U.S. Securities & Exchange Commission
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U.S. Securities and Exchange Commission

Washington, D.C.

Litigation Release No.17228 / November 13, 2001

SEC v. Robert L. Bentley, Entrust Group and Bentley Financial Services, Inc., Civ. Action No. 53-66 (Eastern District of Pennsylvania)

On November 7, 2001, United States District Court Judge Jay C. Waldman issued a preliminary injunction and order continuing the appointment of a receiver and asset freeze against Robert L. Bentley, Bentley Financial Services, Inc. and Entrust Group. The preliminary injunction prohibits violations of the antifraud and broker-dealer registrations provisions set forth in Section 17(a) of the Securities Act of 1933 and Sections 10(b) and 15(a) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The order continues a freeze of the defendants' assets and the appointment of David H. Marion of the Philadelphia law firm Montgomery, McCracken, Walker & Rhoads LLP as a receiver to take control of their assets. The defendants consented to the entry of the preliminary injunction and order without admitting or denying the Commission's allegations in the action. A trial date in the action has not been set.

The Commission's complaint alleged that the defendants claimed to be selling bank-issued, federally insured certificates of deposit ("CDs"), but that the defendants were in fact selling uninsured securities. Although the defendants were using at least some investor funds to buy CDs, the terms of the CDs often varied substantially from those of the securities defendants were selling. The Commission also alleged that, in many cases, investors had to rely on the defendants' ability to attract new investors in order for previous investors to receive repayment of their principal. Accordingly, investors were not buying the low-risk, federally-insured CDs that they were promised. Rather, they were buying higher risk securities issued by defendants, whose business was uninsured, unaudited and unregulated. When the Commission filed the action, hundreds of financial institutions and individual investors located nationwide had over $300 million invested with the defendants.


Modified: 11/13/2001