SEC Charges Edward May and E-M Management for Massive Offering Fraud Harming Seniors and Other Investors

FOR IMMEDIATE RELEASE
2007-240

Washington, D.C., Nov. 20, 2007 - The Securities and Exchange Commission today filed charges stemming from a $250 million offering fraud that involved phony Las Vegas casino and resort telecommunications deals and victimized as many as 1,200 investors, many of whom were senior citizens.

The SEC's action charges Detroit-area resident Edward May and E-M Management Co. LLC with selling investors shares of limited liability companies that they claimed had received revenues from telecommunications equipment and services contracts with hotels, casinos, resorts and similar establishments, many of which were purportedly located in Las Vegas. In fact, no such contracts ever existed. To perpetrate their fraudulent scheme, May and E-M relied on a network of individuals, some of whom organized "investment seminars" to entice investors to invest with E-M.

The SEC brought 46 enforcement actions in Fiscal 2007 against frauds targeting retirees and other older investors.

Linda Chatman Thomsen, Director of the Commission's Division of Enforcement, said, "This action reaffirms the Commission's commitment to take aggressive and forceful action against those who cause widespread harm through fraudulent securities offerings, particularly those who prey upon the elderly."

Merri Jo Gillette, Director of the Commission's Chicago Regional Office, added, "Our investigation has uncovered a brazen scam in which the defendants touted phony casino and resort deals, complete with bogus contracts and fictitious hotel executives, to cheat hundreds of investors out of millions of dollars. The investigation in this matter will continue."

The Commission's civil injunctive complaint, filed in the U.S. District Court, Eastern District of Michigan, alleges that May, through E-M, raised as much as $250 million between 1998 and July 2007 from investors living in such states as Michigan, California, Florida, Illinois, New York, Ohio and New Jersey. According to the complaint, May and E-M sold securities in the form of interests in limited liability companies (LLCs), and told investors that these LLCs had been contracted to install and provide telecommunications equipment and services to such major hotel chains and casinos as Hilton, MGM Grand, Motel 6, Tropicana and Sheraton. Both orally and in writing, May and E-M promised returns in the form of monthly payments to investors for a period as long as 12 to 14 years, and "guaranteed" that investors, at a minimum, would receive the promised payments for approximately the first 20 to 24 months after they invested.

The complaint alleges that, in reality, the LLCs did not have any telecommunication contracts with the establishments identified in offering materials provided by May and E-M. To further their scheme, May and E-M provided some investors with copies of fictitious contracts between E-M or certain LLCs and various hotels and casinos. Some of these fictitious contracts included the names of purported hotel executives who did not exist.

The SEC complaint alleges that, as a result of their misconduct, May and E-M violated, and unless enjoined will continue to violate, Sections 5(a), 5(c), and 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act and Rule 10b-5 thereunder. As part of this action, the Commission seeks orders of preliminary and permanent injunction against May and E-M enjoining them from future violations of certain federal securities laws and, in addition, requiring May and E-M to pay disgorgement of ill-gotten gains, prejudgment interest and civil penalties.

Investors with questions or information about this matter may call the Chicago Regional Office's telephone line dedicated to this case at (312) 353-0626.

For more information, contact:

Peter K.M. Chan
Assistant Regional Director
SEC's Chicago Regional Office
(312) 353-7410

C.J. Kerstetter
Branch Chief
SEC's Chicago Regional Office
(312) 353-7435

  Additional materials: Litigation Release No. LR-20366