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U.S. Securities and Exchange Commission


Litigation Release No. 20236 / August 9, 2007

SEC v. AmeriFirst Funding, Inc., AmeriFirst Acceptance Corporation, Jeffery C. Bruteyn and Dennis W. Bowden, (U.S.D.C., Northern District of Texas, Dallas Division, Civil Action No. 3:07-CV-1188-D)

Court Grants Preliminary Injunction and Other Equitable Relief in Scheme Targeting Elderly Investors

On July 31, 2007, Judge Sidney A. Fitzwater, United States District for the Northern District of Texas, granted the Commission's request for a preliminary injunction and other equitable relief against defendants AmeriFirst Funding, Inc., AmeriFirst Acceptance Corporation (collectively "AmeriFirst"), Jeffrey C. Bruteyn ("Bruteyn") and Dennis Bowden ("Bowden") and relief defendants Hess Financial Corporation ("Hess Financial") and American Eagle Acceptance Corp. ("American Eagle"). The pending civil action charges the defendants with raising as much as $55 million through the fraudulent offer and sales of so-called Secured Debt Obligations ("SDOs").

The Commission presented evidence that AmeriFirst sales agents lured elderly investors and those saving for retirement, with advertisements for relatively high-yielding FDIC-insured certificates of deposit, then convinced the investors to purchase the SDOs. The Commission provided evidence that defendants misrepresented the safety of the SDOs by falsely asserting, among other claims, that the investment had little or no risk because accounts were guaranteed by a commercial bank, protected by many layers of insurance coverage and fully secured by collateral. The Commission also presented evidence that the defendants touted the credentials of Bruteyn, a principal of AmeriFirst Funding, Inc. and AmeriFirst Acceptance Corp., while failing to disclose his long history of financial irresponsibility and securities-related sanctions, including personal bankruptcies and a permanent bar from associating with any broker-dealer. Finally, the Commission provided proof that defendants falsely promised to use investor funds only in specified investment vehicles, while, in fact, they misused millions of dollars of investor funds to purchase speculative investments and spent millions more for their personal benefit.

Judge Fitzwater concluded that the Commission had established a reasonable likelihood that the defendants violated the securities registration and anti-fraud provisions of the federal securities laws in the course of offering and selling the SDOs. Specifically, the Court stated that the Commission had established that defendants made material misrepresentations and omissions concerning the safety of the SDOs and Bruteyn's history of financial irresponsibility and securities-related sanctions. The Court also found that the Commission had establish that defendants misused investor funds by purchasing unauthorized investment vehicles and diverting a substantial amount of investor funds for their own personal use and benefit.

The Court continued its asset freeze entered July 2, 2007 against AmeriFirst Funding, Inc., AmeriFirst Acceptance Corporation, Bruteyn and Bowden and relief defendants Hess Financial and American Eagle. The Court also ordered the defendants and relief defendants to repatriate assets located outside the jurisdiction of the court, ordered the defendants to render an accounting of their assets and all investor monies and prohibited defendants from secreting or destroying their records.

In a separate ruling on August 2, 2007, the Court granted the Commission's request to extend the receivership, asset freeze and other equitable relief to five new relief defendants named in the Commission's First Amended Complaint, InterFinancial Holdings, Inc. ("InterFinancial"), a Nevada corporation traded on the Pink Sheets under the symbol IFCH, Hess International Properties, LLC ("Hess International LLC"), a Texas limited liability company, Hess International Investments, SA ("Hess International SA"), a Honduran corporation, Gerald Kingston ("Kingston"), and United Financial Markets, Inc. ("United Financial"), a Texas corporation. While the Court extended all prior remedies to InterFinancial, the Court confined the relief against InterFinancial to real property in Roatan, Honderas, the company's only known asset.

In the First Amended Complaint, the Commission alleged, among other claims, that over $2 million in AmeriFirst investor funds were diverted to purchase 58 acres of real estate in Roatan, Honduras. The Commission presented the Court with evidence that InterFinancial, Hess International LLC and Hess International SA may each have an ownership interest in this property. The Commission provided evidence that Kingston, individually and through United Financial, received more than $1 million in commissions from the fraudulent offer and sale of AmeriFirst SDOs. The Commission also established that Kingston purchased a valuable work of art from defendant Bruteyn after Bruteyn was already subject to the asset freeze and receivership established on July 2, 2007.

The Commission acknowledges the assistance of the Texas State Securities Board and the State of Florida Office of Financial Regulation.

For additional information, see Litigation Release No. LR-20181 (July 2, 2007).



Modified: 08/10/2007