UNITED STATES SECURITIES AND EXCHANGE COMMISSION
LITIGATION RELEASE NO. 17013 / May 23, 2001
United States v. Gene Irving Garland, Case No. 3:00CR-197-H(1).
SECURITIES AND EXCHANGE COMMISSION v. Gene Irving Garland, Jr., individually and dba Association for Retired Persons Financial Services and Sharla Dawn Holland, Case No. 3:00CV-1149-X, USDC, NDTX (Dallas Division)
United States District Judge Barefoot Sanders handed down what Federal officials report is the longest sentence imposed on a white-collar defendant in the Northern District of Texas since the federal sentencing guidelines took effect. On May 17, 2001, Gene Irving Garland, Jr. was sentenced to 23 years in the federal penitentiary for masterminding a scheme to defraud elderly investors. Garland was immediately taken into custody by federal marshals to be transported to the penitentiary. A jury had previously found Garland guilty on 120 counts of securities fraud, mail fraud and money laundering.
Previously, Judge Joe Kendall, also a United States District Judge for the Northern District of Texas, had granted the Commission's request for a judgment by default against Garland, individually and doing business as Association for Retired Persons Financial Services ("RPFS"). Garland and Sharla Dawn Holland, who has also entered a guilty plea to charges of securities fraud for her involvement in the scheme, were alleged to have defrauded more than 50 elderly individuals of approximately $1.7 million. Judge Kendall's order permanently enjoined Garland from future violations of the antifraud and securities registration provisions of the federal securities laws and directed Garland to pay $1,710,674.07 in disgorgement, plus $319,807.87 in prejudgment interest, and $15,877 in civil penalties.
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 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 or more. Concealed from investors, however, were the facts that RPFS had minimal business operations, 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. In addition, Garland and Holland stole at least $900,000 of the funds raised from the defrauded senior citizens and used the money for personal mortgage payments, country club dues, personal credit card bills and lavish entertaining.