Act of 1934. In addition to the emergency relief described above, the complaint seeks permanent injunctions prohibiting future violations of the securities laws, disgorgement, and civil penalties.
The SEC would like to extend its thanks to the FBI and the United States Attorney's Office for the Southern District of Florida as well as the Broward County Sheriff's office for their assistance in this matter.