SECURITIES AND EXCHANGE COMMISSION
LITIGATION RELEASE NO. 16977/ April 26, 2001
SEC V. ELFINDEPAN, S.A., SOUTHERN FINANCIAL GROUP, TRACY CALVIN DUNLAP, JR., BARRY LOWE, JAMES L. McCALL, STRATEGIC ASSET FUNDS, S.A., EDMUND MENDEN, MICHAEL MENDEN and MICHAEL ZIEGLMEIER, defendants, and C.R.C.C. LLC and PATRICK WILSON, relief defendants.1:00CV00742 (August 10, 2000)
COURT OF APPEALS AFFIRMS TRIAL COURT'S ORDER INCARCERATING DUNLAP FOR CONTEMPT
On March 15, 2001, the U.S. District Court for the Middle District of North Carolina adjudged defendants Elfindepan, S.A., Southern Financial Group and Tracy Calvin Dunlap, Jr. to be in civil contempt of court based on their refusal to obey court orders requiring them to produce documents, and account for and repatriate investor funds, related to their allegedly fraudulent investment schemes. The U.S. District Court ordered defendants to comply with its orders by March 20, 2001, or face the imposition of a contempt sanction designed to compel their compliance.
Defendants refused to comply as ordered based on their assertion of Dunlap's personal Fifth Amendment privilege against self-incrimination. Accordingly, on March 23, 2001, the U.S. District Court ordered that Dunlap, in his representative capacity as the agent and control person of Elfindepan and Southern Financial, be taken into custody and incarcerated until such time as he causes Elfindepan and Southern Financial to comply with the relevant orders.
Dunlap appealed the order of incarceration. On April 23, 2001, the U.S. Court of Appeals for the Fourth Circuit affirmed the order incarcerating Dunlap in his representative capacity as the agent and control person of Elfindepan and Southern Financial (case nos. 01-1382 and 01-1391). Recognizing that artificial entities like Elfindepan and Southern Financial Group have no privilege against self-incrimination, the U.S. Court of Appeals ruled that Dunlap could not assert his personal privilege to avoid his representative obligation to cause Elfindepan and Southern Financial Group to comply with the U.S. District Court's orders. Dunlap remains incarcerated.
Prior Litigation Releases: http://www.sec.gov/litigation/litreleases/lr16649.htm