Alliance Leasing Corporation and Prime Atlantic, Inc.

Litigation Release No. 16488 / March 27, 2000

SEC v. Alliance Leasing Corporation and Prime Atlantic, Inc., Case No. 98 CV 1810J CGA (S.D. Cal.).

The Securities and Exchange Commission ("Commission") announced that it obtained judgments against all five remaining defendants in this investment fraud case. On March 20, 2000, the Honorable Napoleon A. Jones, Jr., United States District Judge for the Southern District of California, granted the Commission's motion for summary judgment against Susan and Charles Browne (the "Brownes") of San Diego, California and Ruidoso, New Mexico. The Brownes formerly owned and operated Alliance Leasing Corporation ("Alliance"). The Court determined that the Brownes raised over $46,000,000 from more than 1,500 investors throughout the United States through the fraudulent sale of unregistered equipment leasing investments in Alliance. The Court ruled that the Brownes defrauded investors by failing to tell them key facts about the investment, including:

• 30% of investor funds would be paid in sales commissions;

• the Brownes had violated the securities laws in earlier investment offerings;

• Charles Browne had previously filed for bankruptcy; and

• the Brownes owned or controlled many of the companies to which Alliance supposedly leased equipment.

The Court also determined that the Brownes illegally sold the Alliance investment in violation of the registration provisions of the federal securities laws. Finally, the Court ordered the Brownes to disgorge $477,467 (plus interest) of their ill-gotten gains to investors and pay a matching civil money penalty of $477,467 each.

The Court also entered judgment against Prime Atlantic, Inc. ("Prime"), and its owners, David Halsey and Braccus Giavanno, of Jacksonville, Florida (collectively, the "Prime Defendants"). The Court ruled that the Prime Defendants established and operated the sales organization that sold the Alliance investment to individuals in return for 30% of the offering's proceeds. The Court determined that the Prime Defendants engaged in fraud by failing to disclose the excessive commissions that they received from Alliance. The Court also entered judgment against the Prime Defendants for selling the unregistered Alliance securities and for illegally acting as an unregistered broker-dealer. The Court ordered the Prime Defendants to pay disgorgement (plus interest) as follows: Prime - $12,182,820; Halsey - $1,615,999; and Giavanno - $1,691,011. The Court also ordered Prime to pay a civil money penalty of $500,000 and Halsey and Giavanno to pay a penalty of $100,000 each. The Court ordered all of the defendants in this action to pay these judgments to the Commission within thirty days.

The entry of these judgments ends a major enforcement case that the Commission's Pacific Regional Office filed in October 1998. The Commission originally obtained a temporary restraining order against Alliance and Prime to stop the sale of the unregistered Alliance investments. In addition, Judge Jones ordered that more than $22 million in Alliance and Prime bank and brokerage accounts be frozen. David. T. Cleary (the Chapter 11 Trustee appointed for Alliance) recently distributed most of this money to investors pursuant to a reorganization plan approved by the federal bankruptcy court. The plan also calls for the Trustee to make additional distributions to investors based on the Trustee's ability to recover investor funds through continued litigation.