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U.S. Securities and Exchange Commission

U.S. SECURITIES AND EXCHANGE COMMISSION

Litigation Release No. 18602 / February 27, 2004

SEC v. Kelsey L. Garman, Koinonia Investment Club II, Koinonia Income Account, Koinonia 100/200 and Koinonia Kingdom Club,Civ. Action No. 04-M-354 (BNB) (District of Colorado)

Today, the Securities and Exchange Commission filed suit in the United States District Court for the District of Colorado against Kelsey L. Garman, of Springfield, Missouri, and four Colorado partnerships under Garman's control, Koinonia Investment Club II, Koinonia Income Account, Koinonia 100/200 and Koinonia Kingdom Club ("the Koinonia Funds"), for violations of the antifraud and registration provisions of the federal securities laws.

The Commission alleges that from at least 1997 through the present, Garman offered partnership interests in each of the Koinonia Funds, raising funds from more than 200 investors nationwide. The Commission claims that Garman misrepresented the funds' historical performance and risk in Koinonia Funds' offering materials and on a related Internet web site. In addition, the Complaint alleges that Garman suffered significant trading losses in at least two of the funds, which he hid from investors by sending them false quarterly statements claiming fund profitability. The Complaint further contends that the Koinonia Funds' securities offerings were not registered with the Commission and were not exempt from registration. Finally, the Commission alleges that each of the Koinonia Funds failed to register as investment companies as required by law.

The Complaint alleges that Garman violated Sections 5(a), 5(c) and 17(a) of the Securities Act of 1933, 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. The complaint further alleges that the Koinonia Funds violated Sections 5(a), 5(c) and 17(a) of the Securities Act, Section 10(b) of the Exchange Act and Rule 10b-5 thereunder and Section 7 of the Investment Company Act.

SEC Complaint in this matter


http://www.sec.gov/litigation/litreleases/lr18602.htm


Modified: 03/01/2004