UNITED STATES SECURITIES AND EXCHANGE COMMISSION
LITIGATION RELEASE NO. 16273 / September 7, 1999
Securities and Exchange Commission v. The Commonwealth Group, LLC and Ned Rich Hart; Civil Action No. 2:99CV-0692K (USDC Utah).
The Commission has obtained an order temporarily restraining The Commonwealth Group, LLC and Ned Rich Hart from making fraudulent sales of unregistered interests in a Ponzi scheme. The court also froze the assets of Commonwealth, Hart, Ticonderoga Leasing, Healthcare Consortium 3 and International Lease Management, LLC, which were alleged to have received some of the illegal profits from the scheme. It is alleged that since June 1998 Commonwealth and Hart have offered and sold interests in a program in which investors take out second mortgages on their houses and ostensibly invest the proceeds in notes issued by an unnamed Nevis, West Indies insurance company. The complaint alleges that Commonwealth and Hart have told investors the notes will provide a return sufficient to cover the investors' first and second mortgage payments as well as return an additional 11% to 35% return. It is also alleged that Commonwealth and Hart have sold over $2.3 million in such notes to investors and that the investment program has been operated as a Ponzi scheme in which new investments have been used to pay interest and principal owed to earlier investors. It is further alleged that Hart has diverted a substantial portion of the funds raised in the program for his personal use. The Order was entered September 7, 1999, by the Honorable Dale Kimball, United States District Judge for the District of Utah.
The complaint charged Commonwealth and Hart with violating Sections 5(a), 5(c) 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. The complaint also named Ticonderoga Leasing, Healthcare Consortium 3 and International Lease Management, LLC as relief defendants. A hearing on the Commission's motion for a preliminary injunction has been scheduled for September 16, 1999. The Commission wishes to thank the United States Attorney's Office for the District of Utah, the Federal Bureau of Investigation and the Utah Division of Securities for their assistance in this matter.