Litigation Release No. 16420 / February 1, 2000

SEC v. Thomas V. Conwell and Lake Forest Financial Group, Ltd., (N.D. Ill., Case No. 00C-0619, filed January 31, 2000)

On January 31, 2000, the Securities and Exchange Commission (SEC) filed an action in the United States District Court for the Northern District of Illinois charging that Thomas V. Conwell (Conwell) and Lake Forest Financial Group, Ltd. (LFFG), a financial services firm located in Lake Forest, Illinois, misappropriated nearly $800,000 from investors he solicited to purchase securities.

The Complaint alleges that Conwell, a resident of Lake Bluff, Illinois and the owner and sole shareholder of LFFG, engaged in a scheme to defraud by soliciting investors to purchase various securities, instructing investors to issue checks to LFFG, depositing the checks into LFFG's general operating account over which only he had control, and using investor funds to pay his own personal debts and expenses as well as LFFG debts and expenses. Specifically, the Complaint alleges that Conwell, through LFFG, induced nineteen investors to provide him with $781,912.71 for the purpose of purchasing various securities. Instead of investing the funds as promised, Conwell used the investor funds for personal and business expenses, including yacht club dues and the purchase of a swimming pool. The Complaint further alleges that in order to conceal his fraud, Conwell issued fraudulent account statements and repeatedly lied to investors about the manner in which he used their funds.

Based on the foregoing, the SEC's Complaint charges that Conwell and LFFG violated Section 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 seeks the entry of an order of permanent injunction against Conwell and LFFG, and ancillary relief in the form of disgorgement of Conwell's ill-gotten gains plus prejudgment interest and the imposition of civil money penalties. Conwell and LFFG consented to the relief requested without admitting or denying the facts alleged in the Complaint.