U.S. Securities and Exchange Commission
Litigation Release No. 17982 / February 12, 2003
SEC v. Autofund Servicing, Inc. and James D. Haggard, Jr., Civ. Action. No. SA 03-CA-121 (FB)(Western District of Texas, San Antonio Division)
On February 11, 2003, the Commission filed a settled civil action against Autofund Servicing, Inc. ("Autofund") and its president, James D. Haggard, Jr. for issuing materially misleading press releases concerning the purported acquisition of a multi-million dollar loan portfolio, Autofund's 2001 revenues, and the approval of a $2 million loan. Until ceasing business operations in June 2002, Autofund, based in San Antonio, was engaged in the business of collecting charged-off automobile loans. Autofund's stock was quoted on the OTC Bulletin Board under the symbol AFSR.
The Commission alleged that on January 22, 2002, Autofund issued a press release announcing that it had "completed the closure" of an automobile loan portfolio with a $30 million face value. In fact, Autofund had never acquired this portfolio. On January 23, 2002, Autofund announced that its 2001 revenues increased 24% from the previous year, when, in fact, its revenues had actually declined approximately 11%. Finally, on March 5 and 7, 2002, Autofund announced that it had secured a $2 million loan that would allow the company to acquire loan portfolios that would lead to significant increases in earnings. In fact, Autofund had not obtained any such loan.
Without admitting or denying the allegations in the SEC's complaint, Autofund and Haggard have consented to the entry of an injunction for violations of the anti-fraud provisions of the federal securities laws, specifically Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. In addition, Haggard has consented to pay a $25,000 civil penalty and to be barred from serving as an officer or director of any SEC reporting company for a period of five years. The settlement terms are subject to court approval.