Litigation Release No. 21030 / May 8, 2009

Securities and Exchange Commission v. C. Wesley Rhodes, Jr., Rhodes Econometrics, Inc., The Rhodes Company, and Resource Transactions, Inc., Civil Action No. CV06-1353-MO (D. Or.)


The Securities and Exchange Commission announced that on May 5, 2009, the United States District Court for the District of Oregon entered a final judgment against C. Wesley Rhodes for $11.8 million in disgorgement of ill-gotten gains, $4.6 million in prejudgment interest, and a $130,000 civil penalty. The District Court had previously entered, on May 30, 2007, a permanent injunction against Rhodes.

The Commission's complaint alleged that Rhodes raised millions of dollars from investors, including many senior citizens, by representing that he would invest their money in stocks and bonds. The complaint further alleged that contrary to those representations, Rhodes used the investors' money for other purposes, including buying vintage automobiles and sports memorabilia. According to the complaint, Rhodes sent account statements to the investors representing that their investments had an aggregate value of nearly $40 million as of June 30, 2006. As of September 21, 2006, however, Rhodes had less than $2 million invested in stocks and bonds.

Aside from Rhodes, the defendants named in the Commission's complaint were Rhodes' companies, Rhodes Econometrics, Inc., The Rhodes Company, and Resource Transactions, Inc. The District Court entered permanent injunctions against these companies on May 30 and June 21, 2007.

In a related criminal action, based on the same conduct alleged in the Commission's complaint, Rhodes pled guilty and was sentenced to a 10 year prison term beginning on June 1, 2009.

For additional information, see Litigation Release Nos. 20144 (June 5, 2007) and 19855 (Sept. 29, 2006).