SECURITIES ACT OF 1933Release No. 7678 / May 11, 1999
SECURITIES EXCHANGE ACT OF 1934
PROCEEDINGS INSTITUTED AGAINST LILA KEITH
The Commission announced that it has instituted a cease-and-desist proceeding against Lila Keith ("Keith") of Aurora, Colorado, in which the staff alleges that from approximately July to September 1998, Keith fraudulently offered and sold over the Internet interests in a prime bank investment scheme offering a 20-to-1 return to investors within thirty days. Keith raised over $300,000 from at least three investors through her company Keith Financial Services ("Keith Financial"). In the order, the staff alleges that Keith offered and sold the interests on behalf of the schemes promoter, from whom she was to receive a $500,000 commission for her efforts. Neither Keith nor Keith Financial is registered with the Commission as a broker-dealer.
The staff alleges that Keith violated Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder by making false statements to the public, to investors and to prospective investors regarding, among other things: (1) the existence of the program; (2) the potential for investors to earn a 20-to-1 return through the program based on international bank-to-bank trading and/or loan transactions; (3) the use of investor proceeds; and (4) her failure to investigate the claims made by the promoter of the program. The staff further alleges that Keith engaged in the business of effecting transactions in securities for the accounts of others without registering with the Commission, in violation of Section 15(a)(1) of the Exchange Act.
A hearing will be scheduled to determine whether the allegations are true and, if so, whether a cease-and-desist order should be issued against Keith and whether Keith should be required to make an accounting and pay disgorgement, including reasonable interest.
The Commission also filed a civil action in the U.S. District Court for the District of Colorado against the promoter of the prime bank scheme, HDG Investment Corporation ("HDG") and Paul J. Edwards ("Edwards"), seeking preliminary and permanent injunctions to prevent HDG and Edwards from continuing to violate the antifraud provisions of the securities laws, and seeking an accounting, disgorgement, prejudgment interest, and the imposition of civil penalties. [SEC v. HDG Investment Corporation and Paul J. Edwards, Civil Action No. 99-K-911 (D. Colo.)][LR-16139].