U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 20867 / January 26, 2008
SEC v. Transnational Fund, Inc., a/k/a National Savings, and Michael Luckett, Civil Action No. 07-CA-11774-RWZ (D. Mass.)
Final Judgment Entered Against Defendants In Sec Enforcement Action Charged With Fraudulent Offering of CD-Like Securities
The Securities and Exchange Commission announced today that on January 23, 2009, a final judgment by consent was entered against defendants Michael P. Luckett, 37, a former resident of Boston, Massachusetts, and Transnational Fund, Inc. in a previously-filed Commission enforcement action. Luckett and Transnational Fund were enjoined from violating the antifraud and registration provisions of the federal securities laws and held liable for disgorgement of $312,400 plus prejudgment interest of $17,250. Luckett previously pled guilty to related criminal charges and was sentenced to 36 months imprisonment in a prosecution brought by the U.S. Attorney for the District of Massachusetts.
The Commission filed its Complaint on September 21, 2007, and obtained a temporary restraining order, asset freeze, and other relief that same day. The Commission's Complaint alleged that, from July 20, 2007, through the date of the complaint, Transnational and Luckett conducted a fraudulent offering of unregistered securities known as "Transnational Certificates" using Transnational's websites, which the court ordered Luckett and Transnational to cease operating. According to the Commission's complaint, the defendants promised to pay investors at a rate of 6.35% annual percentage yield in nine months. The Complaint alleged that at least 15 investors in six different states, including Arizona, Kansas, Michigan, Missouri, Pennsylvania, and Texas, purchased these Certificates, investing a total of at least $432,400. The Complaint further alleged that, in soliciting investors, Transnational and Luckett made material misrepresentations and omissions in that they: (1) failed to disclose to investors and potential investors that Luckett would use investor funds for personal purposes; (2) misrepresented that Transnational was just like a bank; and (3) misrepresented that Transnational had been in business for years. The Complaint alleged that Luckett took thousands of dollars from at least one Transnational bank account into which he had deposited investor funds and used the money to pay, among other things, rent on a luxury condominium in Boston and the lease on a Toyota automobile. According to the Complaint, he also used bankcards issued on bank accounts holding investor funds for various personal living expenses.
The final judgment enjoined Luckett and Transnational Fund from violating Sections 5 and 17 of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. Based on their financial condition, the defendants were not ordered to pay a civil penalty, and payment of all by $222,901.22 of the disgorgement and prejudgment interest was waived. Luckett and Transnational consented to the entry of the final judgment without admitting or denying the allegations of the Complaint.