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>United States Securities and Exhange Commission

Litigation Release No. 16574 / May 31, 2000


The Securities and Exchange Commission today announced that on May 31, 2000 it filed suit in the Northern District of Texas against four licensed insurance salesmen, alleging that they fraudulently sold more than $4.5 million in worthless promissory notes to approximately 75 elderly investors. The promissory notes were issued by a now defunct South Carolina company, which was previously sued by the SEC ( SEC v. Chemical Trust, et. al., Case No. 00-8015 - CIV-RYSKAMP (S.D. Fla.), Lit. Rel. No. 16416, January 21, 2000). The defendants named in the SEC's current suit are:

  • Kurtis Keith Lowe, age 36, a resident of Fort Worth, Texas. The Complaint alleges that Kurtis Lowe offered and sold the promissory notes under the assumed name, Omega Financial Services, and recruited insurance salesmen from across Texas to sell the promissory notes under the Omega name.

  • Woody Keith Lowe, age 59, a resident of Hereford, Texas. It is alleged that Woody Lowe offered and sold the promissory notes under the assumed name Omega in the Amarillo, Texas area.

  • Jerry Lynn Ruyle, age 53, a resident of Flint, Texas. It is alleged that Ruyle offered and sold the promissory notes under the assumed name Omega in the Tyler, Texas area.

  • Robert Allen Blackburn, age 34, a resident of Arlington, Texas. It is alleged that Blackburn offered and sold the promissory notes under the assumed name Omega in the Dallas, Texas area.

The Commission's Complaint alleges that the defendants targeted the senior citizen community, promising investors annual returns of between 8% and 15%. The defendants also claimed that the principal invested was guaranteed through surety bonds issued by a third-party surety company. In reality, the investment was a "ponzi" scheme and the purported surety company was operated by a convicted felon and had no assets to support the surety bonds it issued to investors.

The Complaint alleges that the defendants placed advertisements in local newspapers specifically targeting elderly investors with promises of safe and secure investments such as "FDIC INSURED CD'S," one defendant even placed advertisements in the obituary section of a newspaper.

All of the defendants in this matter were licensed insurance agents who, it is alleged, used their position of trust to sell the fraudulent investment to existing clients, as well as to new clients solicited through the newspaper advertisements that they placed. The defendants knew that many of the investors liquidated their conservative investments, such as annuities and bank certificates of deposit, to invest in the promissory notes. It is alleged that the defendants knowingly withheld material information from investors, including the large commissions paid to the defendants and that several states had taken regulatory action against the issuer.

As a result of the misconduct, the Complaint charges the defendants with violating the securities registration and antifraud provisions of Sections 5(a), 5(c), and 17(a) of the Securities Act of 1933, and Section 10(b) of the Securities and Exchange Act of 1934, and the Commission's Rule 10b-5. The defendants are also charged with acting as unregistered broker-dealers in violation of Section 15(a) of the Exchange Act. The Complaint seeks permanent injunctive relief against the defendants, an accounting, disgorgement of ill-gotten profits, and civil money penalties.

The Commission would like to acknowledge the outstanding cooperation of the Texas State Securities Board, who worked with the Commission in its investigation.