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U.S. Securities and Exchange Commission


LITIGATION RELEASE NO. 16783 / October 30, 2000

SECURITIES AND EXCHANGE COMMISSION v. Gene Irving Garland, Jr., individually and dba Association for Retired Persons Financial Services and Sharla Dawn Holland, Civil Action No. 3-00CV1149-X, USDC, NDTX (Dallas Division)

The Securities and Exchange Commission announced that on October 20, 2000, Judge Joe Kendall, United States District Judge for the Northern District of Texas, granted the Commission's request for a judgment by default against Gene Irving Garland, Jr., individually and doing business as Association for Retired Persons Financial Services ("RPFS"). The Commission's Complaint alleged that Garland and Sharla Dawn Holland defrauded approximately 60 elderly individuals of approximately $1.8 million. The Court's order permanently enjoins Garland from future violations of the antifraud and securities registration provisions of the federal securities laws and directs Garland to pay $1,710,674.07 in disgorgement, plus $319,807.87 in prejudgment interest, and $15,877 in civil penalties. Garland currently is awaiting trial on a 127 count federal criminal indictment alleging securities fraud, mail fraud and money laundering.

In its Complaint, the Commission alleged that Garland and Holland violated 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. Under the guise of providing estate and financial planning services, the defendants solicited information about the senior citizens' assets and investments. Upon obtaining this information, the defendants encouraged the senior citizens to liquidate their legitimate investments and individual retirement accounts and to use the proceeds to purchase "annuities" issued by RPFS purportedly paying 11 percent interest. Concealed from investors, however, were the facts that RPFS had minimal business operations and insufficient revenue to pay the promised interest rate and that Garland and Holland used funds from later investors to make principal and interest payments to earlier investors, as well as for their own personal uses. Garland and Holland allegedly misappropriated at least $900,000 of the funds raised from the defrauded senior citizens.