U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 21445 / March 10, 2010
Securities and Exchange Commission v. Francois E. Durmaz (aka Mahmut E. Durmaz), Robert C. Pribilski, USA Retirement Management Services (aka Usa Financial Management Services, Inc.), Defendants, and Sibel Ince, Mehmet Karakus, Marlali Gayrimenkul Yatirimlari, Marlali Investment Company, LLC, Gulen Enterprises, Inc., Relief Defendants, Civil Action No. CV 10-01689 GW (AJWx) (C.D. Cal.)
SEC Halts $20 Million Ponzi Scheme Preying On Retirees Attending Estate Planning Seminars
On March 9, 2010, the Securities and Exchange Commission obtained an emergency court order to shut down a Ponzi scheme targeting retirees in California and Illinois by inviting them to estate planning seminars and later coaxing them to buy promissory notes for purported Turkish investments.
The SEC alleges that USA Retirement Management Services ("USARMS") and managing partners Francois E. Durmaz and Robert C. Pribilski mass-mailed promotional materials to prospective investors and invited them to estate planning seminars held at country clubs and banquet halls. They gained retirees' confidence in follow-up meetings and portrayed themselves as educated and experienced in foreign investments specifically tailored to the needs of seniors. Durmaz and Pribilski then pitched what they represented as safe, guaranteed investments in "Turkish Eurobonds" through the purchase of USARMS promissory notes that would earn annual returns between 8 and 11 percent.
The SEC alleges that USARMS raised at least $20 million from more than 120 investors, but did not actually invest the money in Turkish Eurobonds as promised. Instead, returns were paid to earlier investors with funds received from new investors in Ponzi-like fashion. Durmaz and Pribilski further misused investor funds to finance their other businesses and purchase such things as luxury automobiles, homes, vacations, and web-based pornography. They also wired investor money into bank accounts belonging to individuals living in Turkey who are named as relief defendants in the SEC's case.
USARMS and its securities are not registered with the SEC. USARMS is incorporated in Illinois and has offices in Los Angeles; Irvine, Calif.; and Oakbrook Terrace, Ill. Durmaz resides in Los Angeles and Streamwood, Ill., and Pribilski resides in Lisle, Ill. Neither of them is registered with the SEC in any capacity nor do they hold any securities licenses.
The SEC's complaint charges all defendants with violations of the registration provisions of Section 5(a) and 5(c) of the Securities Act of 1933 ("Securities Act") and of the antifraud provisions of Section 17(a) of the Securities Act and Section 10(b) of the Securities Exchange Act of 1934 ("Exchange Act") and Rule 10b-5 thereunder. The complaint also charges defendants Durmaz and Pribilski with violations of the broker-dealer registration provisions of Section 15(a) of the Exchange Act.
The Honorable George H. Wu, U.S. District Judge for the Central District of California, granted the SEC's request for emergency relief for investors, including an order temporarily enjoining defendants from future violations of the antifraud provisions and freezing their assets. Judge Wu also granted the SEC's request for emergency relief against relief defendants Sibel Ince, Marlali Gayrimenkul Yatirimlari, Mehmet Karakus, Marlali Property Investment Company, LLC, and Gulen Enterprises, Inc. A hearing on whether a preliminary injunction should be issued against the defendants and whether a permanent receiver should be appointed is scheduled for March 23, 2010, at 9:00 a.m. PT.
See Also: SEC Complaint