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U.S. Securities and Exchange Commission


LITIGATION RELEASE NO. 16882 \ January 31, 2001

SECURITIES AND EXCHANGE COMMISSION v. BENNY L. JUDAH and EXCEL LEASE FUND, INC., Civil Action No. 5:01-CV-045 (N.D. Texas, Lubbock Division)

On January 31, 2001, the Securities and Exchange Commission ("SEC") filed suit in the United States District Court for the Northern District of Texas against Benny L. Judah and Excel Lease Fund, Inc., seeking permanent injunctive relief and a $50,000 civil money penalty for defendants' fraudulent offering and sale of over $32 million of unregistered securities to hundreds of investors nationwide.

  • Excel Lease Fund, Inc. ("Excel") is a Texas corporation headquartered in Lubbock, Texas.

  • Judah, 41, and a resident of Lubbock, Texas, is the sole shareholder, officer and director of Excel.

Judah, through Excel, is principally engaged in commercial equipment leasing. The Complaint alleges that, from 1987 to 2000, Judah largely funded Excel's leasing activities by selling unregistered one-year promissory notes, called "Participating Lease Notes" (PLNs), to hundreds of investors across the country. Judah and Excel were extremely successful in selling PLNs, with over $32 million in PLNs outstanding as of May 2000. However, according to the Complaint, Judah and Excel raised these funds by fraudulent means. The Complaint alleges, for example, Judah and Excel misrepresented that PLNs were guaranteed and secured by Excel's leases (they were not); that an insurance policy on Judah's life backed the entire amount of PLNs outstanding (it did not); and that PLN proceeds would be used only to fund allegedly low-risk commercial equipment leasing (they were used for other, riskier purposes as well, including loans to other companies Judah controlled). The Complaint further alleges that Judah and Excel failed to provide prospective investors any financial disclosures, and omitted the fact that millions of dollars of leases were pledged to secure Excel's credit line with a bank in which Judah had ownership interests. The SEC further contends that, despite knowing of these critical misrepresentations and omissions, Judah and Excel continued selling PLNs into May 2000.

In addition, the SEC alleges that Judah, who is not a registered broker, violated the broker registration requirements of the federal securities laws by selling the PLNs

Simultaneous with the filing of the Complaint, Judah and Excel consented, without admitting or denying the allegations of the Complaint, to the entry of a final judgment that: (1) permanently enjoins each of them from violating 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; (2) further permanently enjoins Judah from violating Section 15(a) of the Securities Exchange Act of 1934; and (3) orders Judah to pay a civil money penalty of $50,000. Because Judah and Excel have now repaid all non-accredited investors and completed a rescission offer to the remaining PLN holders, thus retaining no ill-gotten gains, the SEC does not seek disgorgement in this case.

The Commission gratefully acknowledges the assistance of the State Securities Board of Texas in this matter.