Credit Bancorp, Ltd.
On November 17, 1999, the SEC obtained emergency relief against Credit Bancorp, Ltd, Credit Bancorp, Inc., its two principals, and the company's trustee, including freezing the assets of the companies and its principals. The SEC alleged that the defendants failed to deposit at least $200 million in marketable securities from 200 investors/customers into trust accounts in the name of Credit Bancorp at major financial institutions in Europe. Instead, the defendants perpetrated a Ponzi scheme by selling or margining the securities and wiring the proceeds to bank accounts in the U.S. and overseas or using the proceeds to pay for business and extravagant personal expenses, and to purchase other securities. For more information about the SEC's action, you can read Litigation Release No. 16358 (Nov. 17, 1999).
The Court appointed Carl E. Loewenson, Jr. as Receiver. The Receiver has distributed approximately $174 million of assets to CBL customers.
Mr. Loewenson is continuing to pursue the recovery of additional CBL assets in Europe and the United States through litigation and other efforts. Due to these ongoing disputes, the Closing Agreement with the IRS, and continuing efforts to marshal additional assets for the benefit of CBL customers, the Receivership has not been closed. In light of the uncertainty of these ongoing disputes and continuing efforts, and the necessity for further IRS action with respect to the amount retained for federal taxes, it is unclear if and when the Receivership will make an additional distribution of assets to CBL customers. No subsequent distribution is expected until at least the decision of the Deutsche Bank appeal and the resolution of that nearly $10 million issue. If the Receivership does not win the Deutsche Bank appeal, none of that reserve will be available for distribution.
For more information, you can visit the Receiver's website.