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U.S. Securities and Exchange Commission

United States Securities and Exchange Commission
Washington, D.C.

Litigation Release No. 17635 / July 30, 2002

Securities and Exchange Commission v. Resource Development International, LLC, et al., Civil Action No. 3:02-CV-0605-R, (USDC/ND/TX)

On July 22, 2002, United States District Judge Jerry Buchmeyer issued bench warrants requiring the arrest and incarceration of defendants Gerald Stock and Kevin Lynds. At the request of the Securities and Exchange Commission and the court-appointed Receiver, Judge Buchmeyer found that Stock and Lynds, participants in a prime bank fraud, were in civil contempt for willfully violating several prior orders entered by the Court.

The Commission filed the SEC v. RDI matter on March 25, 2002, alleging that Stock and Lynds, together with several other defendants, violated the antifraud and registration provisions of the federal securities laws by participating in a Ponzi scheme involving the offer and sale of a non-existent "prime bank" trading program. Resource Development International, its principals, James and David Edwards, and other defendants collected more than $98 million from more than 1300 investors nationwide through numerous misrepresentations and omissions, including false and misleading statements concerning the existence of the prime bank trading program, the safety of the investment, the purported participation of governmental and international organizations, and the use of investor funds.

James and David Edwards, a father and son who masterminded the RDI scheme from their headquarters in Tacoma, Washington, were fugitives for more than two months after Judge Buchmeyer issued bench warrants for their arrest on May 8, 2002. Agents from the Tacoma office of the United States Marshals Service arrested the Edwards on July 21, 2002 in a remote area of Washington State. The Edwards are currently being transported from Washington State to Texas.

Lynds, Stock and the Edwards will each be incarcerated at the Seagoville Federal Correctional Center in Seagoville, Texas. Lynds, Stock and the Edwards will join Ed Harris, the president of Jade Asset Management, another defendant in the RDI matter. Harris has been incarcerated in Seagoville since April, after Judge Buchmeyer held him in civil contempt for refusing to comply with the Court's order that Jade repatriate and turn over to the Receiver all funds held by Jade in offshore bank accounts. At that point, five individuals will be incarcerated at the Seagoville facility based on contempt motions brought by the Commission and Receiver in the SEC v. RDI litigation.

After further proceedings for contempt in Texas, the Edwards will likely be extradited to California, where they face state criminal charges relating to the same fraudulent scheme that is the basis for the Commission's complaint. On June 20, 2002, the Santa Clara District Attorney's Office filed charges against four men, including James and David Edwards, on numerous counts of: (1) Selling a Security by False Statements or Material Omissions; (2) Selling an Unqualified Security; (3) Burglary; and (4) Elder Financial Abuse. In addition to the Edwards, Santa Clara authorities brought criminal charges against William Whelan, another defendant in the Commission's lawsuit. The Santa Clara County case involves eight local victims who were persuaded to transfer money from retirement funds or home equity loans to RDI or Dennel Finance Limited, the subject of another prior Commission action. In its news release, the Santa Clara District Attorney's Office acknowledged the assistance of the Commission in bringing the criminal charges.

The Commission wishes to acknowledge the assistance of the Seattle and Tacoma offices of the United States Marshals Service throughout the SEC v. RDI matter.

Unscrupulous promoters continue to victimize the public with Prime Bank schemes. Accordingly, investors are advised to access the Commission's "Prime Bank" Investor Alert that provides tips on how to avoid being a victim of these scams. The investor alert can be found on the Commission's web site, at www.sec.gov/divisions/enforce/primebank.shtml.

For further information regarding Resource Development International, LLC litigation, see SEC Litigation Release No. 17438 / March 26, 2002, and for the Dennell Finance Limited litigation, see SEC Litigation Release No. 16089 / March 17, 1999.



Modified: 07/30/2002