SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 17121 / September 7, 2001
SECURITIES AND EXCHANGE COMMISSION v. TRI-WEST INVESTMENT CLUB, ALYN RICHARD WAAGE, AND HAARLEM UNIVERSAL CORPORATION, United States District Court for the Northern District of California, Civil Action No. C-01-3386
S.E.C. CHARGES TRI-WEST INVESTMENT CLUB WITH RUNNING FRAUDULENT INTERNET-BASED PRIME BANK SCHEME
The United States Securities and Exchange Commission ("Commission") announced today that it has filed a securities fraud lawsuit in connection with a scam that has raised at least $30 million by offering phony "Prime Bank" investments over the Internet. The Commission charges that the scheme victimized hundreds (and possibly thousands) of investors nationwide, including the San Francisco Bay Area.
According to documents filed by the Commission in the federal court for the Northern District of California, Tri-West Investment Club ("Tri-West") and Alyn Waage, a Canadian citizen residing in Puerta Vallarta, Mexico, may have raised more than $30 million from investors in the U.S. and abroad. The Commission's complaint alleges that Tri-West, through its website, solicits a minimum $1,000 investment in a "bank debenture trading program" secured by "certain key International `Prime Banks.'" Tri-West claims to guarantee a 120% annual rate of return with no risk to investors. In fact, according to the Commission, the securities offered by Tri-West are entirely fictitious; "bank debenture trading programs" and other purported "Prime Bank" instruments do not exist.
Tri-West's website further claims that the "bank debenture trading program" is managed by Haarlem Universal Corporation, purportedly "one of the largest and most prestigious trading companies in the world" with a thirty year history of generating high returns for investors. According to the Commission, however, Haarlem is not a registered investment company, and has been in existence only since the scheme began in 1999.
Documents submitted to the court by the Commission show that Mexican authorities recently arrested Waage for entering Mexico with a suitcase containing $4.5 million in undeclared cashiers checks made payable to Haarlem.
The Commission's complaint charges that Tri-West and Waage violated the antifraud provisions of the federal securities laws, Section 17(a) of the Securities Act of 1933 ("Securities Act"), Section 10(b) of the Securities Exchange Act of 1934 ("Exchange Act") and Rule 10b-5 thereunder, as well as the federal registration provisions, Sections 5(a) and 5(c) of the Securities Act. The Commission seeks emergency relief, including a court order freezing Tri-West's assets; the Commission's lawsuit ultimately seeks the return of all investor funds as well as penalties and other relief from Tri-West and Waage. The complaint also names Haarlem as a relief defendant.
In a separate matter, the Office of the United States Attorney for the Eastern District of California has filed criminal charges against certain persons for their roles in the Tri-West investment scheme.
The Commission acknowledges the assistance of various state and federal authorities in its investigation, including the North American Securities Administrators Association and securities regulators in West Virginia and Washington, as well as Canadian law enforcement authorities.
For more information about Internet fraud, visit http://www.sec.gov/divisions/enforce/internetenforce.htm. For more information about prime bank frauds, visit the SEC's website at http://www.sec.gov/divisions/enforce/primebank.shtml. To report suspicious activity involving possible Internet fraud, visit http://www.sec.gov/complaint.shtml.