U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 21337 / December 15, 2009
Securities and Exchange Commission v. Eagle Development Enterprises, Inc., Eagle Storage & Development, LLC, Eagle Aviation Sales & Leasing, LLC, Michael J. Bowen, defendants, and Eagle Assets & Management, LLC, Eagle Housing & Development AZ, LLC, Eagle Housing & Development, Inc., and Eagle Helicopters & Aviation, Inc., relief defendants, United States District Court for the Central District of California, Case No. SACV09-1470 JVS(MLGX) (filed Dec. 14, 2009).
SEC HALTS MULTI-MILLION DOLLAR ONGOING FRAUD IN ORANGE COUNTY
The Securities and Exchange Commission ("Commission"), on December 14, 2009, obtained a temporary restraining order, asset freeze and other emergency relief in a civil fraud action filed against Michael Bowen ("Bowen") and three of his companies, Eagle Development Enterprises, Inc., Eagle Storage & Development, LLC, Eagle Aviation Sales & Leasing, LLC, for conducting a $28 million fraudulent offering scheme involving storage facilities and helicopters. Although one of these entities is in Chapter 7 bankruptcy, Bowen's solicitation and lulling efforts are ongoing.
The Commission alleges that Bowen, age 57, of Rancho Cucamonga, Calif., solicited investors nationwide through three different unregistered offerings that hyped an imminent public offering in the U.K., embellished his companies' assets, and concealed a prior cease and desist order imposed by the Alabama Securities Commission in 2005.
The Commission's complaint, filed in the U.S. District Court in Orange County, Calif., alleges that since at least 2003, the defendants have raised $28 million from approximately 500 investors through various offerings, each time promising to invest the funds in different schemes ranging from storage and assisted living facilities to helicopters. According to the complaint, the defendants enticed investors by dangling the prospect of an upcoming initial public offering in the U.K., when they knew full well that no steps had been taken for this purpose. The complaint further alleges that the defendants made baseless predictions about the future price of the stock after the purported public offering. Further, the Commission alleges that Bowen commingled and misused at least $3 million of the investor funds to purchase luxury vehicles and to transfer monies to his other companies. Finally, the complaint alleges that defendants failed to disclose to investors that Bowen and Eagle Storage were subjects of Alabama's cease and desist order involving the unregistered sale of Eagle Storage securities.
Acting on the Commission's lawsuit, the Honorable James Selna, United States District Judge for the Central District of California, issued a temporary restraining order against the defendants and issued orders freezing their assets, requiring accountings from them, prohibiting the defendants from destroying documents, and ordering expedited discovery. A hearing on whether a preliminary injunction should be issued against the defendants is scheduled for 1:30 p.m. on December 23, 2009.
The Commission's complaint alleges that all of the defendants violated the securities registration and antifraud provisions of the federal securities laws, Sections 5(a), 5(c), and 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. In addition to emergency relief, the Commission's complaint seeks from each defendant preliminary and permanent injunctions and disgorgement with prejudgment interest. As to Bowen, Eagle Development and Eagle Aviation, the Commission also seeks a civil penalty. The complaint also names as relief defendants Eagle Assets & Management, LLC, Eagle Housing & Development AZ, LLC, Eagle Housing & Development, Inc., and Eagle Helicopters & Aviation, Inc., all of which are controlled by Bowen and which hold assets acquired from investor proceeds.