U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 19799 / August 10, 2006
SEC v. Tri Energy, Inc., H & J Energy Company, Inc., Marina Investors Group, Inc., Lowell Decker, Robert Jennings, Henry Jones, Arthur Simburg, Mildred Stultz, DJM, LLC, Financial MD, Inc., Financial MD and Associates, Inc., Daniel J. Merriman, Global Village Records, and La Vie D'Argent, as defendants, and R.P.J. Investment Group, Inc., T.M.A. Investment Enterprises, Thomas Avery, and Wing NGA Lau, a/k/a Adrienne Lau, as relief defendants, Case No. ED CV 05-00351 AG(MANx) (C.D. California, filed August 9, 2006)
SEC Files Amended Complaint Adding Additional Defendants and a Relief Defendant to Halt Massive Affinity Fraud And Ponzi Scheme that Continued Despite May 2005 Court Ordered Preliminary Injunction and Asset Freeze
The Securities and Exchange Commission today filed an amended complaint adding additional defendants and a relief defendant in a civil action alleging the defendants perpetrated an ongoing affinity fraud and Ponzi scheme, which continued despite a May 2005 Court ordered preliminary injunction and asset freeze. According to the Complaint, defendants have defrauded hundreds of investors of over $50 million by promising returns of 100% or more within 60 days. The Complaint alleges that defendants have been telling investors that these extraordinary profits were to be generated in part by helping an unnamed Saudi Arabian prince move gold from Israel through Luxembourg to the United Arab Emirates. In reality, according to the Complaint, although some money has been paid out to investors, these funds appear to have come from new investor money, and substantial amounts of investor funds have been transferred to bank accounts controlled by the proposed defendants and relief defendants. Defendants have characterized the purported gold transaction to religiously devout investors as "deistically inspired" and "divinely guided."
The amended complaint adds DJM, LLC, Financial MD, Inc., Financial MD and Associates, Inc., Global Village Records, La Vie D'Argent, Daniel J. Merriman, and Millie Stultz as defendants and Wing NGA Lau, a/k/a Adienne Lau as a relief defendant. According to the complaint, even after the original defendants were enjoined from continuing to violate the federal securities laws, they continued their fraud by soliciting additional money into this scam. To circumvent the asset freeze, certain defendants created a new company, Global Village Records, and then used the bank accounts of companies owned by Daniel J. Merriman to forward money from investors. Millie Stultz promoted the alleged scheme even after learning of the SEC's complaint. The Commission and Global Village Records have also stipulated to the entering of a preliminary injunction against Global Village Records. For their roles in the alleged scheme, the SEC charges the new defendants along with the old defendants Tri Energy, Inc., Marina Investors Group, Inc., H & J Energy Company, Lowell Decker, Robert Jennings, Henry Jones and Arthur Simburg with violations of Sections 5 and 17(a) of the Securities Act of 1933 ("Securities Act") and violations of, and aiding and abetting violations of, Section 10(b) of the Securities Exchange Act of 1934 ("Exchange Act") and Rule 10b-5 thereunder. The SEC also named in the original complaint as relief defendants La Vie D'Argent, R.P.J. Investment Group, Inc., T.M.A. Investment Enterprises and Thomas Avery, who allegedly receiving investor funds to which they have no legitimate claim.