COMPLAINT FOR CIVIL PENALTIES

Plaintiff, Securities and Exchange Commission (the "Commission"), for its Complaint alleges as follows:

SUMMARY OF ALLEGATIONS

1. Between May 1996 and June 1997, Defendant Basic Capital Management, Inc. ("Basic Capital") and five other affiliated entities (the "Affiliates") collectively purchased over one million shares of Greenbriar Corporation ("Greenbriar"), a company listed on the American Stock Exchange. Defendant Gene E. Phillips had substantial contact with the management of Basic Capital and had a significant influence on its advisory services and investment decisions as well as the investment decisions of the Affiliates.
    
2. Although neither Basic Capital nor any of the Affiliates purchased more than five percent of Greenbriar's outstanding shares, their holdings in the aggregate exceeded five percent of those shares by July 1996 and amounted to approximately 16.1% by June 1997.
    
3. Throughout the period in question, Basic Capital and the Affiliates ("the Phillips Group") deposited their Greenbriar shares in margin accounts and borrowed against those margin accounts to fund additional stock purchases. Three of the Affiliates also used funds drawn from lines of credit with Basic Capital to finance their Greenbriar stock purchases.
    
4. Because Basic Capital and/or Phillips had the ability to influence investments made by the Affiliates, the Defendants and the Affiliates collectively constituted a group for purposes of Section 13(d) of the Securities Exchange Act of 1934 ("Exchange Act"). Accordingly, the Defendants should have filed a Schedule 13D with the Commission within ten days after the Phillips Group collectively acquired five percent of Greenbriar's outstanding shares in July 1996. Thereafter, they should have made amendments to that filing each time the Phillips Group collectively acquired an additional one percent or more of Greenbriar's outstanding shares. They did not file a Schedule 13D, however, until April 9, 1998. Accordingly, the Defendants violated Section 13(d) of the Exchange Act and Rules 13d-1 and 13d-2 promulgated thereunder.
    
5. By their failure to comply with Section 13(d) on a timely basis, the Defendants misled the broker-dealers who extended margin loans to the Phillips Group that were secured by Greenbriar stock. The broker-dealers who extended such loans did so without knowing that the Phillips Group controlled as much as 16.1% of Greenbriar's outstanding shares. This information was material because it would have affected the manner in which the broker-dealers evaluated the market for Greenbriar shares and the liquidity of the shares pledged as collateral for the margin loans. The Defendants' knowing or reckless failure to provide the broker-dealers with the information required by Section 13(d) constituted a violation of Section 10(b) of the Exchange Act and Rule 10b-5 promulgated thereunder.

JURISDICTION

6. The Commission brings this action pursuant to Section 21(d)(3) of the Exchange Act [15 U.S.C. § 78u(d)(3)], seeking a judgment ordering Gene E. Phillips and Basic Capital Management, Inc. to pay civil penalties.
    
7. This Court has jurisdiction over this action under Sec-tions 21(d)(3) and 27 of the Exchange Act [15 U.S.C. §§ 78u(d)(3) and 78aa]. Venue lies in this Court pursuant to Section 27 of the Exchange Act [15 U.S.C. § 78aa].

DEFENDANTS

8. BASIC CAPITAL MANAGEMENT, INC. is a Nevada corporation with its principal place of business in Dallas, Texas. It is a privately owned advisory company that manages investments for several publicly traded real estate investment entities. Basic Capital is owned by Realty Advisors, Inc., which in turn is owned by the May Trust, a trust established for the benefit of the children of Phillips. During the period in question, Basic Capital owned approximately 52% of the outstanding securities of one of the Affiliates, a publicly held real estate investment company whose shares then traded on the New York Stock Exchange.
    
9. GENE E. PHILLIPS is a resident of Dallas, Texas. He formerly served as the chief executive officer of Basic Capital. Although Phillips has not been an officer or director of Basic Capital or any of the publicly held real estate entities advised by Basic Capital since 1992, Phillips continues to have substantial contact with the management of Basic Capital and has a significant influence on its advisory services and investment decisions as a representative of the May Trust.

FACTS
Greenbriar Stock Purchases

10. Greenbriar develops and operates assisted living facilities. Greenbriar's chairman and chief executive officer is a former business associate of Phillips. In a series of transactions occurring in 1991 and 1992, the former business associate acquired control of Greenbriar by purchasing Greenbriar stock from entities controlled by Phillips in return for a promissory note in the amount of $5.7 million from the former associate's personal holding company. As of May 1996, the $5.7 million promissory note and 1,210,000 Greenbriar shares pledged as collateral for that note were held by one of the Affiliates.
     
11. On May 20, 1996, one of the Affiliates began to buy shares of Greenbriar on the open market. Thereafter, at various dates between May 30 and July 16, 1996, Basic Capital and three of the Affiliates each began to buy shares of Greenbriar on the open market. The orders to purchase shares on behalf of Basic Capital and two of the Affiliates were made by a Basic Capital employee. The orders to purchase shares on behalf of two other Affiliates were made by individuals who managed both of those entities as well as another Affiliate.
     
12. By July 26, 1996, Basic Capital and four of the Affiliates collectively held 327,196 shares of Greenbriar, an amount that was more than five percent of the total number of shares outstanding at that time. In light of these holdings, the Defendants should have filed a Schedule 13D report within ten days, but no such report was filed.
     
13. The Phillips Group continued to purchase Greenbriar shares after crossing the five percent threshold on July 26, 1996. By December 31, 1996, the Phillips Group held 606,096 shares of Greenbriar, or approximately 9.2% of the total number of shares outstanding at that time. During January 1997, the Phillips Group purchased an addi-tional 216,000 shares of Greenbriar. In February and March 1997, the personal holding company of Greenbriar's chairman and chief executive officer transferred a total of 237,149 Greenbriar shares to one of the Affiliates in payment of accrued interest and to reduce the principal amount of the $5.7 million note. On June 24, 1997, the date on which the Phillips Group made the last Greenbriar stock purchase, the Phillips Group collectively held 1,054,345 shares of Greenbriar stock. This represented approximately 16.1% of the total number of shares outstanding.
     
14. Between May 1996 and June 1997, the Phillips Group accounted for approxi-mately 54% of the total trading volume in Greenbriar stock. On partic-ular days during that period, the Phillips Group bought all the Greenbriar stock traded.
     

Financing For The Greenbriar Stock Purchases

15. Prior to June 1996, Basic Capital had provided lines of credit to three of the Affiliates. Each of those entities financed their initial Greenbriar stock purchases with funds advanced by Basic Capital under these lines of credit.
     
16. Each of the entities comprising the Phillips Group also maintained margin accounts with various broker-dealers. They pledged their Greenbriar shares as collateral for margin loans in these accounts, thereby obtaining funds to use for additional stock purchases. The increase in Greenbriar's stock price, which rose to prices as high as $23.50 in June 1997, also provided them with additional purchasing power.
     
17. The market price for Greenbriar shares declined throughout the second half of 1997 and throughout 1998 and 1999. As a result, the Phillips Group entities were required to pay down their margin loans secured by Greenbriar stock. They repaid all of these loans in full, without selling any of the Greenbriar shares.
     

Schedule 13D Filings

18. The Phillips Group initially filed Schedule 13D reports with respect to their investments in Greenbriar on April 6, 1998, after the Commission's staff had commenced a formal investigation. These initial filings disclosed the Greenbriar stock purchases and the relationships between the parties, but disclaimed any status as a "group" for purposes of Section 13(d). On November 9, 1998, the Phillips Group filed an amendment to the Schedule 13D and acknowledged that the entities comprising the Phillips Group may be deemed to constitute a group for purposes of Section 13(d). The amended filing also disclosed that three of the Affiliates had financed their Greenbriar stock purchases with funds drawn down from lines of credit with Basic Capital.

FIRST CLAIM FOR RELIEF

Violations of Section 13(d) (1) and (2) of the Exchange Act
[15 U.S.C. § 78m(d)(1) and (2)] and Rule 13d-1 and 13d-2
thereunder [17 C.F.R. §§ 240.13d-1 and 240.13d-2]

19. Paragraphs 1 through 18 are hereby re-alleged and incorporated herein by reference.
     
20. The common stock of Greenbriar Corporation was registered pursuant to Section 12 of the Exchange Act [15 U.S.C. § 78l] and was listed and traded on the American Stock Exchange.
     
21. Pursuant to Section 13(d) of the Exchange Act and Rule 13d-1 thereunder, persons who are directly or indirectly the beneficial owners of more than five percent of the outstanding shares of a class of voting equity securities registered under the Exchange Act are required to file a Schedule 13D within ten days of the date on which their ownership exceeds five percent. The Schedule 13D filing requirement applies both to individuals who pass the five percent threshold and to groups which acquire, or own when formed, more than five percent of the shares of a class of equity securities.
     
22. Given the interrelationships that existed among the Defendants and the Affiliates in this case, including the ability of Phillips to influence the conduct of Basic Capital and the Affiliates and the lines of credit extended by Basic Capital so that the Affiliates could purchase Greenbriar shares, the Defendants and the Affiliates constituted a group for purposes of Section 13(d). Accordingly, the Defendants should have filed a Schedule 13D with respect to the Greenbriar holdings of the Phillips Group within ten days after the Phillips Group's collective holdings crossed the five percent threshold on July 26, 1996.
     
23. Thereafter, the Defendants were required to promptly file an amendment to Schedule 13D upon the occurrence of any material change to the information outlined therein. Pursuant to Exchange Act Rule 13d-2(a), any increase in beneficial ownership in an amount equal to one percent or more of the class of securities in question is deemed to be a material change. Therefore the Defendants should have filed at least ten amend-ments to a Schedule 13D between August 1996 and June 1997.
     
24. Because the Defendants did not file the Schedule 13-D or the amendments in a timely manner, they each violated Section 13(d) of the Exchange Act and Rule 13d-1 and 13d-2 thereunder in connection with the acquisitions of Greenbriar stock by the Phillips Group.

SECOND CLAIM FOR RELIEF

Violations of Section 10(b) of the Securities Exchange Act of 1934
[15 U.S.C. § 78j(b)] and Rule 10b-5 thereunder [17 C.F.R. § 240.10b-5]

25. Paragraphs 1 through 24 are hereby re-alleged and incorporated herein by reference.
     
26. The duty to file under Section 13(d) creates the duty to file truthfully and completely. A false or misleading material statement or material omission on a Schedule 13D, if made with scienter, may violate the antifraud provisions of the securities laws, Section 10(b) of the Exchange Act and Rule 10b-5 thereunder. The fact that the information is required to be revealed under Section 13(d) is evidence of its materiality.
     
27. The information that the Defendants should have timely disclosed on Schedule 13D was material. By reason of the Defendants' failure to make timely filings pursuant to Section 13(d), the broker-dealers who extended margin loans to the Phillips Group secured by Greenbriar stock did so without realizing that the Phillips Group controlled more than five percent of the outstanding shares of Greenbriar. The Defendants' failure to make timely filings also created the impression that the market for Greenbriar shares was deeper and more liquid than it was in fact. As a result, the broker-dealers who extended margin loans to the Respondents would have been exposed to a considerable risk of loss if the Phillips Group had failed to meet its obligations under the margin loans. For all these reasons, the information that the Defendants did not disclose in a timely manner on Schedule 13D was material.
     
28. The Respondents were aware that Section 13(d) imposes reporting requirements on persons who acquire more than five percent of the outstanding shares of a class of equity securities registered pursuant to Section 12 of the Exchange Act, and the pattern of their trading indicates that they took steps to avoid having any individual person or entity cross the five percent reporting threshold. Moreover, given the relationships and the financing arrangements that existed among the Defendants and the Affiliate, the Defendants knew or were reckless in not knowing that they were required to aggregate the Greenbriar holdings as a group for purposes of Section 13(d).
     
29. Defendants' material omissions were in connection with the purchase or sale of a security within the meaning of Section 10(b) of the Exchange Act and Rule 10b-5 thereunder. When securities are pledged as collateral for a margin loan, the broker-dealer acquires an interest in the securities equal to the amounts loaned on margin. When this interest is created, a sale occurs. Thus, misrepresentations or omissions made when obtaining a margin loan are "in connection with" the purchase or sale of a security. Accordingly, the Defendants' violated Section 10(b) and Rule 10b-5 thereunder by obtaining margin loans secured by Greenbriar stock at times when the material fact of their collective ownership of more than five percent of Greenbriar's outstanding shares was not disclosed.

PRAYER FOR RELIEF

Wherefore, the Commission respectfully requests that this Court enter a Final Judgment against Defendants Basic Capital Management, Inc. and Gene E. Phillips ordering them to pay, pursuant to Section 21(d)(3) of the Exchange Act [15 U.S.C. Section 78u(d)(3)], a civil penalty in the amount of $850,000, for which they shall be jointly and severally liable.