SECURITIES AND EXCHANGE COMMISSION
LITIGATION RELEASE NO. 16618 \ July 3, 2000
SECURITIES AND EXCHANGE COMMISSION V. MARK GATCH AND HENRY BENJAMIN SCHMIDT, Case No. C-1-97-599 (SSB) (S.D. Ohio, W.D.)
The Securities and Exchange Commission announced that in a decision dated June 9, 2000, the Honorable Sandra S. Beckwith of the United States District Court for the Southern District of Ohio has held that Henry Benjamin Schmidt violated the antifraud provisions, as well as other provisions, of the federal securities laws. Schmidt, age 66, resides in St. Petersburg, Florida. Schmidt co-founded, owned, and operated Ben Mar Investments, Inc. ("Ben Mar"), an unregistered investment adviser in the Greater Cincinnati area. Ben Mar effectively operated as a Ponzi scheme from 1992 through March 1995, resulting in investor losses in excess of $12 million. Mark Gatch, the co-founder and owner of Ben Mar, of Amelia, Ohio, previously settled the Commission´s civil action against him, and is serving a five-year prison term in connection with his operation of Ben Mar.
The Court, in ruling for the Commission on all counts of the complaint, found that Schmidt:
Judge Beckwith permanently enjoined Schmidt from further violations of these provisions of the federal securities laws, finding that Schmidt had a past history of defying court orders, that he had demonstrated a nonchalant attitude towards matters of compliance, and that he had shown an inclination to engage in risky enterprises with little regard for the legal requirements attendant to the project. Judge Beckwith further ordered that Schmidt disgorge over $1.8 million dollars in ill-gotten gains, representing amounts Schmidt withdrew from the Ben Mar Fund before its March 1995 collapse. Judge Beckwith found that third-tier civil penalties against Schmidt were also appropriate, but declined to impose the penalty in light of the amount of disgorgement ordered. The parties are to submit proposals to the Court for the schedule and terms for payment of disgorgement.
For further information, see Litigation Release No. 15394 (June 25, 1997) and Litigation Release No. 15530 (October 7, 1997).