Litigation Release No. 20557 / May 7, 2008

Securities and Exchange Commission v. Gold-Quest International, et al., United States District Court for the District of Nevada, Civil Action No. 2:08-CV-00566 LDG-LRL

SEC Stops Multi-Million Dollar Ponzi Scheme

The Securities and Exchange Commission yesterday obtained a court order halting a $27 million fraudulent scheme involving investors in the United States and Canada. The SEC sued Las Vegas-based Gold-Quest International and its principals, David M. Greene, age 54, John Jenkins, age 62, and Michael McGee, age 52, all residents of Las Vegas, NV, for allegedly running a Ponzi scheme and misappropriating investor funds. The Honorable Lloyd D. George, United States District Court Judge for the District of Nevada, issued an order freezing assets and appointing a temporary receiver over Gold-Quest and its affiliates.

The SEC's complaint, filed in federal court in Las Vegas, alleges that since May 2006, the defendants have raised and misappropriated more than $27.9 million from more than 2,100 investors in the United States and Canada. The complaint further alleges that, undisclosed to investors, the defendants paid more than $19.1 million as returns to other investors in this Ponzi scheme. According to the SEC's complaint, Gold-Quest and its owners claim they are not subject to the jurisdiction of the United States or Canada because they are members of the Little Shell Nation Indian tribe, purportedly headquartered in North Dakota. However, the Little Shell Nation is not in fact recognized as a sovereign tribe or nation.

In its lawsuit, the SEC obtained an order (1) freezing the assets of Greene, Jenkins, and McGee; (2) freezing and repatriating the assets of, and appointing a temporary receiver over, Gold-Quest and its affiliates; (3) preventing the destruction of documents; and (4) temporarily enjoining Gold-Quest, Greene, Jenkins, and McGee from future violations of 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 Commission also seeks preliminary and permanent injunctions, disgorgement, and civil penalties against all defendants. A hearing on whether a preliminary injunction should be issued against the defendants and whether a permanent receiver should be appointed is scheduled for May 14, 2008 at 2:00 p.m.

The SEC acknowledges the assistance of the Alberta Securities Commission, the British Columbia Securities Commission, the Manitoba Securities Commission, the Ontario Securities Commission, and the Nevada Secretary of State, Securities Division.

SEC Complaint in this matter