UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF FLORIDA

Plaintiff Securities and Exchange Commission (the "SEC" or "Commission") alleges and states as follows:

I. INTRODUCTION

1. The Commission brings this action to restrain and permanently enjoin Defendant Louis W. Ratfield ("Ratfield") from violating the registration and antifraud provisions of the federal securities laws. From at least 1997 through May 2001, Ratfield raised over $4 million from about 120 investors by selling interests in two investment clubs, purported "Common Law Trusts" called Stonehenge Enterprises Pure Trust ("Stonehenge") and The Baron Financial Services ("Baron"). In connection with the offering, Ratfield made false and misleading representations to investors regarding the profitability, liquidity and risk of the investments. Ratfield told prospective investors, among other things, that their investment would generate returns of at least 9.25% and possibly up to 26% or 40%, and falsely assured them that their principal would be fully insured. In truth, Ratfield did not generate any returns for his investors because he used the majority of the investors' funds to make unsecured loans to risky start-up companies, none of which were successful. Ratfield further lulled his investors into believing their investments were generating the promised returns - thereby encouraging additional investments - by providing them with bogus quarterly statements reflecting non-existent returns.

II. DEFENDANT

2. Defendant Ratfield, 63 years old, resides in Lake Worth, Florida, where he also maintains a tax preparation and accounting practice. In addition to offering tax and accounting services to the public, he served as general manager of Stonehenge and Baron, two purported "Common Law Trusts" formed by Ratfield. Ratfield exercised sole discretionary authority over the activities of Stonehenge and Baron.

III. JURISDICTION AND VENUE

3. This Court has jurisdiction over this action pursuant to Sections 20(b), 20(d) and 22(a) of the Securities Act of 1933 ("Securities Act") [15 U.S.C. §§ 77t(b), 77t(d) and 77v(a)]; Sections 21(d), 21(e), and 27 of the Securities Exchange Act of 1934 ("Exchange Act") [15 U.S.C. §§ 78u(d), 78u(e) and 78aa]; and Section 214 of the Investment Advisers Act of 1940 ("Advisers Act") [15 U.S.C. §80b-14].
    
4. The Southern District of Florida is the proper venue for this action. Certain actions and transactions alleged and stated herein constitute violations of the Securities Act and the Exchange Act and have occurred within the Southern District of Florida. Ratfield maintains his office in Lake Worth, Florida from which the securities were offered and sold to investors. Defendant Ratfield also maintains his primary residence within the Southern District of Florida.
    
5. Defendant Ratfield, directly and indirectly, has made use of the means and instrumentalities of interstate commerce, the means and instruments of transportation and communication in interstate commerce, and the mails, in connection with the acts, practices, and courses of business complained of herein.

IV. RATFIELD'S FRAUDULENT OFFERING

A. The Stonehenge and Baron Investment Clubs

6. Commencing in 1997, Ratfield solicited many of his tax preparation clients and other to invest in an investment club operated by Ratfield called LWR Financial Services Trust ("LWR"). Ratfield later formed Stonehenge, which purchased the assets of LWR in September 2000, and Baron. Stonehenge and Baron were both "Common Law Trusts" domiciled in Florida, and their names are registered as fictitious names with the Florida Division of Corporations.
    
7. Stonehenge and Baron were "investment clubs" set up by Ratfield to receive funds from individual investors, which funds would then be pooled and used by Ratfield to make investments on behalf of the trusts. Stonehenge was set up for individuals seeking to invest less than $50,000, while Baron was for individuals with $50,000 or more to invest.
    
8. Ratfield promised investors that they would earn at least 9.25% and possibly up to 26% to 40% annually, with a "conservative" return of 26% offered to individuals investing their pension funds. In exchange for their investment, investors received a share certificate in the trust indicating the number of share units they owned, the rate of return, and assuring investors that their "principal is fully insured and secured."
    
9. As general manager of Stonehenge and Baron, Ratfield exercised sole discretion over the investment decisions of the clubs. The investors exercised no control over how the investment funds were used, and were not even advised of the investments Ratfield made. Indeed, the only information investors received were quarterly statements and yearly Form 1099s, both of which reflected the purported returns on their investment. These "returns" were entirely fictitious.

B. Material Misrepresentations or Omissions

10. From 1997 through May 2001, Ratfield raised over $4 million from approximately 120 investors. In connection with the offering and sale of the investments in Stonehenge (and its predecessor LWR) and Baron, Ratfield made numerous material misrepresentations and omissions regarding, among other things, the rate of return on the investments, the risk and liquidity of the investments.

(1) Profitability of Investments

11. Ratfield solicited investors, either in person or on the telephone, to invest in his investment clubs by representing that his clubs would generate annual returns of at least 9.25% and possibly up to 26% or 40%. Investors who sought to invest their pension funds were guaranteed the more conservative rate of return, or 26%. Ratfield would purportedly be paid for his services out of any funds the investment clubs generated in excess of those returns necessary to pay investors.
     
12. These representations were patently false. Ratfield invested the pooled investor funds in risky start-up companies without regard to the safety of the investments. The companies in which Ratfield invested usually signed promissory notes prepared by Ratfield in exchange for investor funds. The promissory notes often did not set forth repayment schedules or interest rates. All of the start-up companies in which Ratfield invested failed; none generated any returns, much less the outstanding returns Ratfield assured investors the investment clubs were realizing.

(2) Risk of Investments

13. Ratfield misrepresented the investment risks to investors by failing to disclose to prospective investors and investors that he was investing in start-up companies.
     
14. Ratfield further misrepresented the risk of the investment to investors by indicating on the face of the investment club certificates that the investment principal was "fully insured and secured." In reality, as early as 1998, Ratfield learned from his insurance agent that his business errors and omissions insurance coverage would not cover the investment clubs or its losses. Even after Ratfield learned that his insurance coverage would not cover the investment clubs, he continued falsely to represent that the investment was fully insured.

(3) Liquidity of Investments

15. Ratfield further assured investors that they could redeem their investment annually. This representation was false. Ratfield invested the funds in extremely risky start-up companies with little or no liquidity. As a result, only a handful of investors were able to redeem their investments, and Ratfield was only able to pay those investors by using new investor funds.

(4) Ratfield's Quarterly Statements and Form 1099s Lulled Investors into Believing their Investments Were Secure and Profitable

16. Ratfield made repeated "lulling" statements to investors about the profitability of their investment in the clubs, encouraging them to remain in the investment clubs - and to send more money. Ratfield reinforced these false statements by sending investors quarterly statements that reflected the promised annual returns on each investment.
     
17. From 1997 through 2000, Ratfield also distributed to individual investors a federal tax Form 1099 showing the interest that the each investment had purportedly earned and what each investor owed for income tax purposes.
     
18. The quarterly statements and Form 1099s were entirely fraudulent and designed to lull investors into believing that the investment clubs were profitable and generating the promised returns.
     
19. In fact, the returns reflected on the statements were entirely fictitious since Ratfield never actually generated any returns for his clients. The majority of the investments Ratfield made were unsecured loans to risky start-up companies that failed. Ratfield nevertheless continued to send these false account statements and Form 1099s to investors even after it became clear that the investments were not profitable, that he could never pay the promised returns and that, in fact, he was losing the investors' funds.

C. Ratfield's Misappropriation of Funds

20. Although Ratfield should have received no compensation because the investments he made on behalf of the clubs were not profitable, unexplained cash withdrawals from Baron's accounts indicate that Ratfield misappropriated at least $50,000 of investor funds for his personal use.

COUNT I

SALE OF UNREGISTERED SECURITIES IN VIOLATION OF SECTIONS 5(a) AND 5(c) OF THE SECURITIES ACT

21. The Commission realleges and repeats its allegations set forth at paragraphs 1-20 of this Complaint as if fully restated herein.
     
22. No registration statement was filed or in effect with the Commission pursuant to the Securities Act with respect to the securities and transactions described herein.
     
23. Since a date unknown but since at least 1997 through May 2001, Defendant Ratfield, has:
     

(a)	made use of the means or instruments of transportation or communication in interstate commerce or of the mails to sell securities as described herein, through the use or medium of a Private Placement Memorandum, prospectus or otherwise;
(b)	carried securities or caused such securities, as described herein, to be carried through the mails or in interstate commerce, by any means or instruments of transportation, for the purpose of sale or delivery after sale; and/or
(c)	made use of the means or instruments of transportation or communication in interstate commerce or of the mails to offer to sell or offer to buy through the use or medium of any prospectus or otherwise, as described herein, without a registration statement having been filed or being in effect with the Commission as to such securities.

24. By reason of the foregoing, Defendant Ratfield has violated, and unless enjoined, will continue to violate Sections 5(a) and 5(c) of the Securities Act [15 U.S.C. §§ 77e(a) and 77e(c)].

COUNT II

FRAUD IN VIOLATION OF SECTION 17(a)(1) OF THE SECURITIES ACT

25. The Commission realleges and repeats its allegations set forth at paragraphs 1-20 of this Complaint as if fully restated herein.
     
26. Since a date unknown but since at least 1997 through May 2001, Defendant Ratfield, in the offer or sale of securities, by use of the means or instruments of transportation or communication in interstate commerce or by use of the mails, directly or indirectly, as described herein, has been, knowingly, willfully or recklessly employing devices, schemes or artifices to defraud.
     
27. By reason of the foregoing, Defendant Ratfield has violated and, unless enjoined, will continue to violate Section 17(a)(1) of the Securities Act [15 U.S.C. § 77q(a)(1)].

COUNT III

FRAUD IN VIOLATION OF
SECTIONS 17(a)(2) AND 17(a)(3) OF THE SECURITIES ACT

28. The Commission realleges and repeats its allegations set forth at paragraphs 1-20 of this Complaint as if fully restated herein.
     
29. Since a date unknown but since at least 1997 through May 2001, Defendant Ratfield, in the offer or sale of securities, by use of the means or instruments of transportation or communication in interstate commerce or by use of the mails, directly or indirectly, as described herein, has been: (i) obtaining money or property by means of untrue statements of material facts and omissions to state material facts necessary to make the statements made, in the light of the circumstances under which they were made, not misleading; and (ii) engaging in transactions, practices and courses of business which are now operating and will operate as a fraud or deceit upon purchasers and prospective purchasers of such securities.
     
30. By reason of the foregoing, Defendant Ratfield has violated and, unless enjoined, will continue to violate Sections 17(a)(2) and 17(a)(3) of the Securities Act [15 U.S.C. §§ 77(q)(a)(2) and 77(q)(a)(3)].

COUNT IV

FRAUD IN VIOLATION OF
SECTION 10(b) OF THE EXCHANGE ACT AND RULE 10b-5

31. The Commission realleges and repeats its allegations set forth at paragraphs 1-20 of this Complaint as if fully restated herein.
     
32. Since a date unknown but since at least 1997 through May 1999, Defendant Ratfield, directly or indirectly, by use of the means or instrumentalities of interstate commerce or of the mails, or of any facility of any national securities exchange, in connection with the purchase or sale of the securities, as described herein, has been, knowingly, willfully or recklessly: (i) employing devices, schemes or artifices to defraud; (ii) making untrue statements of material facts and omitting to state material facts necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading; and (iii) engaging in acts, practices and courses of business which have operated, are now operating and will operate as a fraud upon the purchasers of such securities.
     
33. By reason of the foregoing, Defendant Ratfield, has violated and, unless enjoined, will continue to violate Section 10(b) of the Exchange Act [15 U.S.C. § 78j(b)] and Rule 10b-5 [17 C.F.R. § 240.10b-5] thereunder.

COUNT V

FRAUD IN VIOLATION OF
SECTIONS 206(1) AND 206(2) OF THE ADVISERS ACT

34. The Commission realleges and repeats its allegations set forth at paragraphs 1-20 of this Complaint as if fully restated herein.
     
35. Since a date unknown but since at least 1997 through May 1999, Defendant Ratfield, by use of the mails or means or instrumentalities of interstate commerce, directly or indirectly, has been, knowingly, willfully or recklessly: (i) employing devices, schemes or artifices to defraud their clients or prospective clients; and (ii) engaging in transactions, practices and courses of business which are now operating and will operate as a fraud or deceit upon their clients or prospective clients.
     
36. By reason of the foregoing, Defendant Ratfield has violated and, unless enjoined, will continue to violate Sections 206(1) and 206(2) of the Advisers Act [15 U.S.C. §§ 80b-6(1) and 80b-6(2)].

RELIEF REQUESTED

WHEREFORE, the Commission respectfully requests that the Court:

A. Declaratory Relief

Declare, determine and find that Defendant Ratfield committed the violations of the federal securities laws alleged herein.

B. Permanent Injunctive Relief

Issue a Permanent Injunction, restraining and enjoining Defendant Ratfield, his officers, agents, servants, employees, attorneys, and all persons in active concert or participation with him, and each of them, from violating: (i) Sections 5(a) and 5(c) of the Securities Act [15 U.S.C. §§ 77e(a) and 77e(c)]; (ii) Section 17(a)(1) of the Securities Act [15 U.S.C. § 77q(a)]; (iii) Sections 17(a)(2) and 17(a)(3) of the Securities Act [15 U.S.C. §§ 77(q)(a)(2) and 77(q)(a)(3)]; (iv) Section 10(b) of the Exchange Act [15 U.S.C. § 78j(b)], and Rule 10b-5 [17 C.F.R. § 240.10b-5]; and Sections 206(1) and 206(2) of the Investment Advisers Act [15 U.S.C. §§ 80b-6(1) and 80b-6(2)].

C. Disgorgement

Issue an Order requiring Defendant Ratfield to disgorge all profits or proceeds that he has received as a result of the acts and/or courses of conduct complained of herein, with prejudgment interest.

D. Penalties

Issue an Order directing Defendant Ratfield to pay civil fines and/or penalties pursuant to Section 20(d) of the Securities Act [15 U.S.C. § 77t(d)]; Section 21(d) of the Exchange Act [15 U.S.C. § 78(d)(3)] and Section 209(e) of the Investment Advisers Act [15 U.S.C. §§ 80b-9(e)].

E. An Accounting

Issue an Order requiring an accounting of Defendant Ratfield of all proceeds received, directly or indirectly, pursuant to the acts and/or courses of conduct complained of herein.

F. Further Relief

Grant such other and further relief as may be necessary and appropriate.

G. Retention of Jurisdiction

Further, the Commission respectfully requests that the Court retain jurisdiction over this action in order to implement and carry out the terms of all orders and decrees that may hereby be entered, or to entertain any suitable application or motion by the Commission for additional relief within the jurisdiction of this Court.