U. S. Securities & Exchange Commission
Litigation Release No. 19254 / June 8, 2005
Securities and Exchange Commission v. Dianna Blairtorbett a/k/a Dianna Blair Torbett a/k/a Dianna Blair-Torbett, Individually and d/b/a McMinn Consultants, and McMinn Consultants, Limited, Civil Action No. 1:02-CV-384 (E.D. Tenn.)
SUMMARY JUDGMENT GRANTED AND FINAL JUDGMENT ENTERED AGAINST DIANNA BLAIRTORBETT
The Securities and Exchange Commission (“Commission”) announced today that the Honorable R. Allan Edgar, U. S. District Judge for the Eastern District of Tennessee, granted the Commission’s motion for summary judgment and entered a final judgment against Dianna Blairtorbett (“Blairtorbett”) on June 3, 2005. In its order, the Court directed Blairtorbett to pay disgorgement, prejudgment interest and a civil penalty in the amounts of $5,080,266, $1,908,784 and $50,000, respectively, within 30 days from the entry of the final judgment. The Court concluded that Blairtorbett’s consent to an earlier order, which enjoined her from further violations of the antifraud and registration provisions of the federal securities laws, amounted to a stipulation in the instant motion, that all allegations of the complaint were true. On April 1, 2003, Blairtorbett was permanently enjoined from further violations of the antifraud provisions of Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934, and Rule 10b-5 thereunder, and from further violations of the registration provisions of Sections 5(a) and 5(c) of the Securities Act. On August 1, 2003, a judgment by default was entered against Blairtorbett’s codefendant, McMinn Consultants, Limited.
The complaint in this matter alleged that Blairtorbett and her company McMinn fraudulently offered and sold unregistered securities by promising extravagant rates of return derived from a variety of investments, including purported prime bank trading programs. The defendants raised approximately $7.7 million from nearly 100 investors in thirteen states and the funds were pooled into accounts owned and controlled by McMinn. The complaint also alleged that the defendants made misrepresentations and omissions of material fact to investors concerning, among other things, the touted risk free nature of McMinn’s investments, the use of investor funds, expected returns and the false representation that McMinn’s investments were secured by approximately $7 billion in gold and other precious metals. The precious metals did not exist. Furthermore, the complaint alleged that Blairtorbett falsely represented that an initial investment of $50,000 would be worth approximately $1.7 million in three years and $22 million in five years, but that she had no basis for these representation, and that she knowingly or recklessly failed to disclose that a significant percentage of investor funds would be used to pay the “returns” of earlier investors.