U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 19492 / December 12, 2005
Securities And Exchange Commission v. Travis E. Correll, individually and d/b/a Horizon Establishment, Gregory Thompson, Dwight J. Johnson, Harry Robinson "Robbie" Gowdey, individually and d/b/a Atlas and Jericho Productions, Grant Cardno, Neulan D. Midkiff, Travis Correll & Company, Inc., The Liberty Establishment, Inc., Sovereign Capital Investments, S.A., TNT Office Supply, Inc., The Net Worth Group, Inc. and Joshua Tree Group LLC, Defendants, and Banner Shield, LLC, Hospitality Management Group, Inc., Creative Wealth Ventures, LLC and JTA Enterprises, Relief Defendants.
Civil Action No. 4:05CV472, (United States District Court; Eastern District of Texas; Sherman Division)
SEC Sues to Halt High Yield Offering Fraud and to Freeze Assets for Investors
On December 7, 2005, the SEC filed an emergency action in United States District Court for the Eastern District of Texas against Travis E. Correll of Atlanta, individually and d/b/a Horizon Establishment, and his companies The Net Worth Group, Inc. ("Net Worth Group") and Travis Correll & Company, Inc. ("TC&Co."), Gregory Thompson of San Antonio and his company TNT Office Supply, Inc., ("TNT") Dwight J. Johnson of Garland, Texas, Harry Robinson "Robbie" Gowdey of Frisco, Texas, individually and d/b/a Atlas and Jericho Productions, Grant Cardno of Norfolk Island, a territory of Australia and his entities, The Liberty Establishment, Inc. ("Liberty") and Sovereign Capital Investments, S.A. ("Sovereign"), Neulan D. Midkiff of Forest Lake, Minnesota and his entity, Joshua Tree Group LLC ("Joshua Tree"), charging that the defendants are engaged in an ongoing fraudulent high yield investment scheme by which they raised approximately $36 million since July 2004. The Court granted a temporary restraining order, asset freeze and other emergency relief against defendants Correll, TC&Co., Net Worth Group. Thompson, TNT, Johnson, Gowdey, Midkiff and Joshua Tree.
In its complaint, the Commission alleges that the defendants are offering and selling interests in purported foreign and international bank deposit programs (collectively "Bank Deposit programs") promising four to 12 percent monthly returns without risk to their investment principal. The Commission also alleges that investors send or wire their money to TNT or to one of Correll's entities -- Net Worth Group or TC&Co, and that all of the funds are then transferred to a Horizon Establishment bank account controlled by Correll. According to the complaint, investors are told that Correll, the "money manager," forwards investor funds to Cardno, who deposits them in an offshore reserve account; Cardno, identified as the "trader," with exclusive contracts with international banks, supposedly uses the monies in the reserve account to participate in trading programs and loan programs. In reality, according to the complaint, the Bank Deposit program does not exist and none of the investors' funds are sent to Cardno, his entities or to any offshore account for investment. Instead, as set forth in the complaint, all of the investor funds are commingled among various Correll-controlled accounts, and the "investment returns" paid to investors are Ponzi payments, i.e., they derive from the proceeds of more recent investors.
The Commission also names in its complaint, as relief defendants, Banner Shield, LLC, Hospitality Management Group, Inc., Creative Wealth Ventures, LLC and JTA Enterprises based on their alleged improper receipt of investor funds. As part of its emergency relief, the Court issued an order freezing any investor funds in the relief defendants' control.
The Commission alleges in its complaint that defendants Correll, individually and d/b/a Horizon Establishment, TC&Co., Net Worth Group, Thompson, TNT, Johnson, Gowdey, individually and d/b/a Atlas and Jericho Productions, Cardno, Liberty, Soverign, Midkiff, and Joshua Tree each violated 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.
In addition to the emergency relief that has been granted, the Commission seeks against each of the defendants permanent injunctions, disgorgement plus prejudgment interest and civil money penalties.
The Commission acknowledges the assistance of the United States Attorney's Offices and the Federal Bureau of Investigation in Atlanta, Minneapolis, Dallas and Fort Worth and the United States Postal Inspection Service in Minneapolis.