Litigation Release No. 19952 / December 20, 2006

Securities and Exchange Commission v. Credit First Fund, LP, et al., Civil Action No. CV-05-8741-DSF(PJWx) (C.D. Cal.)

SEC Settles With David R. Lund, Orchestrator of a $10 Million Securities Fraud in Orange County, California

On November 20, 2006, the Securities and Exchange Commission settled fraud and securities registration claims against David R. Lund ("Lund") of Newport Beach, California, the sole individual defendant and owner of defendants Investors First Financial Services, Inc. and Investors Guild, Inc., companies through which Lund offered and sold unregistered securities. The unregistered securities consisted of interests in defendants Credit First Fund, LP, Credit First, LLC, and Credit First Income Plus, LLC (collectively, "Credit First"). As alleged in the Commission's complaint filed on December 15, 2005, Lund and the company defendants raised $10.7 million from 187 investors nationwide, many of them elderly, making false representations that Credit First would pay investors a monthly return of one to three percent on their investment from operations of the business. In reality, however, Credit First was not profitable, and the defendants were making monthly returns of capital to investors.

Lund, without admitting or denying the Commission's allegations, consented to the entry of a judgment permanently enjoining him from future violations of the antifraud and securities registration provisions of the federal securities laws (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). Lund also agreed to disgorge his ill-gotten gains from the Credit First offerings in the amount of $309,170, to pay prejudgment interest in the amount of $11,809.71, and to pay a $120,000 civil penalty. Previously, on February 13, 2006, the Court appointed a permanent receiver over the entity defendants. Pursuant to the judgment entered against Lund, he will turn over all of his ill-gotten gains to the court-appointed Receiver. The Commission moved the court to establish a Fair Fund pursuant to Section 308 of the Sarbanes-Oxley Act of 2002, and to include Lund's penalty in that Fund to be paid to and managed by the court-appointed Receiver.

On December 20, 2006, the Commission also issued an Order Instituting Administrative Proceedings Pursuant to Section 15(b) of the Securities Exchange Act of 1934 Making Findings and Imposing Remedial Sanctions ("Order") against Lund. The Order bars Lund from association with any broker or dealer with the right to reapply after five years. Lund consented to the Order without admitting or denying any of the allegations in the civil injunctive action.

The Commission's case is pending against the company defendants.

For more information see LR-19497, (December 16, 2005); LR-19565, (February 15, 2006).