U.S. Securities and Exchange Commission
Litigation Release No. 18221 / July 8, 2003
SEC v. John E. Brinker, Jr., Gary J. Bentz, et al., Civil Action No. IP01-0259 C-H/G (S.D. Ind.).
The U.S. Securities and Exchange Commission ("Commission") announced today that on June 18, 2003, the Hon. David F. Hamilton of the U.S. District Court for the Southern District of Indiana ordered John H. Brinker, Jr. of Cincinnati, Ohio, and Gary J. Bentz of Loveland, Ohio, to jointly pay $17.4 million in disgorgement and prejudgment interest and to pay an additional $110,000 each in civil penalties for their role in defrauding investors through a "prime bank" trading scheme. Judge Hamilton also ordered Steadfast Ministries, Inc., a Cincinnati, Ohio charitable organization incorporated by Brinker and others, to pay $265,300 in disgorgement and prejudgment interest for funds the company received from the scheme.
In February 2001, the Commission sued Brinker, Bentz, and other defendants for operating the fraudulent scheme that raised $20.3 million from over 600 investors. At the same time, Judge Hamilton issued a permanent injunction that prohibits Brinker, Bentz, and other defendants from engaging in fraud and other misconduct in violation of Sections 5(a), 5(c), and 17(a) of the Securities Act of 1933, Sections 10(b), 15(a), and 15(c) of the Securities Exchange Act of 1934, and Rules 10b-5 and 15c1-2 thereunder. Brinker and Bentz consented to the injunction order without admitting or denying the allegations in the Commission's complaint.
The injunction order also froze the assets of Brinker, Bentz, and the other defendants. In previous civil contempt proceedings, the Commission alleged that shortly before the asset freeze, Bentz obtained approximately $142,000 by borrowing against his assets, and that after the freeze, he spent all or part of the borrowed funds in violation of the freeze. The court ruled that Bentz violated the freeze, and held him in civil contempt. Bentz was subsequently convicted of criminal contempt for the same conduct and sentenced to three months of imprisonment. (For more detail on the injunction and contempt proceedings, see Litigation Release Nos. 16915, 17534, and 17881.)