SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 17534 / May 24, 2002
SEC v. John E. Brinker, Jr., Gary J. Bentz, et al., Civil Action No. IP01-0259 C-H/G (S.D. Ind.).
The U.S. Securities and Exchange Commission ("Commission") announced today that on May 23, 2002, a federal judge held Gary J. Bentz ("Bentz") in civil contempt and ordered him imprisoned for violating an asset freeze order. Bentz, a resident of the Cincinnati area, violated the order by secretly spending up to $142,000 in funds frozen by the court.
In February 2001, the Commission sued Bentz and others for operating a fraudulent Ponzi scheme that raised millions of dollars from investors in a "prime bank" trading program. At the same time, Hon. David F. Hamilton of the U.S. District Court in Indianapolis issued a permanent injunction that prohibits Bentz and other defendants from engaging in fraud and other misconduct in violation of Sections 5(a), 5(c), and 17(a) of the Securities Act of 1933, Sections 10(b), 15(a), and 15(c) of the Securities Exchange Act of 1934, and Rules 10b-5 and 15c1-2 thereunder. The defendants consented to the injunction order without admitting or denying the allegations in the Commission's complaint. A court-appointed examiner later reported that Bentz and his co-defendants raised a total of $20.3 million from over 600 investors.
The injunction order also froze the assets of Bentz and the other defendants. In the contempt proceedings, the Commission alleged that shortly before the asset freeze, Bentz obtained approximately $142,000 by borrowing against his assets, and that after the freeze, he spent all or part of the borrowed funds in violation of the freeze. The court ruled that Bentz violated the freeze and is in civil contempt, and ordered him imprisoned until he pays $142,000 into the court's custody or makes a credible showing that he is unable to do so. The court also referred the matter to the United States Attorney for a possible criminal contempt prosecution. (For more detail on the injunction and contempt proceedings, see Litigation Release Nos. 16915 and 17512.)