U.S. SECURITIES & EXCHANGE COMMISSION
Litigation Release No. 17915 / January 7, 2003
Securities and Exchange Commission v. Harral Dunbar, Jr., Individually and d/b/a Ghost International, Civil Action Number 02-233-B-M1 (M.D. La.)
COURT ISSUES CONTEMPT ORDER AGAINST HARRAL DUNBAR, JR. FOR POST INJUNCTION SECURITIES SALES CONDUCTED ON INTERNET AND FOR FAILURE TO PAY AS PREVIOUSLY ORDERED
The Securities and Exchange Commission ("Commission") announced today that on December 18, 2002 Judge Frank J. Polozola of the United States District Court for the Middle District of Louisiana held a show cause hearing and issued an order finding defendant Harral Dunbar, Jr., in contempt of the Court's preliminary and permanent injunctions for securities sales over the Internet, which occurred between the entry of the preliminary and permanent injunctions, and after the entry of the permanent injunction. The Court also found Dunbar in contempt of its order directing payment of disgorgement, prejudgment interest and a civil penalty, as a result of his failure to pay. In earlier orders, the Court preliminarily and later permanently enjoined Dunbar from antifraud and registration violations of the federal securities laws. In imposing the preliminary injunction, the Court found that Dunbar, of Baton Rouge, Louisiana, owned the Ghost International website and used it to solicit investors in investment contracts by promises of inordinate amounts of guaranteed returns and promises of no-risk investing, and further found that investors have received little or no return despite several months of promises by Dunbar that returns would be paid. The Court also previously ordered Dunbar to pay disgorgement in the amount of $9,600, along with prejudgment interest thereon, and ordered Dunbar to pay a "third tier" statutory civil penalty in the amount of $120,000.
The Court found that Dunbar, after the entry of the injunctions against him, obtained funds from two investors who purchased the securities by touting Ghost International's "private contribution and investment program" which allegedly paid, for example, $100,000 on a $200 investment over a few weeks. As with the earlier sales, Dunbar made various promises of exorbitant returns. Dunbar made various representations to fraudulently induce the investors, including that his company dealt in "high yield investments" and that funds were to be placed in offshore bank accounts, which would pay promised returns for five months of a supposed seven-month program. The Court ordered Dunbar to pay a compensatory fine in the amount of $6,600.
The preliminary and permanent injunctions prohibited Dunbar from further violations of 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 thereunder.