U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 23653 / September 23, 2016
Securities and Exchange Commission v. North Star Finance LLC, et al., Civil Action No. 15-cv-1339 (D. Md.)
Perpetrators of Advance Fee Loan Scam Targeting Home Building Industry Agree to Settle SEC Charges
On September 21, 2016, North Star Finance LLC, G. Thomas Ellis, and Yasuo Oda entered consents to settle the SEC's charges against them.
Without admitting or denying the allegations in the SEC's complaint, North Star, Ellis, and Oda consented to a judgment permanently enjoining them from violations of Sections 5(a), 5(c), and 17(a) of the Securities Act and Sections 10(b) and 15(a) of the Exchange Act and Rule 10b-5 thereunder, with the amounts of any disgorgement, prejudgment interest, and civil penalties to be determined by the court on the SEC's motion. The settlement remains subject to court approval.
On May 11, 2015, the SEC charged North Star, Ellis, and Oda, together with several other individuals and entities, for defrauding dozens of investors in an advance fee loan scam involving bogus prime bank instruments. Many of these investors were solicited from the National Association of Home Builders ("NAHB"). After the SEC filed its complaint, the court entered a temporary restraining order and asset freeze against the defendants, who later consented to the entry of preliminary injunctions.
According to the SEC's complaint, the defendants, including Ellis, Oda, and their company, North Star Finance, collectively received approximately $5 million from defrauded investors since at least January 2013. Investors were promised that, for an advance fee, the defendants could obtain and "monetize" bank guarantees to generate millions of dollars that would be made available to fund investors' projects. The SEC alleged that the bank guarantees that served as the backbone of these programs were a fiction, and underscored that several government agencies have warned investors away from transactions involving such instruments.
The SEC's litigation against defendants Michael K. Martin, Sharon L. Salinas, Capital Source Lending LLC, Capital Source Funding LLC, and Thomas Vetter, and relief defendants Goodwill Funding Inc. and Charel Winston is ongoing.
For further information, see Litigation Release No. 23262 (May 14, 2015).