SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 16736 / September 28, 2000
SEC v. Terry V. Koontz, et al., Civil Action No. 98cv11904NG (D. Mass., Sept. 17, 1998)
The Securities and Exchange Commission announced today that judgments were entered in its civil enforcement action against four salesmen who sold fictitious prime bank instruments in a $19 million offering fraud. Richard J. Fulcher, of Moseley, Virginia, Thomas J. Dolan, of Northport, New York, Lawrence E. Seppanen, of Marlton, New Jersey, and Walter G. Lapp, of Hamilton, New Jersey, all former registered representatives associated with World Marketing Alliance, Inc. ("WMA"), consented to the entry of permanent injunctions, and Fulcher also agreed to pay disgorgement of $660,553 plus interest and a civil penalty of $75,000. Based on their demonstrated financial inability to pay, the Court waived payment of disgorgement and prejudgment interest by and did not impose a civil penalty against to Dolan, Seppanen, and Lapp.
The Commission's complaint in SEC v. Koontz, et al. (D. Mass., filed Sept. 17, 1998), alleged that Fulcher, Dolan, Seppanen, and Lapp were among several individuals involved in a scheme in which more than 80 individuals in 16 states were induced to invest over $19 million in a fictitious "international bank debenture trading" program called Private Pool, LLC. The complaint alleged that Fulcher, Dolan, Seppanen, and Lapp sold a total of over $7.7 million of unregistered securities of Private Pool to approximately 39 investors.
The complaint further alleged that Fulcher, Dolan, Seppanen, and Lapp made various false representations to potential investors about Private Pool, including representations that investors would earn a return of 1% per week for a 40-week trading period, that their funds would be secured by government bonds in a two-to-one ratio, and that investors would receive a security interest in the bonds evidenced by a UCC-1 financing statement filed with the State of New York. The complaint alleged that "international bank debenture trading" does not exist and that the invested funds were used by the scheme's promoters to pay other investors and sales commissions and for personal purposes, including the purchase of homes, jewelry, and automobiles, including Cadillacs, BMWs, and a Mercedes Benz.
Fulcher, Dolan, Seppanen, and Lapp consented, without admitting or denying the allegations of the Commission's complaint, to the entry of a final judgment permanently enjoining them from violating Sections 5(a), 5(c) and 17(a) of the Securities Act of 1933 and Sections 10(b) and 15(a) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The Commission's action is continuing as to the remaining defendants and relief defendants.