U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 19512 / December 22, 2005
Securities and Exchange Commission v. Benjamin Franklin Cook, et al, Civil Action No. 3:99-CV-571-R, USDC, NDTX (Dallas Division)
Securities and Exchange Commission v. Resource Development International, LLC, et. al., Civil Action No. 4-97CV-1018Y, USDC, NDTX (Dallas Division)
United States v. William Whelan, Criminal Action No. 05CR00226OWW, USDC, EDCA (June 30, 2005)
Prime Bank Fraud Participant Pleads Guilty to Perjury During SEC Litigation
The Securities and Exchange Commission announced that on November 28, 2005, William Whelan, of Visalia, California, pled guilty to three counts of perjury in the United States District Court for the Eastern District of California. Whelan was named in a seven count indictment charging him with perjury, obstruction of justice and providing false statements in connection with a deposition provided to the Commission in the SEC v. Cook matter.
The SEC v. Cook case involved an emergency action brought by the Commission in March 1999 to halt an ongoing Ponzi scheme centered around the offer and sale of non-existent prime bank securities issued by Dennel Finance Limited. After obtaining a TRO to halt the Dennel scheme, the Commission staff learned that certain individuals affiliated with Dennel were conducting a nearly identical fraud under a new name, Resource Development International, LLC. The Commission brought a second emergency action in March 2002 against Resource Development and others to end the related scheme, alleging that the defendants raised approximately $98 million from more than 1300 investors nationwide using fraudulent statements regarding the purported investment in bank trading programs and annual rates of return of 48 to 1220 percent.. William Whelan was not a defendant in the SEC v. Cook matter, but was named as a defendant in the SEC v. Resource Development litigation.
Whelan, a licensed insurance agent, was sued by the Court-appointed Receiver in the SEC v. Cook case after he was identified as "facilitator" who received commissions from the offer and sale of the fraudulent Dennel program. The Commission and Receiver jointly deposed Whelan in SEC v. Cook in August 2000 and Whelan was questioned about his involvement in other high-yield, prime bank programs, including, specifically, the Resource Development program.
In the plea agreement, Whelan admits that, during his deposition, he testified falsely numerous times about his role in the Resource Development program. Whelan testified that he had never received any commissions for offering or selling any high-yield bank debenture-type program other than the Dennel program. Whelan further testified that he had never seen documents relating to the Resource Development program. In addition, Whelan testified that he had never heard of an entity called "Resource Development." In the plea agreement, Whelan admits that, contrary to his testimony, he had, in fact, been offering and selling the fraudulent Resource Development program for several months prior to his testimony, had received commissions for selling the Resource Development investment, and had utilized the documents disseminated by Resource Development in the course of selling the program.
The three perjury counts subject Whelan to a potential prison sentence of as many as 15 years and a potential fine of as much as $750,000. No sentencing date has been scheduled.
For more information see the following Litigation Releases: 16089 (March 17, 1999); 16112 (April 14, 1999); 16341 (October 25, 1999); 16538 (May 4, 2000); 16849 (January 2, 2001); 16863 (January 19, 2001); 17438 (March 26, 2002); 17635 (July 30, 2002); 18217 (July 7, 2003); 18418 (October 17, 2003); 19087 (February 17, 2005); 19118 (March 3, 2005); 19295 (July 7, 2005).