United States Securities and Exhange Commission
Litigation Release No. 16571 / May 31, 2000
SEC SUES TAMARACK FUNDING CORPORATION AND GARRY P. ISAACS FOR SECURITIES FRAUD IN CONNECTION WITH AN INTEREST-BEARING "PROMISSORY NOTE" SCHEME.
Securities and Exchange Commission v. Tamarack Funding Corp. and Garry P. Isaacs, Civil Action No. 00-6730 (S.D. Florida, filed May 31, 2000)
The Securities and Exchange Commission ("Commission") announced today that it filed a federal civil action against Tamarack Funding Corporation, a Texas corporation ("TFC of Texas"), Tamarack Funding Corporation, a Florida corporation ("TFC of Florida") (collectively, "TFC"), and Garry P. Isaacs ("Isaacs"), their president, for securities fraud.
The Commission's complaint alleges that the defendants fraudulently raised approximately $4.7 million from at least 125 investors nationwide by offering and selling unregistered securities in the form of interest-bearing "promissory notes." Specifically, the complaint alleges that from July 1995 to February 2000, TFC and Isaacs knowingly or recklessly made material false and misleading representations in the offer and sale of "promissory notes" to the investing public. According to the complaint, investors in the offering were told that their funds would be used to purchase retail automobile installment loan contracts ("vehicle loans") and that their investment would be 100% collateralized.
Contrary to these representations, the complaint alleges that investments were not fully collateralized, as only $1.4 million was actually used by TFC to purchase vehicle loans. According to the SEC, the remaining investor funds were used to pay TFC's operating costs and unrelated expenses. The Complaint further alleges that TFC used some of the monies received from new investors to repay interest to existing investors and was thereby engaged in a Ponzi scheme.
As a result, the Commission charges TFC of Texas, TFC of Florida, and Isaacs with violations of the antifraud and securities registration requirements 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. For relief, the Commission seeks preliminary and permanent injunctions, accountings, disgorgement of ill-gotten gains with prejudgment interest, civil penalties, and the appointment of a receiver.
Also named in the lawsuit as relief defendants are two companies, controlled and owned by Isaacs, that received over $4 million in investor funds. These entities are Tamarack Lender's Trust and Tamarack Capital Management Corp.