U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 19591 / March 6, 2006
Securities and Exchange Commission v. Reinhard et al., Civil Action No. 06-997-CMR (E.D. Pa.)
Commission Files Fraud Injunction Action Against IDPM Group, Inc., Craig H. Reinhard and Debra R. Bzik Stopping Ponzi Scheme
The Securities and Exchange Commission ("Commission") on March 6, 2006, obtained a preliminary injunction halting an ongoing Ponzi scheme being conducted by Craig H. Reinhard and Debra R. Bzik, both residents of Allentown, Pennsylvania, through their jointly held company, IDPM Group, Inc. ("IDPM"). The Commission's complaint, filed in United States District Court in the Eastern District of Pennsylvania, alleges that, from at least August 1994 through the present, the defendants have raised more than $3.9 million from at least 50 investors in several states by claiming to sell certificates of deposit ("CDs") that did not exist. Reinhard, the primary salesman, lured investors, many of whom are elderly, with promises of above market rates on FDIC insured CDs purportedly issued by an entity called the "Liberty Certificate of Deposit Trust Fund." Reinhard and Bzik also distributed fictitious investment documents and account statements to attract investors and to ensure they continued to invest in the scheme.
The complaint further alleges that, rather than purchase CDs, Reinhard and Bzik used all of the proceeds from new investors to make payments to earlier investors, and to pay their own personal expenses as well the operating expenses of IDPM.
The complaint charges IDPM, Reinhard and Bzik with violating Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934, and Rule 10b-5 thereunder.
Without admitting or denying the allegations of the complaint, the proposed defendants consented to the entry of an order preliminarily enjoining them from engaging in the violations set forth above, partially freezing their assets, granting expedited discovery, prohibiting the alteration or destruction of documents, and requiring an accounting from the defendants. In addition to the emergency relief obtained, the Commission's complaint seeks from each defendant permanent injunctions, disgorgement with prejudgment interest, and a civil penalty.