U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 19059 / February 1, 2005
SECURITIES AND EXCHANGE COMMISSION v. LEARN WATERHOUSE, INC.; RANDALL TREADWELL; RICK D. SLUDER; LARRY C. SATURDAY; AND ARNULFO M. ACOSTA, Civil Action No. 04-CV-2037W (LSP) (S.D.Cal.)
SEC OBTAINS ORDER REQUIRING DEFENDANT RANDALL TREADWELL TO SHOW CAUSE WHY HE SHOULD NOT BE HELD IN CIVIL CONTEMPT
On January 26, 2005, the Hon. Thomas J. Whelan, United States District Judge for the Southern District of California, issued an order to defendant Randall Treadwell to show cause why he should not be held in civil contempt for violating the court's November 1, 2004, and October 12, 2004 orders. Treadwell is the former chairman, president and chief operating officer of Learn Waterhouse, Inc., which operated a fictitious prime bank trading program according to a complaint filed previously by the Securities and Exchange Commission.
According to the Commission's contempt application, Treadwell had:
The court ordered Treadwell to appear on February 23, 2005, and show cause why an order of civil contempt should not be issued, why he should not be incarcerated, and why he should not be fined $1000 per day pending his compliance with the court's orders.
On October 12, 2004, the Commission filed a complaint against Treadwell, Learn Waterhouse Inc., Rick D. Sluder, Larry C. Saturday, and Arnulfo M. Acosta alleging that they had raised more than $24 million from 1700 investors in a nationwide Ponzi scheme. The defendants claimed that their bank trading program generated investor returns ranging from 5% to 50% per month and that the investments were purportedly secured by a "pre-funded, cash-back instrument" that had been issued by a top U.S. bank. However, investor funds were being used to pay the returns and more than $2.5 million had been misappropriated by the defendants to support themselves and their other businesses.
On November 1, 2004, Thomas Lennon was appointed as the permanent receiver over Learn Waterhouse, Inc. and given authority over all of its assets. The court also ordered the defendants to repatriate all assets from abroad, and issued a preliminary injunction prohibiting all of the defendants from future violations of the antifraud and registration provisions of the Securities Act of 1933 and the Securities Exchange Act of 1934. In addition to the relief already obtained, the Commission seeks permanent injunctions, disgorgement and civil penalties from all of the defendants.