U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 18997 / December 14, 2004
UNITED STATES V. BENNY G. MORRIS, Case No. 3:04CR0103AS (N.D. Ind.)
SECURITIES AND EXCHANGE COMMISSION V. FIRST CHOICE MANAGEMENT SERVICES INC. ET AL., Case No. 3:00CV0446RM (N.D. Ind.)
MARKETER OF FIRST CHOICE SECURITIES OFFERINGS PLEADS GUILTY TO MAIL FRAUD CHARGE IN CONNECTION WITH INVOLVEMENT IN FIRST CHOICE OFFERING FRAUD
The Securities and Exchange Commission (Commission) announced that on October 14, 2004, Benny G. Morris pled guilty to one count of mail fraud in the United States District Court for the Northern District of Indiana for participating in a scheme to defraud investors in securities offerings by First Choice Management Services (First Choice). The Commission previously charged First Choice and its President, Gary Van Waeyenberghe, with violations of the federal securities laws based on related conduct in July 2000. Van Waeyenberghe was criminally indicted on conspiracy, mail fraud, wire fraud and money laundering charges based on related conduct in September 2004.
According to the information to which Morris pled guilty, Morris was President of Integras Capital Group, which became the marketing office for First Choice securities offerings in or around December of 1999. The information alleges that from in or around November 1999 through July 2000, Morris knowingly and intentionally participated in a scheme to defraud prospective First Choice investors through the use of false and fraudulent representations regarding securities offerings by First Choice known as Enhanced Automobile Receivables (EARs) and Realty First Mortgages (RFMs).
Shortly after the filing of the Commission's Complaint in July 2000, the Court issued a Temporary Restraining Order and subsequently a Preliminary Injunction freezing First Choice's and Van Waeyenberghe's assets and appointed a receiver to manage First Choice's assets during the pendency of the litigation. On January 8, 2003, by consent, the Court permanently enjoined First Choice and Van Waeyenberghe from future violations of the antifraud and securities registration provisions of the federal securities laws, ordered First Choice and Van Waeyenberghe jointly and severally to pay $31.3 million in disgorgement and prejudgment interest and imposed a $110,000 civil penalty on Van Waeyenberghe. On the same day, the Court entered an Order Liquidating First Choice which required the court-appointed receiver for First Choice to liquidate First Choice's remaining assets in order to satisfy, at least in part, First Choice's disgorgement obligation.