U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 20148 / June 8, 2007
SEC v. John L. Montana, Melvin R. Lyttle, Paul E. Knight, Worldwide T&P, Inc., First National Equity, LLC and P.K. Trust & Holding, Inc., Civil Action No. 03-CV-1513 (S.D. Ind.) (Barker, J.)
The Securities and Exchange Commission ("Commission") announced that on May 23, 2007, the Honorable Sarah Evans Barker of the United States District Court for the Southern District of Indiana entered Orders of Permanent Injunction against Defendants Melvin R. Lyttle ("Lyttle"), Paul E. Knight ("Knight"), First National Equity, LLC ("FNE"), P.K. Trust & Holding, Inc. ("P.K. Trust"), John L. Montana, Jr. ("Montana") and Worldwide T&P, Inc. ("Worldwide T&P"). Judge Barker had already granted the Commission's motion for summary judgment against Lyttle, FNE, Knight and Montana on November 22, 2007. SEC v. Montana, et al., 464 F. Supp. 2d 772 (S.D. Ind.). P.K. Trust and Worldwide T&P had previously defaulted.
In entering the Orders of Permanent Injunction, the Court ruled that the Defendants should be permanently enjoined from future violations of the antifraud and registration provisions of the securities laws. Also, the Court ruled that Knight, P.K. Trust, Montana and Worldwide T&P should be permanently enjoined from future violations of the broker-dealer registration provisions of the securities laws. The Court awarded the following amounts of disgorgement and pre-judgment interest: (1) Lyttle and FNE were ordered to disgorge, jointly and severally, $7,038,443, representing profits or other financial gain resulting from the conduct alleged in the Commission's Complaint, together with prejudgment interest thereon in the amount of $4,146,233, for a total payment of $11,184,676; and (2) Knight and P.K. Trust were ordered to disgorge, jointly and severally, $1,750,945, representing profits or other financial gain resulting from the conduct alleged in the Commission's Complaint, together with prejudgment interest thereon in the amount of $900,874, for a total payment of $2,651,819. Defendants Lyttle and Knight were also ordered to each pay a civil penalty in the amount of $110,000.
The Commission alleged in its Complaint that the Defendants raised approximately $32 million by selling interests in a purported trading program which would invest money in the trading of various instruments including medium term notes. The Commission's Complaint alleged that in the offer and sale of the investments in the purported trading program, the Defendants defrauded investors by making misrepresentations and omissions of material fact regarding the investment's rate of return, the safety of the investment and the use of investor funds.
For additional information see Litigation Release No. 18411