U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 19323 / August 3, 2005
Accounting and Auditing Enforcement
Release No. 2289 / August 3, 2005
UNITED STATES V. PATRICK D. QUINLAN, SR. ET AL., Case No. 01-80514 (E.D. Mich.)
SECURITIES AND EXCHANGE COMMISSION V. PATRICK D. QUINLAN ET AL., Case No. 02-60082 (E.D. Mich.)
FORMER MCA CEO, PREVIOUSLY SUED BY SEC FOR INVOLVEMENT IN MCA FINANCIAL AND OFFERING FRAUD, SENTENCED TO PRISON TERM AND RESTITUTION
The Securities and Exchange Commission (Commission) announced that on July 21, 2005, the Honorable Judge Nancy G. Edmunds of the United States District Court for the Eastern District of Michigan sentenced Patrick D. Quinlan, Sr., former CEO of MCA Financial Corporation (MCA), to ten years in prison for his involvement in a fraudulent scheme perpetrated by MCA. Judge Edmunds also ordered Quinlan to pay $256.6 million in restitution. Previously, in February 2004, Quinlan pled guilty to one count of conspiracy to commit mail, wire and bank fraud and to make false statements in a matter within the jurisdiction of a federal agency and one count of making false statements to the Commission.
Quinlan, Lee Wells, Keith Pietila, Alexander Ajemian, John O'Leary, Cheryl Swain and Kevin Lasky are the defendants in a pending civil injunctive action filed by the Commission on April 23, 2002 in the United States District Court for the Eastern District of Michigan. The Complaint in that case alleges that Quinlan and the other six defendants violated, or aided and abetted violations of, the antifraud provisions of the federal securities laws, among other things, as a result of their involvement in a financial and offering fraud by MCA. The Complaint further alleges that MCA sold $71 million of securitized interests in pools of mortgage loans from 1994 through 1999 while knowingly misrepresenting the risk, rate of return and historical performance of the interests in the offering materials and that as a result, investors lost at least $49 million. The Complaint also alleges that MCA engaged in the fraudulent sale of $19 million in debentures between 1994 and 1999 by including financial statements that materially inflated its assets, income and equity in registration statements and annual and quarterly reports filed with the Commission and that as a result, investors in the debentures lost all $19 million invested.
All seven defendants have pled guilty to federal criminal charges arising out of MCA's fraudulent scheme. Ajemian, Pietila and Lasky have been sentenced to 37 months, 48 months and 24 months in prison respectively and were ordered to pay $256.6 million, $256.6 million and $128 million respectively in restitution. Wells, Swain and O'Leary have not been sentenced yet. In addition, the Michigan Attorney General's Office has filed state felony securities fraud charges against Quinlan, Wells, Pietila and Ajemian.
The Commission wishes to thank the Office of the United States Attorney for the Eastern District of Michigan for its assistance and cooperation in this matter.
For additional information, see Litigation Release Nos. 17484 (April 23, 2002), 18131 (May 12, 2003), 18195 (June 19, 2003) and 18512 (December 18, 2003).