U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 21186 / August 27, 2009
Securities and Exchange Commission v. William Graulich, IV and iVest International Holdings, Inc., Civil Action No. 09-CV-4355 (JAG) (D.N.J.) (August 26, 2009)
SEC Brings Fraud Charges and Obtains Emergency Relief to Stop Prime Bank Scheme
The Securities and Exchange Commission announced that, on August 26, 2009, it filed an emergency action in the United States District Court for the District of New Jersey against William Graulich, IV, of Henryville, Pennsylvania, and his company, iVest International Holdings, Inc. ("iVest") for operating a fraudulent prime bank scheme. On August 26, the Court entered an order granting a temporary restraining order against the defendants, freezing their assets, and imposing other emergency relief.
"Prime bank" and "high yield" investment schemes are offering frauds typically characterized by, among other things, promises of spectacular returns for investors, at little or no risk. The Commission's complaint alleges that, from at least October 2006 through the present, Graulich and iVest have raised approximately $13 million from at least five investors by offering and selling investments in a trading program that purports to generate guaranteed weekly returns ranging from 22% to 140% with little or no risk. Graulich falsely promised prospective investors that their funds would remain on deposit in a segregated account and, together with those of other investors, would be used solely as collateral to obtain a line of credit, which Graulich would then use to trade certain instruments issued by reputable international banks and other financial institutions.
The complaint further alleges that the iVest trading program was a complete sham, and that Graulich never entered into any of the promised transactions. Instead, he has misappropriated investor funds for, among things, personal expenses including New York Yankees tickets, a Jaguar automobile, large cash withdrawals, payments for back taxes owed, and daily living expenses, while also making payments to investors under the guise of investment profits.
As a result of the conduct described in the complaint, the Commission alleges that the defendants violated Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and seeks permanent injunctions, disgorgement together with prejudgment interest, and civil monetary penalties from the defendants.
Additional information on how prime bank and other banking-related investment schemes work can be found on the SEC's website (http://www.sec.gov/divisions/enforce/primebank.shtml).
