United States Securities and Exchange Commission
LITIGATION RELEASE NO. 17610 / July 12, 2002
SECURITIES AND EXCHANGE COMMISSION v. RICHARD T. TAYLOR, et al., Civil Action No. 3:01-CV-02683-M, USDC NDTX (Dallas Division)
On July 2, 2002, the Honorable Barbara M.G. Lynn, Judge, United States District Court for the Northern District of Texas (Dallas), entered a partial summary judgment in a multi-million dollar offering fraud scheme against Richard T. Taylor (Spring, Texas). The judgment enjoins Taylor from violating the antifraud and registration provisions of the federal securities laws (Sections 5(a) and (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), orders Taylor to disgorge $3,298,295.95, together with prejudgment interest, to a court-appointed receiver for the benefit of defrauded investors. The issue of civil money penalties will be determined at a later time by the court.
As alleged in the Commission's complaint, the Court found: that, between 1992 and late 2001, Taylor, individually and doing business as Transworld Bankers, sold 30-month, purported FDIC-insured certificates of deposit (CDs) to no less than 82 investors; that the CDs were not registered with the Commission; and that Taylor had represented that the CDs would pay higher-than-average rates and that there would be no charge to investors for Taylor and Transworld Bankers' services. The Court also found that Taylor used investor funds for his own use, for "Ponzi" payments and to pay sales commissions.
After the Commission filed its original emergency action to shut down the scheme and freeze assets on December 20, 2001, the United States Attorney for the Northern District of Texas filed an information charging Taylor with securities fraud and mail fraud arising out of the scheme. On March 20, 2002, Taylor entered a plea of guilty to one count of securities fraud in violation of Section 17(a) of the Securities Act of 1933, 15 U.S.C. §77q(a), and one count of mail fraud in violation of 18 U.S.C. §1341. Taylor is scheduled to be sentenced on August 2, 2002, and could receive a prison sentence of as much as 10 years. Additionally, the United States Attorney for the Northern District of Texas filed an information charging Kevin M. Devoto, a salesman who offered Taylor's CDs, with misprision of a felony arising out of the scheme. Devoto entered a guilty plea to the information and is scheduled to be sentenced on September 13, 2002.