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U.S. Securities and Exchange Commission

Before the

Release No. 49837 / June 9, 2004

Release No. 2247 / June 9, 2004

File No. 3-11463

In the Matter of



On April 23, 2004, the Securities and Exchange Commission ("Commission") issued an Order Instituting Proceedings ("OIP") pursuant to Section 15(b) of the Securities Exchange Act of 1934 ("Exchange Act") and Section 203(f) of the Investment Advisers Act of 1940. Respondents C. David Hallman and CDH & Affiliates, Inc. ("CDH"), received the OIP on May 1 and May 3, 2004, respectively. On May 27, 2004, I postponed the hearing scheduled for June 2, 2004, to June 30, 2004.

The Division of Enforcement filed a Motion and Memo Of Law In Support Of Order Making Findings and Imposing Sanctions By Default ("Motion") on May 28, 2004. The Motion has four attachments: Exhibit 1 is an Order by U.S. District Judge, Jack T. Camp, in SEC v. CDH & Affiliates, Inc., Civil Action File No. 3:02-CV-17-JTC (N.D. Ga.), issued October 23, 2003; Exhibit 2 is the Commission's Complaint For Injunctive Relief, filed February 25, 2002; Exhibit 3 is the Final Judgment of Permanent Injunction, entered April 1, 2004; and Exhibit 4 is a letter from The Sovereign Military Order of Malta, Federal Association, popularly called the Knights of Malta, stating that Cecil David "Bear" Hallman is not now, and has never been, a member.

On June 1, 2004, Respondent Hallman filed a letter requesting a postponement of the hearing and requesting an extension of time to answer the OIP. Respondent Hallman states that the reason for his requests is that his attorney of record "has abandoned me without notice."


Respondents are in default pursuant to Rules 155 and 220 of the Commission's Rules of Practice because they failed to answer the allegations in the OIP within twenty days after service of the OIP. 17 C.F.R. 201.155, .220. Pursuant to Rule 155(a), I find the following facts set out in the OIP and the complaint, order, and judgment issued in SEC v. CDH & Affiliates, Inc., Civil Action File No. 3:02-CV-17-JTC (N.D. Ga.) are true. See Motion Exhibits 1, 2, 3; 17 C.F.R. 201.155(a).

CDH was incorporated in Georgia in 1997, and dissolved administratively by the Georgia Secretary of State in 2002.1 When the complaint was filed, CDH was the sole owner of CDH Financial Advisors, L.L.C. ("CDH Financial"), a Georgia limited liability company based in Fayetteville, Georgia. Respondent Hallman, age fifty and a resident of Fayetteville, Georgia, controlled CDH and signed agreements on behalf of CDH as its chairman. CDH Financial was registered with the Commission as an investment adviser, Commission File Number 801-57348, from March through July 2000, and was registered with the State of Georgia from March through December 2000.

From September 1997 through at least June 1999, Respondents engaged in the business of effecting transactions in securities and fraudulently raised more that $2.2 million in transaction-related fees from at least twenty-seven customers, purportedly to prepare corporate bond offerings for those customers and then to sell those bonds for the customers. In an effort to avoid detection of their scheme, Respondents, until at least July 2001, continually told their victims that their bond issues would be funded and made other misrepresentations to encourage the victims to believe that funding was imminent. CDH never sold bonds for any customer and the risk-free high-yield investment program that Respondents described to investors did not exist. Respondent Hallman made numerous misrepresentations to his victims, including false claims that some victims' bonds had been successfully sold, that bond sales were imminent and that the proceeds of the bond sales would be invested in a high-yield investment program that would pay thirty to forty percent every ten days. Based on these activities, Respondents violated Sections 10(b) and 15(a) of the Exchange Act and Rule 10b-5 thereunder.

On October 23, 2003, the district court granted the Commission's motion for summary judgment and permanently enjoined Respondents from future violations of Sections 10(b) and 15(a) of the Exchange Act and Rule 10b-5 thereunder. The district court found that Respondents engaged in the business of assisting issuers in effecting securities transactions without first registering with the Commission. The district court also found that Respondent Hallman represented CDH in its contractual dealings with over ninety clients who paid Respondents over eleven million dollars for various high yield investment programs in bonds that never existed.

On April 1, 2004, the district court entered a Final Judgment of Permanent Injunction that: (1) permanently enjoined Respondents from directly or indirectly violating Sections 10(b) and 15(a) of the Exchange Act and Rule 10b-5 thereunder; (2) ordered Respondents, jointly and severally, to pay disgorgement in the amount of $3,128,000, plus pre-judgment interest of $1,079,616.95, for a total of $4,207,616.95; and (3) ordered each Respondent to pay a civil penalty of $110,000.

In view of these findings, it is appropriate and in the public interest to impose the following sanctions on Respondents.


I DENY Respondent Hallman's request for additional time to answer the OIP because Attorney Ramig never filed an appearance to represent Respondents in this administrative proceeding. Attorney Ramig's May 27, 2004, letter notified Respondent Hallman that he was withdrawing from representation in two proceedings in the United States District Court for the Northern District of Georgia.

I GRANT the Motion and ORDER that C. David Hallman and CDH & Affiliates, Inc., are barred from associating with any broker, dealer, or investment adviser pursuant to Section 15(b) of the Securities Exchange Act of 1934 and Section 203(f) of the Investment Advisers Act of 1940.

I CANCEL the hearing scheduled to begin on Wednesday, June 30, 2004.

Brenda P. Murray
Chief Administrative Law Judge




Modified: 06/09/2004