Worldwide Funding III Limited LLC
In August 2013, the Securities and Exchange Commission filed a civil lawsuit in Miami, Florida to obtain an emergency court order to halt a number of individuals and entities from operating a fraudulent prime bank investment scheme. The defendants named in the lawsuit are:
Bernard H. Butts Jr.
The Commission's complaint alleged that the defendants violated the antifraud, securities registration, and broker-dealer registration provisions of the federal securities laws. Defendants raised over $3.9 million from approximately 47 investors in both the United States and abroad. In websites, emails, and telephone conference calls with investors, defendants falsely represented that an investor's payment of $60,000 to $90,000 would be used to acquire a Stand-By Letter of Credit (SBLC) worth 10 million Euros, which would be invested in an offshore trading program. Defendants promised investors returns of 6.6 million Euros (approximately $8.7 million U.S. dollars) within 15 to 45 days, and additional returns of approximately 14% per week for 40 to 42 weeks. Butts, a Florida attorney, served as the escrow agent for the scheme receiving investors' funds into his attorney trust account, and assuring investors that their money would not be released until he received confirmation of receipt of the SBLC by the bank. Instead Butts immediately transferred investors' funds from his trust account paying approximately 45% to Geivelis, 10% to sales agents, and retaining 45% for himself and his associated companies. The complaint alleges that no funds were used to acquire SBLCs, and Butts received no confirmations from the bank that SBLCs were ever received. Anisky, Banner, Express Commercial Capital, and Baggs all offered and sold interests in the fraudulent scheme and received commissions for their sales. A link to the Commission's complaint may be found here.
In October 2013, Judge Martinez issued preliminary injunctions against each of the defendants, and a permanent injunction against James Baggs. The Commission's action is currently in the discovery phase, where the parties exchange documents and other information. The court has not set a trial date.
On July 11, 2014, Judge Martinez entered a final judgment against Bernard H. Butts Jr. enjoining him from violating the securities registration, anti-fraud, and broker-dealer registration provisions of Sections 5(a), 5(c) and 17(a) of the Securities Act of 1933; and Sections 10(b) and 15(a)(1) of the Securities Exchange Act of 1934 and Rule 10b-5. The court ordered Butts and his associated companies, Bernard H. Butts Jr. PA and Butts Holding Corporation, to pay $1,691,608 in disgorgement and prejudgment interest of $96,232.99; and Butts and his wife Margaret A. Hering to pay an additional $100,000 in disgorgement and prejudgment interest of $4,570.82. In addition, the court ordered Butts to pay a civil penalty of $2,059,284.19 into a Fair Fund to be administered through the court. Butts, his associated entities, and wife previously paid $1,914,268.69 into the registry of the court, and gave up their rights to $2,037,407.31 seized in a forfeiture action, which funds were also paid into the registry of the court. A link to the Court's Final Judgment against Butts, his associated entities, and his wife may be found here.
The Commission's attorney, Leslie J. Hughes, has submitted a distribution plan to the court for approval of a claims process for investors to participate in a distribution from the Worldwide Funding Fair Fund. The Commission's attorney will send the forty-seven investors a Proof of Claim form which must be returned by September 30, 2014, the Claims Bar Date, to participate in the Distribution Plan. A link to the Notice of Distribution Plan and Notice of Claims Bar Date may be found here.
If you were an investor who sent funds to Bernard H. Butts Jr. PA, Worldwide Funding III Limited LLC, Global Worldwide Funding Ventures, Inc., or one of the defendants listed above, between April 1, 2012, and August 30, 2013, for investment in the SBLC trading program, and you may request a Proof of Claim form by sending an email to WorldwideFundingFairFund@sec.gov. Your request for a Proof of Claim form must be received by the Claims Bar Date September 30, 2014, in order to participate in the Distribution Plan.
For more information about Prime Bank Schemes, see the Investor Alert.