UNITED STATES OF AMERICA
SECURITIES AND EXCHANGE COMMISSION
Securities Exchange Act of 1934
Release No. 50255 / August 25, 2004
Administrative Proceedings File No. 3-11605
COMMISSION INSTITUTES ADMINISTRATIVE PROCEEDINGS AGAINST DERRICK N. MCKINNEY AND RICK R. MALIZIA
On August 25, 2004, the Securities and Exchange Commission issued an Order Instituting Administrative Proceedings Pursuant to Section 15(b) of the Securities Exchange Act of 1934 (the "Order") against Derrick N. McKinney ("McKinney"), a resident of Lewis Center, Ohio, and Rick R. Malizia ("Malizia"), a resident of Weston, Florida, based upon the entry of a permanent injunction against them in SEC v. Steven E. Thorn, et al., Civ Action No. C2-01-290 (S.D. Ohio).
On October 14, 2003, the Honorable Edmund A. Sargus, Jr. of the U.S. District Court for the Southern District of Ohio granted summary judgment in favor of the Commission and against McKinney and Malizia, among others, holding them liable for raising approximately $75 million from investors in a series of fraudulent prime bank schemes and using investor funds to conduct a massive Ponzi scheme. The Court found that the McKinney and Malizia had violated Section 17(a) of the Securities Act of 1933 ("Securities Act") and Sections 10(b), 15(a) and 15(c)(1) of the Securities Exchange Act of 1934 ("Exchange Act") and Rules 10b-5 and 15c1-2 thereunder.
In granting the Commission's motion for summary judgment, the Court ruled in part that McKinney and Malizia should be permanently enjoined from future violations of the antifraud and broker-dealer registration provisions of the securities laws. The Court further ordered McKinney to disgorge $54,200 plus $16,499 of pre-judgment interest and held him jointly and severally liable for $1,434,757 of disgorgement and $294,632 of pre-judgment interest imposed against his company, International Trading Partners, Ltd., pursuant to a previous Court order. Malizia was ordered to disgorge an amount to be determined later by the Court. Lastly, the Court ordered Malizia and McKinney to pay civil penalties in amounts to be determined at a later hearing.
A hearing will be scheduled before an administrative law judge to determine whether the allegations contained in the Order are true, to provide McKinney and Malizia an opportunity to dispute these allegations, and to determine what, if any, remedial sanctions are appropriate and in the public interest.
The Order requires the Administrative Law Judge to issue an initial decision no later than 210 days from the date of service of this Order, pursuant to Rule 360(a)(2) of the Commission's Rules of Practice.
See also the Order in this matter