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U.S. Securities and Exchange Commission


Litigation Release No. 22013 / June 27, 2011

Securities and Exchange Commission v. Elite Resources, et al., Civil Action Number 1:10-CV-3522-SCJ (N.D. GA.)

The Securities and Exchange Commission (“Commission”) announced that on June 23, 2011, the Honorable Steve C. Jones, United States District Judge for the Northern District of Georgia, entered an order permanently enjoining Patricia Diane Gruber (“Gruber”), Kadar M. Josey (“Josey”), Elite Resources, LLC and Elite3 Holding Corp. (collectively “Defendants”). The order restrained and enjoined Defendants from violating of Sections 5(a), 5(c), and 17(a) of the Securities Act of 1933, Section 10(b) of the Exchange Act of 1934 (“Exchange Act”) and Rule 10b-5 thereunder and Gruber and Josey from violating Section 15(a) of the Exchange Act. Defendants were also ordered to pay disgorgement, pre-judgment interest and a civil penalty in amounts to be resolved upon motion of the Commission at a later date, and directed that for purposes of that motion, the allegations of the Commission’s Complaint shall be deemed true. Defendants consented to the entry of the order without admitting or denying the allegations of the Commission’s Complaint.

The Commission’s complaint, filed on October 29, 2010, alleges that from at least April 8, 2010 through at least August 20, 2010, Defendants raised approximately $2.85 million from at least nine investors. In raising these funds, the complaint alleges Defendants represented that investors could draw upon bank issued guarantees worth millions of dollars, in one case representing a 40,000% return on investment, without having to repay the withdrawn funds. The complaint also alleges that Defendants further represented that investor funds would be held in escrow until the bank guarantees were issued. The complaint alleges that both of these representations were false in that no such bank guarantees existed and the defendants used almost all of the funds for several undisclosed purposes immediately upon receipt. When investors demanded performance, the complaint alleges that the defendants provided them with a fictitious guarantee certificate purportedly issued by Barclays Bank.

See also L.R.-21713



Modified: 06/27/2011