U.S. SECURITIES AND EXCHANGE COMMISSION
LITIGATION RELEASE NO. 18259A / July 30, 2003
SECURITIES AND EXCHANGE COMMISSION v. JOSEPH LLOYD NORRIS, MARK GRAY COLEMAN, MAGELLAN COMMUNICATIONS GROUP, LLC, and NORTHERN LIGHTS FINANCIAL, LLC, United States District Court for the District of Nevada, Civil Action No. CV-N-02-0112-DWH-(VPC)
COURT ENTERS FINAL JUDGMENTS AGAINST DEFENDANTS IN INVESTMENT ADVISORY FRAUD CASE
The Securities and Exchange Commission today announced that the Honorable David W. Hagen, United States District Judge for the District of Nevada, has entered final judgments against defendants Joseph Norris and Mark Coleman, both of whom are residents of Carson City, Nevada, and defendants Magellan Communications and Northern Lights Financial, in a case in which the SEC alleged fraud in connection with purported investment advisory services. Under the terms of the final judgments, each defendant is enjoined from violating the antifraud provisions of the federal securities laws, Section 10(b) of the Securities Exchange Act of 1934, and Rule 10b-5 thereunder, and Sections 206(1) and 206(2) of the Investment Advisers Act of 1940. The final judgments order the defendants, jointly and severally, to pay disgorgement of $6,020,997.30. The judgments also order Norris and Coleman, jointly and severally, to pay prejudgment interest of $879,254.29, and Magellan Communications and Northern Lights Financial to pay prejudgment interest of $727,046.55. In addition, the Court imposed civil penalties of $120,000 each against Norris and Coleman, and $550,000 each against Magellan Communications and Northern Lights Financial. The judgment against Norris and Coleman was entered upon the SEC's motion for summary judgment, and the judgment against Magellan Communications and Northern Lights Financial was entered upon default.
The Commission's Complaint, filed March 7, 2002, alleged that the defendants raised approximately $8.5 million from more than thirty clients by promising to invest the money in offshore "trading programs" that would generate returns of 4-7% per month, or the equivalent of 48-84% per year. According to the Complaint, these "trading programs" had the characteristics typical of fraudulent "prime bank" schemes, which have been the subject of dozens of Commission enforcement actions over the past decade. The Commission charged that Norris and Coleman lost approximately $6 million of their clients' funds in their attempts to invest in such "trading programs," then sent their clients fictitious account statements concealing the losses. The Commission also charged that Norris and Coleman continued to encourage clients and prospective clients to deposit money with them without disclosing the losses.
On July 3, 2003, a Sacramento jury found Coleman guilty of seven counts of federal wire fraud in connection with a similar investment scheme. Norris previously pleaded guilty to one count of wire fraud in connection with that scheme. Federal criminal charges arising from the facts underlying the Commission's case are still pending against both of them.
The entry of the foregoing final judgments concludes the Commission's enforcement action arising from the fraudulent investment advisory business conducted by Joseph Norris, Mark Coleman, Magellan Communications and Northern Lights Financial. Additional information can be found in Litigation Release No. 17403, dated March 7, 2002.
The Commission appreciates the assistance of the United States Attorney for the Eastern District of California in the investigation of this matter.