UNITED STATES SECURITIES AND EXCHANGE COMMISSION
LITIGATION RELEASE NO. 18267 / August 04, 2003
SECURITIES AND EXCHANGE COMMISSION v. JOHN WAYNE ZIDAR, et al., d/b/a/ OAKLEAF INTERNATIONAL, ROSEWOOD INTERNATIONAL and MELIORATIONS MANAGEMENT TEEM, No. C00-823C (USDC W.D. Washington).
The Commission announced that on July 30, 2003, Judge Barbara Rothstein of the Western District of Washington sentenced John Wayne Zidar ("Zidar"), age 60, to thirty years in prison based upon his role in a fraudulent prime bank scheme. The sentence followed a guilty verdict on multiple counts of wire fraud, mail fraud and securities fraud after an eight-week jury trial that concluded in 2002. Five other people were either convicted or pleaded guilty during the criminal trial. Sentencing of the defendants is presently set to conclude in August 2003.
The prime bank scheme raised over $74 million from at least 3,200 U.S. and Canadian victims. In May 2000, the Commission filed a complaint seeking emergency relief, including an asset freeze and injunctive relief. The Court granted this relief on May 10, 2000. The Commission's injunctive complaint, as amended in August 2000, names as defendants Zidar, Elizabeth Anne Phillips and John Wesley Matthews, as well as ten relief defendants. The Commission's complaint alleges that the named defendants promised investors in two programs, Oakleaf International, Inc. and Rosewood International, Inc., a return of 120% per year, as well as preservation of their invested funds, through an unspecified "trading program". The complaint alleges that, contrary to these representations, the defendants misappropriated investor money for personal expenses and failed to engage in any profitable investments. The Commission's complaint further alleges that at least 25% of the investors' money was diverted to pay sales commissions to various salespersons and agents in a multi-level marketing scheme through which the Oakleaf and Rosewood programs were sold.
In the civil case, which has been stayed pending the resolution of the parallel criminal action, the Commission also obtained the appointment of a Receiver to marshal assets and distribute them back to defrauded investors. To date, the Receiver has collected approximately $20 million on behalf of investors through various actions, including litigation in Western Samoa which achieved the repatriation of investor proceeds sent there as part of the scheme. Following the conclusion of the criminal case and the resolution of the Commission's civil action, the Receiver will propose a distribution plan to Chief Judge John C. Coughenour, before whom the Commission's case is pending.