UNITED STATES SECURITIES AND EXCHANGE COMMISSION
LITIGATION RELEASE NO. 16523 \ April 19, 2000
Securities and Exchange Commission v. The Commonwealth Group, LLC and Ned Rich Hart, et al; Civil Action No. 2:99CV-0692K (USDC Utah).
On January 14, 2000, the Commission moved for civil contempt against defendants Ned Hart and The Commonwealth Group for violating certain terms of a temporary restraining order entered September 7, 1999, and a preliminary injunction entered October 14, 1999. These orders precluded the defendants from, among other things, offering or selling securities in violation of the antifraud provisions of the federal securities laws and from accepting payment for investment in securities offered by Commonwealth. In its motion, the Commission alleges that during the months of September and October 1999 Hart and Commonwealth received over $279,000 in investments in its allegedly fraudulent program in violation of the Court's orders.
The Commission's original action alleged Hart and Commonwealth had been offering an offshore investment scheme to investors across the country wherein investors were sold an "immediate annuity" offered by a Nevis insurance company. The Commission alleged, however, that the insurance company was, in fact, a shell purchased and controlled by Hart and that a significant percentage of the invested funds were diverted to Hart's personal use. The Commission further alleged in its complaint that Hart and Commonwealth operated the Commonwealth investment program as a Ponzi scheme for two years prior to the filing of the Commission's action, taking in over $5 million.
In a related matter, on March 1, 2000, the United States Attorney's Office for the District of Utah unsealed a criminal indictment against Hart, David Finzer and Chris Cooper on multiple counts of mail fraud, wire fraud, money laundering and aiding and abetting, all based on their activities relating to Commonwealth. The criminal case is set for trial in May, 2000.http://www.sec.gov/litigation/litreleases/lr16523.htm