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U.S. Securities and Exchange Commission

before the

Securities Act of 1933
Release No. 7705 / July 26, 1999

Administrative Proceeding
File No. 3-9896

In the Matter of

Elizabeth A. Boyd,



In connection with a public administrative proceeding instituted against her on May 11, 1999, pursuant to Section 8A of the Securities Act of 1933 ("Securities Act"), Elizabeth A. Boyd ("Boyd," or "Respondent") has submitted an Offer of Settlement ("Offer") to the Securities and Exchange Commission ("Commission"), which the Commission has determined to accept. Solely for the purpose of this proceeding and any other proceeding brought by or on behalf of the Commission or in which the Commission is a party, and without admitting or denying the findings contained herein, except as to jurisdiction which is admitted, Boyd consents to the entry of the findings and remedial sanctions set forth below.


On the basis of this Order and the Offer submitted by Boyd, the Commission makes the following findings. 1

A. From April 1998 through July 1998, Elizabeth A. Boyd, age 55, resided in Oakville, Ontario, Canada and Fort Myers, Florida, and operated a commodities import-export and financial consulting business known as "North-South Marketing USA" from her residences. Boyd is a retired accountant.

B. At various times from March 1997 through July 1998, Boyd and others offered to members of the public a series of putative investment programs that claimed to generate incredibly high rates of return -- up to 200% a month -- on multi-million dollar investments through the trading on overseas markets of mysterious bank financial instruments issued by or through certain "world prime banks." These offerings were made to an undercover investigator (the "Arizona investigator") working for the Arizona Corporation Commission (the "ACC"), first through a website offering prime-bank-guaranteed "investment options," then later through personal solicitations by Boyd and others. Boyd's participation in the offerings began in April 1998. Ultimately, no investor funds were raised through these contacts or solicitations. In fact, the programs offered were bogus. Neither prime bank guarantees nor the secret market for bank debenture trading, nor the debentures themselves, existed. Each and every material aspect of these offerings was false and misleading and, consequently, Boyd violated the antifraud provision of the Securities Act by soliciting investments in certain of these offerings.

C. At the conclusion of its investigation, On July 15, 1998, the ACC issued a temporary cease-and-desist order against Boyd barring her from, among other things, offering or selling unregistered securities within or from the state of Arizona and engaging in the fraudulent offering or sale of securities within or from the state of Arizona. The order was made permanent with respect to Boyd by consent, effective November 23, 1998. Under the terms of her settlement, Boyd was required to pay an administrative penalty of $2,500.

D. In April 1998, the Arizona investigator first contacted Robert J. Stahl, the creator of a website offering prime bank investments, regarding the investments described on the website. In late April 1998, Stahl put the Arizona investigator in contact with a friend, who had the Arizona investigator contact Boyd for more information on prime bank investments. Between late April and mid-June 1998, the Arizona investigator dealt with Boyd regarding a so-called "106 program" that Stahl had initially described to him in personal solicitations. Boyd confirmed that, pursuant to this program, a world prime bank would provide a guarantee for the investor's principal plus 6%, and that additional returns of 20% would be generated for the investor every 2-3 weeks as the result of the offshore trading of prime bank debt instruments. Boyd telecopied to the Arizona investigator documents regarding the program, including documents explaining its structure, sample transactional documents, and a bogus document entitled "ICC 500 & 600: An Introduction to Bank Debenture Trading Programs," which purported to be an ICC publication on the history and structure of such programs. The ICC has denied writing or publishing this document.

E. On June 10, 1998, Boyd offered the Arizona investigator the opportunity to participate in a second type of prime bank investment -- a "blocked funds" program. This program would require the investor to maintain funds in a specific account for at least 90 days and would allegedly pay to the investor an 80% net return every ten banking days. In furtherance of this offering, Boyd referred the Arizona investigator to her business contact, David V. Francis, II of Bowling Green, Kentucky. Between mid-June and early-July 1998, the Arizona investigator spoke with Boyd and/or Francis on several occasions about the blocked funds program. Francis and Boyd relayed to the Arizona investigator documents and information on the blocked funds program that had been provided to Francis by the program's promoter, Bobby L. Rodgers of Germantown, Tennessee.

F. The various programs offered by Boyd did not exist, nor were there prime bank guarantees or any markets for the trading of the type of illusory debt instruments that were part of the programs. Boyd did not have access to any program similar to the type she offered to the Arizona investigator in direct solicitations. Moreover, Boyd did not have the ability to generate the returns she promised. Boyd had no reasonable basis for the information contained in her contacts or solicitations, or for the high rates of return she offered. Boyd failed to make any significant effort to verify any of the information she disseminated about the existence of the prime bank programs, their structure or legality, or the achievability of the projected rates of return.

G. Section 17(a) of the Securities Act prohibits fraud in the offer or sale of securities. Prime bank instruments are securities; Boyd offered prime bank programs that were investment contracts under the three-part test set out in SEC v. W.J. Howey Co., 328 U.S. 293, 298-99 (1946), and were, therefore, securities. SEC v. Lauer, 864 F. Supp. 784, 794 (N.D. Ill. 1994), aff'd, 52 F.3d 667 (7th Cir. 1995). Furthermore, Boyd cannot escape liability under the securities laws by arguing that the securities did not exist. See id. at 792.

H. Boyd violated Section 17(a)(1) of the Securities Act by acting with scienter in misrepresenting or omitting material facts in connection with the offer of securities. Aaron v. SEC, 446 U.S. 690, 695-97 (1980). Scienter may be established by a showing of knowledge or recklessness. Boyd also violated Section 17(a)(3) of the Securities Act, which does not require proof of scienter and prohibits conduct which would operate as a fraud or deceit upon a purchaser. Boyd knew, or was reckless in not knowing, that the so-called "prime bank" guarantees, bank debentures, and "106 program" did not exist and could not have yielded the high, riskless rates of return promised by her. Boyd failed to verify whether any factual basis existed for her representations concerning the existence, viability or profitability of programs based on transactions involving prime bank guarantees and bank debenture trading. This conduct satisfies the scienter requirement of Section 17(a)(1).


Based on the foregoing, the Commission finds that Respondent violated Sections 17(a)(1) and 17(a)(3) of the Securities Act.


Based on the foregoing, the Commission deems it appropriate and in the public interest to accept the Offer submitted by the Respondent and to impose the sanctions specified therein.

IT IS HEREBY ORDERED THAT Boyd shall cease and desist from committing or causing any violation and any future violation of Sections 17(a)(1) and 17(a)(3) of the Securities Act.

For the Commission, by its Secretary, pursuant to delegated authority.

Jonathan G. Katz




The findings herein are not binding on anyone other than the Respondent.