SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 17751 / September 26, 2002
SEC FILES CONTEMPT ACTION AGAINST DEFENDANTS ACCUSED OF FRAUDULENT PAYDAY ADVANCE SCHEME.
SECURITIES AND EXCHANGE COMMISSION V. STARCASH, ET AL., Case No. CASE NO. 02-80456-CIV-MIDDLEBROOKS/VITUNAC (S.D. Fla.)
The Securities and Exchange Commission announced that on June 24, 2002, it filed, with the United States District Court for the Southern District of Florida, an Application for an Order to Show Cause why Defendants Starcash, Inc., Infinity Consulting Services, Inc., Jean B. Leclercq, Kip Marsique, Frederick J. Shapiro (the Starcash defendants) and non-parties Starcash Online, Inc. ("Online") and Larry Quick ("Quick") should not be held in contempt of Court for continuing to solicit and make false statements to investors in Starcash in violation of the federal securities laws and Court orders.
Separately, on June 17, 2002, the SEC and the Court-appointed Receiver Kenneth A. Welt filed, with the United States District Court for the Southern District of Florida, an Application for an Order to Show Cause why the Starcash defendants should not be held in contempt for failure to comply with the Court's Orders. The application alleged that the Starcash defendants failed to provide a sworn accounting, failed to respond to interrogatories, and failed to produce documents in accordance with a Court Order entered on May 17, 2002.
In its Complaint filed on May 16, 2002, the SEC alleged that Starcash, based in Boca Raton, and Ft. Lauderdale, Florida, conducted a fraudulent unregistered offering to raise investor funds for the purported purpose of funding payday advances in the form of short term loans. The SEC alleged that between October 2001 and May 2002, the Starcash defendants raised more than $6 million from investors nationwide through a network of boiler rooms to allegedly fund short-term payday loans. According to the SEC's complaint, the Starcash defendants falsely represented that investor funds would be used to fund advance payday loans, and that the investments were virtually risk free and were secured by the purported loans. In fact, Starcash paid exorbitant commissions to the boiler rooms from investor monies, and the loans were unsafe and grossly undersecured. In addition, the Complaint alleged that Starcash made baseless predictions to investors that its payday advance business could generate up to $80 million in revenue a year.
On May 17, 2002, the Court entered an Order Granting Ex Parte Motion for Asset Freeze and Other Emergency Relief against the Starcash defendants and Relief defendants Starcash Consulting, Inc., Starcash Industries, Inc. and Starcash Media, Inc. (Relief defendants). On May 28, 2002, the Court entered an Order Granting Motion for Preliminary Injunction of Asset Freeze as to the Relief defendants. On May 28, 2002, the Court entered an Order Granting Motion for Preliminary Injunction of Asset Freeze as to the Starcash defendants, by their consent, without admitting or denying the charges. The Court's Orders required the Starcash defendants to immediately provide the Court and the SEC with a sworn accounting of all monies received from Starcash, Infinity and the Relief defendants, as well as answer interrogatories and produce documents. The Orders also require the Starcash defendants to repatriate any offshore monies and to provide the SEC and the Court with a written description of any repatriated funds.