SECURITIES AND EXCHANGE COMMISSION
LITIGATION RELEASE NO. 16793 / November 8, 2000
SECURITIES AND EXCHANGE COMMISSION v. UNITED AMERICAN INTERNATIONAL, INC., ET AL. Civil Action No. H00-3904, U.S.D.C./Southern District of Texas (Houston Division)
SEC CHARGES HOUSTON INVESTMENT COMPLEX WITH $70 MILLION SECURITIES FRAUD
On November 7, 2000, the Securities and Exchange Commission ("SEC") filed a civil lawsuit charging a Houston-based investment complex with fraud in connection with sales of $70 million in investments in two offshore mutual funds. The SEC alleges that about 560 customers of the investment complex, most of whom reside in Latin American countries, stand to lose $38 million as a result of the fraudulent scheme. Simultaneously with the filing of the SEC's lawsuit, the various companies comprising the investment complex, and their two principals, agreed to the entry of preliminary injunctions and the appointment of a Court-appointed Receiver to take over the operations of the complex and to take possession of what remains of investor funds.
The SEC's Complaint names United American International, Inc. ("UA"), a broker-dealer registered with the SEC, United American Management, Inc. ("UAM"), an investment adviser registered with the SEC, and United American Company ("UAC"), their parent company. The Complaint also names Luis Martinez, an officer and director of the three United American companies, and Guillermo Wydler, a former officer and director of UA and UAM and a current officer and director of UAC. The United American companies are headquartered at Galleria Financial Center, 5075 Westheimer Suite 1177, Houston, TX 77056. Martinez and Wydler are residents of The Woodlands, Texas. The Complaint also names the two offshore funds, United World Capital, Ltd. ("UWC"), a British Virgin Islands entity, and United World Capital Fund Limited ("UWCF"), a Bahamian corporation. The two funds were managed by UAM, Martinez and Wydler.
The SEC's Complaint charges the defendants with violating the antifraud provisions of the federal securities laws. In particular, the Complaint alleges the following:
The Complaint charges that the defendants violated the antifraud provisions found in Section 17(a) of the Securities Act of 1933 ("Securities Act") and Section 10(b) of the Securities and Exchange Act of 1934, and Rule 10b-5 thereunder, and that defendant UAM, aided and abetted by Martinez and Wydler, violated Section 206 of the Investment Advisers Act of 1940, based upon these same activities. In addition to the emergency relief mentioned above (preliminary injunction and Receiver), the Complaint seeks a permanent injunction against, and disgorgement of any ill-gotten gains from, the defendants. The Complaint also seeks civil money penalties against the defendants.