U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 17471 / April 12, 2002.
FINAL JUDGMENT SETTING DISGORGEMENT, PREJUDGMENT INTEREST AND CIVIL PENALTIES AGAINST GARRY P. ISAACS
Securities and Exchange Commission v. Tamarack Funding Corp. and Garry P. Isaacs, Civil Action No. 00-6730 (S.D. Florida, filed May 31, 2000)
The Securities and Exchange Commission ("Commission") announced that on October 23, 2001, the United States District Court for the Southern District of Florida entered a Final Judgment Setting Amount of Disgorgement, Prejudgment Interest, and Imposing Civil Penalties ("Final Judgment") against Garry P. Isaacs ("Isaacs"). The Final Judgment was entered pursuant to a judgment of permanent injunction previously entered by the Court, on September 20, 2000, by consent, without admitting or denying the allegations of the Complaint, against Isaacs and Tamarack Funding Corporation, a Texas corporation ("TFC of Texas"), Tamarack Funding Corporation, a Florida corporation ("TFC of Florida") (collectively, "TFC"), in connection with the fraudulent sale of unregistered securities issued by TFC. In addition to permanently enjoining Isaacs and TFC from violating 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, the September 20, 2000 judgment provided for setting disgorgement and civil penalties against TFC and Isaacs.
On May 31, 2000, the Commission filed a complaint ("Complaint") with the United States District Court for the Southern District of Florida alleging that Isaacs and TFC fraudulently raised approximately $4.7 million from at least 125 investors nationwide by offering and selling unregistered securities in the form of interest-bearing "promissory notes." Specifically, the complaint alleged that from July 1995 to February 2000, TFC and Isaacs knowingly or recklessly made material false and misleading representations in the offer and sale of "promissory notes" to the investing public. According to the complaint, investors in the offering were told that their funds would be used to purchase retail automobile installment loan contracts ("vehicle loans") and that their investment would be 100% collateralized.
Contrary to these representations, the complaint alleged that investments were not fully collateralized, as only $1.4 million was actually used by TFC to purchase vehicle loans. According to the SEC, the remaining investor funds were used to pay TFC's operating costs and unrelated expenses. The Complaint further alleged that TFC used some of the monies received from new investors to repay interest to existing investors and was thereby engaged in a Ponzi scheme.
On October 23, 2001, pursuant to the Commission's motion, the Court ordered Isaacs to disgorge $112,000, with prejudgment interest in the amount of 12,477.44, and imposed a penalty in the amount of $110,000.