U.S. Securities and Exchange Commission
Litigation Release No. 18642 / March 29, 2004
SECURITIES AND EXCHANGE COMMISSION v. COLIN NATHANSON, INDIVIDUALLY AND DOING BUSINESS AS NATHANSON INVESTMENT TRUST, GIANT GOLF COMPANY, PLAY BIG ENTERPRISES, INC., STARQUEST MANAGEMENT, INC., WHITEHAWK CONSULTING GROUP, INC., LEAFHEAD CONSULTANTS, INC., NETTEL CONSULTING CORP., YRMAC CONSULTING SERVICES, INC., AND MILLENNIUM TECHNICAL GROUP, INC., Civil Action No. SA CV 04-0351 GLT (RZX) (C.D. Cal.)
SEC HALTS $29.5 MILLION SECURITIES FRAUD IN ORANGE COUNTY, CALIFORNIA
The Securities and Exchange Commission ("Commission") filed an emergency action on March 25, 2004, to halt a multi-million dollar, ongoing securities fraud perpetrated by Colin Nathanson, age 54, a resident of Coto De Caza, California, and nine of his businesses, eight of which are based in Orange County, California: Nathanson Investment Trust, Giant Golf Company, Play Big Enterprises, Inc., Starquest Management, Inc., Whitehawk Consulting Group, Inc., Leafhead Consultants, Inc., NetTel Consulting Corp., Yrmac Consulting Services, Inc., and Millennium Technical Group, Inc. Also today, the Honorable Gary L. Taylor, United States District Judge for the Central District of California, granted the relief that the Commission sought, issuing orders freezing assets, appointing a temporary receiver over any entity directly or indirectly controlled by Nathanson, and other relief.
The Commission's complaint, filed on March 25, 2004, in federal court in Orange County, alleges that since 2001, Nathanson and his companies have raised $29.5 million from over 1800 investors nationwide through four fraudulent investment schemes. Nathanson was continuing to raise funds from investors in at least two of his schemes. The first of Nathanson's schemes involved selling securities in a golf equipment company he controls, Giant Golf Co., which purportedly was preparing to conduct an IPO. The second scheme is an ongoing Ponzi scheme involving several funds that would purportedly purchase air time to air Giant Golf's infomercials. In the third scheme, according to the complaint, Nathanson sold investment interests through the Nathanson Investment Trust in a purported unnamed software company that he claimed would soon be bought-out by a larger, unnamed, company. Finally, the complaint alleges that Nathanson sold securities in a company known as Millennium Technical Group that Nathanson said would exploit certain FCC licenses purchased in 1994. The Commission alleges that in these four schemes, the defendants lied to investors regarding how they would use the investor funds. The complaint alleges that without the investors' knowledge or consent, Nathanson commingled the investors' monies, and used the commingled funds to operate both the unprofitable defendant businesses and his other various unprofitable businesses.
Additionally, the Commission's complaint alleges that since February 2001, Nathanson used at least $1 million of investor funds to support his extravagant lifestyle, including three homes and payment of $346,500 in gambling-related debts. Finally, the Commission alleges that, in Ponzi-like fashion, Nathanson has caused over $5 million of the $29.5 million raised to be paid to certain investors either as purported "returns" on their investments when, in fact, their investments were not profitable, or as purported returns of their principal.
In its lawsuit, the Commission obtained an order (1) freezing the assets of Nathanson, Nathanson Investment Trust, Giant Golf, Play Big, Starquest, Whitehawk, Leafhead, NetTel, Yrmac, Millennium, and other Nathanson companies; (2) preventing destruction of documents; (3) appointing a temporary receiver over any entity directly or indirectly controlled by Nathanson; and (4) temporarily enjoining all of the defendants from future violations of the securities registration and antifraud provisions of the federal securities laws, Sections 5(a), 5(c) and 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The Commission also seeks preliminary and permanent injunctions, and other relief, including disgorgement and civil penalties against all defendants. A hearing on whether a preliminary injunction should be issued against the defendants and whether a permanent receiver should be appointed is scheduled for April 5, 2004, at 1:30 p.m.
Investors may direct their inquiries to the temporary receiver, Thomas Seaman, at (949) 222-0551, extension 5.