Securities and Exchange Commission
Litigation Release No. 18583 / February 20, 2004
Securities and Exchange Commission v. Jordan Enterprises LLC, et al., No. CV 02-9889 PA (CTx) (C.D. Cal.)
Court Enters Order Against Operators of "Advance Fee" Securities Fraud
On January 14, 2004, the Honorable Percy Anderson, U.S. District Judge for the Central District of California, entered Final Judgments in an "advance fee" securities fraud case against defendants Leon Jordan II, Jordan Enterprises, LLC, Jordan Holdings, LLC (collectively the "Jordan defendants"), Raymond J. Brown ("Brown"), and Ray Brown & Associates. The Final Judgments restrain and enjoin the defendants from further violations of the anti-fraud and broker-dealer registration provisions of the federal securities laws (Section 17(a) of the Securities Act of 1933 ("Securities Act") and Section 15(a)(1) of the Securities Exchange Act of 1934 ("Exchange Act")). The defendants consented to the entry of the judgments without admitting or denying any of the allegations of the Commission's complaint. The court's order holds the Jordan defendants jointly and severally liable for disgorgement and prejudgment interest in the amounts of $900,000 and $30,329.30, respectively (to be reduced by $75,000 in disgorgement and $2,611.69 in prejudgment interest ordered to be paid by defendant Brown), and of those amounts, orders relief defendant Sheila S. Jordan to pay disgorgement and prejudgment interest of $390,000 and $13,142.70, respectively. As partial payment of their financial obligations, the court also ordered the Jordan defendants and relief defendant Sheila S. Jordan to transfer certain real property and previously frozen funds in a bank account to the clerk of the court within 30 days, and ordered defendant Leon Jordan to pay a civil penalty in the amount of $125,000. The court also ordered Brown to pay a civil penalty in the amount of $25,000. In separate administrative proceedings, Brown and Jordan also consented to orders permanently barring them from association with any broker or dealer.
The Commission's complaint alleged that since December 2001, the defendants fraudulently raised at least $850,000 by offering unwitting individuals and entities seeking venture capital (the "participants") the opportunity, for a fee, to receive proceeds from bond offerings that did not exist. According to the complaint, the defendants falsely represented to participants that: (1) they were the exclusive coordinators and intermediaries of several multi-billion dollar bond offerings in which well known large financial institutions were involved; (2) in exchange for a fee (denominated as a "due diligence" fee), the defendants would assist the participants in obtaining the proceeds of a specific bond offering; and (3) the participants' fees would be refunded if the defendants were unable to secure participation in the proceeds of the bond offering for the participants. The complaint alleged that the well-known financial institutions purportedly involved in the defendants' bond offerings disclaimed any involvement in any bond offering with the defendants, and that there was no evidence that any of the bond offerings actually existed.
See also: Lit R. No. 17925 / January 13, 2003