U.S. Securities and Exchange Commission
LITIGATION RELEASE NO. 20635 / July 2, 2008
SEC V. ENTERPRISE TRUST COMPANY, ET AL, Case No. 08 C 1260 (N. D. Ill., filed March 3, 2008)
On July 2, 2008, the Securities and Exchange Commission obtained an Order of Permanent Injunction (“Order”) from the United States District Court for the Northern District of Illinois against John H. Lohmeier (“Lohmeier”), of Oak Brook, Illinois, pursuant to his consent. The Order permanently enjoins Lohmeier from violating the anti-fraud provisions of the federal securities laws in connection with the purchase and sale of securities. Lohmeier consented to the entry of the Order against him without admitting or denying the allegations in the Commission’s complaint.
The Commission’s complaint, filed on March 3, 2008, alleges, among other things, that Defendants Lohmeier, Enterprise Trust Company (“Enterprise”) and Rebecca A. Townsend (“Townsend”) fraudulently induced hundreds of customers of Advisory Financial Consultants ("AFC"), a registered broker-dealer, to transfer custody of approximately $49 million in mutual funds to Enterprise. The complaint further alleges that unbeknownst to and without the authorization of the customers, Defendants Lohmeier, Enterprise, and Townsend placed the AFC customers' mutual funds into margin and other accounts where the AFC customers' securities served as collateral for leveraged margin trading, including options trading and short selling, that was intended to benefit Enterprise's principals, Lohmeier and Townsend, and other Enterprise customers. This margin trading was not intended to and did not benefit the AFC customers. The complaint further alleges that on February 13, 2008, more that $8 million of the AFC customers' mutual funds were sold without the AFC customers' knowledge or approval to cover Enterprise's margin debt.
The Order permanently enjoins Lohmeier from violating Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The agreed Asset Freeze Order, entered on March 3, 2008 and which froze all assets of Lohmeier and Enterprise, remains in effect. Additionally, the Court’s March 12, 2008 order appointing a receiver for Enterprise also remains in effect. The Court will determine whether to impose disgorgement and prejudgment interest, and civil penalties against Lohmeier upon motion of the Commission at a future date.