SEC Obtains Multi-Million Dollar Final Judgment in Advance Fee Loan Scam Targeting Home Building Industry
Litigation Release No. 24656 / November 1, 2019
Securities and Exchange Commission v. North Star Finance LLC et al., Civil Action No. 15cv1339 (D. Md.)
The Securities and Exchange Commission has obtained final judgments against the defendants in an advance fee loan scam involving bogus prime bank instruments.
On October 17, 2019, the United States District Court for the District of Maryland permanently enjoined Defendants Michael K. Martin and Capital Source Lending LLC from violating Sections 5 and 17(a) of the Securities Act of 1933 ("Securities Act") and Section 10(b) and Rule 10b-5 of the Securities Exchange Act of 1934 ("Exchange Act"). The Court also enjoined them from directly or indirectly participating in the issuance, offer, or sale of any security, with the exception of the purchase or sale of securities listed on national securities exchanges. Martin was further enjoined from violating Section 15(a) of the Exchange Act.
The Court ordered Martin and Capital Source Lending to disgorge $2,689,660 plus $341,130 in prejudgment interest jointly and severally, and assessed a civil penalty against each of them in the amount of $3,030,791.
As to Defendant Thomas H. Vetter, the Court permanently enjoined him from violating Section 15(a) of the Exchange Act, and from aiding and abetting violations of Section 17(a) of the Securities Act and Section 10(b) and Rule 10b-5 of the Exchange Act. The Court enjoined Vetter from directly or indirectly participating in the issuance, offer, or sale of any security, with the exception of the purchase or sale of securities listed on national securities exchanges. The Court ordered Vetter to pay $143,326 in disgorgement plus $19,772 in prejudgment interest, and a civil penalty of $163,098.
Defendants North Star Finance LLC, Thomas G. Ellis, and Yasuo Oda, previously consented to the entry of permanent injunctions against them. In its October 17 order, the Court ordered North Star to disgorge $2,062,255 plus prejudgment interest of $256,905 and to pay a civil penalty of $2,319,160. Ellis was assessed $822,282 in disgorgement and $101,941 in prejudgment interest jointly and severally with North Star, and was ordered to pay a separate civil penalty of $924,223. Similarly, Oda was ordered to pay $683,498 in disgorgement and $84,736 in prejudgment interest jointly and severally with North Star, and was ordered to pay a separate civil penalty of $768,234.
Finally, the Court ordered Relief Defendants Goodwill Funding Inc. and Charel Winston to pay disgorgement and prejudgment interest jointly and severally of $159,313.
The SEC's investigation was supervised by Timothy N. England. The SEC's litigation was led by Patrick R. Costello and Matthew B. Reisig, and supervised by Frederick L. Block. The SEC appreciates the assistance of the Federal Bureau of Investigation's Buffalo Field Office.
For further information, see Litigation Release No. 23262 (May 14, 2015).