U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 20629 / June 25, 2008
Securities and Exchange Commission v. Alanar, Inc., et al, Civil Action No. 1:05-CV-01102 (S.D. Ind. May 19, 2008) (Chief Judge David F. Hamilton)
Final Judgments Entered Against Vaughn A. Reeves, Sr., Vaughn A. Reeves, Jr., Jonathan Christopher Reeves, and Joshua Craig Reeves
On May 19, 2008, the United States District Court for the Southern District of Indiana entered final judgments against Vaughn A. Reeves, Sr., Vaughn A. ("Chip") Reeves, Jr., Jonathan Christopher ("Chris") Reeves, and Joshua Craig ("Josh") Reeves (collectively, "the Reeves"). The final judgments permanently enjoin the Reeves from violating the antifraud provisions of the federal securities laws and require them to collectively pay more than $7.88 million in disgorgement, prejudgment interest and civil penalties for their role in an "affinity fraud" investment scheme involving Alanar, Inc. ("Alanar"), a broker-dealer that raised at least $120 million from more than 10,000 investors across the United States.
The Commission's Complaint, filed on July 26, 2005, alleged that the Reeves sold church bonds and units of related bond funds to investors by appealing to the investors' Christian faith and then misused the proceeds from the sales by using the proceeds in ways not disclosed to investors. The Commission further alleged that the Reeves improperly diverted investor proceeds to themselves and entities that they controlled. In their consent to the Order of Permanent Injunction and Other Relief that was entered by the Court on July 26, 2005, the Reeves agreed that the Commission's allegations would be accepted and deemed true by the Court for the purposes of determining the appropriate amount of disgorgement and civil penalties against the Reeves.
The Court set forth the findings that formed the basis for the disgorgement and civil penalty amounts contained in the final judgments in its Entry on Plaintiff's Motion for an Order of Disgorgement, Prejudgment Interest, and Civil Penalties against the Reeves Defendants. See SEC v. Alanar, Inc., et al., 2008 WL 1994854. The Court found that "[u]ndoubtedly, the Reeves were enriched through the operation of their scheme," such as by taking substantial undisclosed loans from relief defendant Churchmen's Capital Group, Inc. Id. at *3. The final judgments entered by the Court: (1) permanently enjoin the Reeves from violating Section 10(b) of the Securities Exchange Act of 1934, and Rule 10b-5 promulgated thereunder, and Section 17(a) of the Securities Act of 1933; (2) order Vaughn Reeves to pay disgorgement, plus prejudgment interest, in the amount of $3,515,396; (3) order Chip Reeves to pay disgorgement, plus prejudgment interest, in the amount of $2,251,566; (4) order Chris Reeves to pay disgorgement, plus prejudgment interest, in the amount of $1,112,680; (5) order Josh Reeves to pay disgorgement, plus prejudgment interest, in the amount of $524,792; and (6) order each of the Reeves to pay a $120,000 civil penalty. Information concerning the above-referenced order of the Court and other matters pertaining to the court-appointed Receiver in this case are posted on the Receiver's website, located at: