U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 21689 / October 7, 2010
Securities and Exchange Commission v. Archie Paul Reynolds and Success Trust, Civil Action No. 1:06-cv-1801-RWS (N.D.GA.)
The Securities and Exchange Commission (“Commission”) announced today that the Honorable Richard W. Story, United States District Judge for the Northern District of Georgia, entered an order and final judgment permanently enjoining Archie Paul Reynolds (“Reynolds”). The order and final judgment restrained and enjoined Reynolds from future violations of Sections 5 and 17(a) of the Securities Act of 1933, and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. Reynolds was also ordered to pay disgorgement in the amount of $834,717.88, pre-judgment interest in the amount of $36,907.39 and a civil penalty in amount of $2,000,000. Additionally, Reynolds’ company, Success Trust, was ordered to pay a civil penalty in the amount of $2,000,000.
The Court found that, from as early as May 2005 through June 2006, Reynolds, acting through Success Trust, raised millions of dollars from at least 500 investors by fraudulently offering and selling interests in three investment programs. Reynolds and Success Trust made numerous false and misleading statements to investors, including: (1) false statements that investor funds and/or investor real estate equity would be used in profitable, risk-free transactions; (2) false claims that Success Trust had relationships with the “top global consortium group of the world” and the “top 15 Financial partners of the world”; (3) false representations that investors would receive bank guarantees or other instruments to protect their real property; and (4) numerous misrepresentations intended to deceive investors and potential investors into believing that the Success Trust programs had received regulatory approval. The Court also found that Reynolds and Success Trust failed to disclose several material facts to investors, including: (1) that investor funds were used to pay commissions to Independent Representatives; and (2) that funds from the Programs would be commingled and used to pay Reynolds’ personal expenses.
See also: L.R.-19793