UNITED STATES OF AMERICA
|In the Matter of||: ORDER INSTITUTING|
|: PUBLIC PROCEEDINGS,|
|: MAKING FINDINGS|
|: AND IMPOSING|
|: REMEDIAL SANCTIONS|
|JEFFREY A. PARKER,||: AND CEASE-AND-DESIST|
The Securities and Exchange Commission ("Commission") deems it appropriate in the public interest and for the protection of investors that administrative proceedings be instituted pursuant to Section 8A of the Securities Act of 1933 ("Securities Act") and Sections 15(b), 19(h) and 21C of the Securities Exchange Act of 1934 ("Exchange Act") against Jeffrey A. Parker ("Parker").
In anticipation of the institution of these proceedings, Parker has submitted an Offer of Settlement ("Offer") which the Commission has determined to accept. Solely for the purposes of these proceedings and any other proceedings brought by or on behalf of the Commission or in which the Commission is a party, Parker, by his Offer, consents, without admitting or denying the findings contained herein, except that he admits that the Commission has jurisdiction over him and over the subject matter of these proceedings, to the entry of this Order Instituting Public Proceedings, Making Findings and Imposing Remedial Sanctions and Cease-and-Desist Order ("Order").
Accordingly, IT IS ORDERED that proceedings against Parker be, and hereby are, instituted.
On the basis of this Order and the Offer, the Commission finds1 that:
1. At all times relevant to this action, Andrew P. Bodnar ("Bodnar"), age 46, was registered as a representative and principal of Delta Equity Services Corporation ("Delta"), a broker-dealer registered with the Commission since 1985. He was also the president, owner and manager of Bodnar & Associates, which operated as a branch office of Delta in Akron, Ohio. Further, Bodnar was an attorney licensed in Ohio.
2. At all times relevant to this action, Parker, age 48, was a registered representative
of Delta and worked at Bodnar & Associates, the Akron, Ohio branch of Delta. He
was directly supervised by Bodnar, his branch manager.
3. CBT Holding Corporation ("CBT") was incorporated in Nevis, British West Indies in November 1996. CBT-Ohio, Ltd. ("CBT-Ohio") is an Ohio limited liability company formed in February 1997. Its principal office is located in Akron, Ohio. These entities were formed and/or controlled by Bodnar.
4. From at least November 1996 through July 1997, Bodnar and another individual directed a fraudulent scheme through which they, together with other sales representatives, raised approximately $6.4 million from the sale of unregistered securities to at least 148 public investors. The scheme was conducted through Bodnar & Associates and another branch office of Delta located in Ellicott City, Maryland.
5. The investors were generally told that their funds would be used to purchase low-risk instruments. The investors were either told or led to believe that these instruments were certificates of deposit which were issued by an off-shore or a "world" bank. They were told that the instruments would earn 12 percent annually, payable on a quarterly basis. After they were solicited, the investors received documents in the form of unsecured promissory notes issued by CBT and CBT-Ohio. However, Bodnar and the other sales representatives continued to assure investors that their funds would be used to purchase certificates of deposit.
6. In fact, rather than using the funds as represented to investors, Bodnar misappropriated the funds. He used most of the funds to pay for his business and personal expenses. He also diverted a substantial sum of money to entities and individuals who were operating a Prime Bank scheme. Finally, he used the remaining funds to make payments to prior CBT and CBT-Ohio investors.
7. Parker assisted Bodnar in selling the CBT and CBT-Ohio securities. As part of his sales efforts, he initially told or led investors to believe that the securities were low-risk investments involving certificates of deposit issued by an off-shore bank. Later, he told investors that the securities were backed by certificates of deposit issued by banks in the United States. He also made the representations concerning the 12 percent rate of return. He conducted no due diligence of CBT and CBT-Ohio as evidenced by his failure to review even the most basic documentation regarding the financial conditions or operations of these companies. Instead, he relied solely upon Bodnar's unsupported verbal representations and the fact that Bodnar was an attorney. His failure to have any reasonable basis for his recommendations to customers to purchase the securities of CBT and CBT-Ohio constituted recklessness and satisfies the scienter requirement. By July 1997, Parker sold approximately $844,000 of CBT and CBT-Ohio securities to public investors. As a result of these sales, Parker was paid commissions of $21,000.
8. Parker sold CBT and CBT-Ohio securities without the approval of, and independently of, Delta. None of the securities transactions were processed through Delta. Although Parker claims that Bodnar told him that Delta was aware of these transactions, he did not attempt to verify this verbal representation.
9. Based on the above-described conduct from November 1996 through July 1997, Parker willfully violated and/or committed or caused violations of:
a. Section 17(a) of the Securities Act, Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, in that he, in the offer or sale of securities, or in connection with the purchase or sale of securities, by the use of the means or instruments or instrumentalities of transportation or communication in interstate commerce or by use of the mails, directly or indirectly, employed devices, schemes or artifices to defraud; obtained money or property by means of, or otherwise made, untrue statements of material fact or omitted to state material facts necessary in order to make the statements made, in light of the circumstance under which they were made, not misleading; or engaged in acts, transactions, practices or courses of business which operated or would operate as a fraud or deceit upon any person;
b. Sections 5(a) and 5(c) of the Securities Act in that he, directly or indirectly, made use of the means or instruments of transportation or communication in interstate commerce or of the mails to sell or offer to sell, through the use or medium of a prospectus or otherwise, the securities described above, or carried or caused them to be carried through the mails or in interstate commerce by the means or instruments of transportation for the purpose of sale or delivery after sale, while no registration statement was in effect or filed with the Commission; and
c. Section 15(a) of the Exchange Act in he made use of the mails or any means or instrumentality of interstate commerce to effect transactions in, or to induce or attempt to induce the purchase or sale of the securities described above, without being registered as, or acting within the scope of his association with, a broker or dealer registered with the Commission pursuant to Section 15(b) of the Exchange Act.
10. Parker has submitted a sworn financial statement and other evidence and has asserted his financial inability to pay a civil penalty and full disgorgement plus prejudgment interest. The Commission has reviewed the sworn financial statement and other evidence provided by Parker and has determined that Parker does not have the financial ability to pay a civil penalty or disgorgement of $21,000, plus prejudgment interest, but that he does have the ability to pay partial disgorgement of $10,000. III.
On the basis of the foregoing, the Commission deems it appropriate and in the public interest to accept the Offer submitted by Parker and impose the sanctions specified therein.
IT IS HEREBY ORDERED THAT Parker shall cease and desist from committing or causing any violation and any future violation of Sections 5(a), 5(c) and 17(a) of the Securities Act and Sections 10(b) and 15(a) of the Exchange Act and Rule 10b-5 thereunder.
IT IS FURTHER ORDERED THAT Parker be, and hereby is barred from association with any broker or dealer.
IT IS FURTHER ORDERED THAT Parker shall, within 30 days of the date of this Order, pay to the United States Treasury disgorgement of $21,000, plus prejudgment interest; however payment of all but $10,000 of that amount shall be waived based upon his demonstrated financial inability to pay. Such payment shall be: (a) made by United States postal money order, certified check, bank cashier's check or bank money order; (b) made payable to the Securities and Exchange Commission; (c) hand-delivered or mailed to the Comptroller, Securities and Exchange Commission, Mail Stop 0-3, Operations Center, 6432 General Green Way, Alexandria, VA 22312; and (d) submitted under cover letter which identifies Parker as the Respondent in these proceedings, and the Commission's file number in these proceedings, a copy of which cover letter and money order or check shall be simultaneously sent to Ronald C. Long, Securities and Exchange Commission, The Curtis Center, Suite 1120E., 601 Walnut St., Philadelphia, PA 19106.
IT IS FURTHER ORDERED THAT the Division of Enforcement may, at any time following the entry of this Order, petition the Commission to: (1) reopen this matter to consider whether Parker provided accurate and complete financial information at the time such representations were made; (2) determine the amount of civil penalty to be imposed against Parker; and (3) seek any additional remedies against Parker that the Commission would be authorized to impose in this proceeding if his offer of settlement had not been accepted. No other issues shall be considered in connection with this petition other than whether the financial information provided was fraudulent, misleading, inaccurate or incomplete in any material respect, the amount of a civil penalty and/or disgorgement and prejudgment interest to be imposed and whether additional remedies should be imposed. Parker may not, by way of defense to such petition, contest the findings in this Order or the Commission's authority to impose any additional remedies that were available in the original proceeding.
By the Commission.
Jonathan G. Katz
-- The findings herein are made pursuant to Parker's Offer and are not binding on any other person or entity in this or any other proceeding.
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