U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 20052 / March 23, 2007
SEC v. Violet Gail Eldridge and UTA-BVI, Ltd., Defendants, and The United Tribes of the Americas Inc. and Executive Bureau of Research and Recovery, Inc., Relief Defendants, No. 05-0735 (U.S.D.C. N.D. Georgia)
On March 21, 2006, the Honorable Clarence Cooper of the United States District Court for the Northern District of Georgia granted summary judgment in favor of the Commission and against Defendants Violet Gail Eldridge ("Eldridge") and UTA-BVI, Ltd. ("UTA-BVI") and Relief Defendants The United Tribes of the Americas, Inc. and Executive Bureau of Research and Recovery, Inc. (collectively "Relief Defendants"). The Court found that UTA-BVI violated Sections 206(1) and 206(2) of the Investment Advisers Act of 1940 ("Advisers Act"), 15 U.S.C. § 80b-6(1) and 80b-6(2), and that Eldridge, who served as a director and trustee of UTA-BVI, aided and abetted UTA-BVI's violations. The Court also found that the Relief Defendants received ill-gotten gains to which they have no legitimate claim.
The Court found that UTA-BVI was an investment adviser because it exercised control over the assets of First National Equity, LLC ("FNE") and P.K. Trust & Holding, Inc. ("P.K.T.") and decided to invest those assets in securities. Moreover, the Court found that UTA-BVI was in the business of providing investment advice to FNE and P.K.T, did so for an extended period of time and was to be compensated for its services rendered, as evidenced by Trust Management Agreements UTA-BVI entered into with FNE and P.K.T.
The Court found that UTA-BVI, through Eldridge, violated the Advisers Act by making transfers of funds entrusted to it by FNE and P.K.T. for the benefit of Eldridge and the Relief Defendants. The Court found that funds were used for a variety of purposes not in the best interest of FNE and P.K.T., including for transfers to Eldridge and the Relief Defendants and for credit card payments, hotels, restaurants, retail purchases, rent and other payments and transfers. The Court found that Eldridge aided and abetted UTA-BVI's violations by directing these transfers from UTA-BVI's brokerage accounts.
In granting the Commission's motion for summary judgment, the Court ruled that UTA-BVI should be permanently enjoined from future violations of the Advisers Act and that Eldridge should be permanently enjoined from aiding and abetting future violations of the Advisers Act. The Court will set amounts of disgorgement and civil penalties at an evidentiary hearing set for a later date.
For additional information concerning this matter, see Litigation Release No. 19146 (March 18, 2005).