UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 17008 / May 17, 2001
Securities and Exchange Commission v. Club Atlanta Travel, Inc., David L. Straub, Frank Garner, and Fred Garner, Civil Action No. 1:97-CV-2774-RCF (NDGA September 18, 1997)
The Securities and Exchange Commission announced that the Honorable Charles A. Moye, Jr., United States District Judge for the Northern District of Georgia, entered an Order Regarding Disgorgement and Civil Penalty as to Frank Garner and Fred Garner ("the Garners"), pursuant to the Court's final judgment of permanent injunction as to the Garners and David L. Straub entered September 18, 1997. The Court ordered Frank Garner to pay disgorgement in the amount of $474,025.00, plus prejudgment interest, but waived payment of all but $13,448.00 and did not impose a civil penalty due to his demonstrated financial inability to pay. The Court ordered Fred Garner to pay disgorgement in the amount of $401,245.00, plus prejudgment interest, but waived payment of all but $33,250.00 and did not impose a civil penalty due to his demonstrated financial inability to pay. The Garners consented to the entry of this Order without admitting or denying the allegations of the Complaint.
On September 18, 1997, the Commission alleged in its Complaint against the Garners, Club Atlanta Travel, Inc. ("CAT") , and David L. Straub ("Straub"), that at least from November 1995, the defendants raised over $32,000,000 from approximately 24,000 investors across the United States and Canada by selling unregistered securities in the form of investment contracts using an instrument called a "CAT Pass." CAT paid out as commissions approximately $28,000,000, including commissions paid to the defendants. The Garners, CAT and Straub sold the securities to investors through false and misleading representations and omissions of material facts concerning, among other things: (a) the expected return on investment; (b) the financial stability and wherewithal of CAT; (c) the escrowing of investors' funds; (d) challenges to CAT by various states' Attorney General offices; and (e) Straub's background.
Without admitting or denying the allegations made against them in the Commission's Complaint, the Garners consented to final judgments, entered on September 18, 1997, which permanently enjoined them from violating Section 5(a), 5(c) and 17(a) of the Securities Act and Section 10(b) of the Securities Exchange Act and Rule 10b-5, and were ordered to pay disgorgement with prejudgment interest and civil penalties in amounts to be determined at a later date.
See also: L.R. 15500 (September 18, 1997).