U.S. Securities and Exchange Commission
Litigation Release No. 17723 / September 12, 2002
Securities and Exchange Commission v. Elfindepan, S.A., et al., U.S. District Court for the Middle District of North Carolina (Civil Action No. 1:00CV00742)
Relief Defendant Held in Contempt for Dissipating Funds in Violation of a Court-Ordered Asset Freeze
On August 30, 2002, the Honorable William L. Osteen, U.S. District Court Judge, held relief defendants Patrick Wilson and C.R.C.C. L.L.C. ("CRCC") in contempt of court for dissipating $1.7 million worth of assets that were the subject of the Court's August 10, 2000 temporary restraining order (TRO) and its August 17, 2000 preliminary injunction and asset freeze (the "asset freeze"). The U.S. Securities and Exchange Commission obtained the TRO and asset freeze in a civil action alleging that Elfindepan, S.A., a supposed Costa Rican financial company, and others defrauded investors nationwide in connection with the unregistered offer and sale of Elfindepan securities. See Litigation Release 16649 (August 10, 2000). The asset freeze prohibited all persons and entities holding or coming into possession of Elfindepan funds from allowing those funds to be withdrawn, removed, or transferred.
In its August 30, 2002 Order, the Court found that defendants Wilson and CRCC had received transfers of $7 million of Elfindepan funds prior to the entry of the TRO and asset freeze, when they were not parties to the Commission's case. Thereafter, the Court found, Wilson and CRCC spent over $1.7 million of those funds after receiving notice of the TRO and asset freeze. The Court gave Wilson and CRCC 60 days from the date of the order to purge their contempt by paying $1,704,914.75 to the Court-appointed receiver.
Recently, the Commission amended its complaint to name Wilson, CRCC and others as defendants. Previously, the Court in this case adjudged defendants Elfindepan, Southern Financial Group, and Tracy Calvin Dunlap, Jr., to be in contempt of court and ordered Dunlap incarcerated based on their refusal to obey court orders requiring them to produce documents and account for and repatriate investor funds. See Litigation Release 16977 (April 26, 2001).