SECURITIES AND EXCHANGE COMMISSION
LITIGATION RELEASE NO. 17821 / October 31, 2002
UNITED STATES v. MICHAEL E. HILL (U.S.D.C., Northern District of Texas, Dallas Division, Criminal Action No. 01-CR-361-ALL)
SECURITIES AND EXCHANGE COMMISSION v. MICHAEL E. HILL, INDIVIDUALLY AN DOING BUSINESS AS FINANCIAL INVESTMENTS, AND MIKE HILL, INC., et al. (U.S.D.C., Northern District of Texas, Dallas Division, Civil Action No. 3-01-CV-2189-R)
On October 19, 2002, Judge Jerry Buchmeyer, United States District Judge for the Northern District of Texas, sentenced Michael Earl Hill to a term of 120 months in federal prison and ordered him to pay $1,691,718 in restitution to his victims in connection with an elaborate securities fraud scheme.
Hill, a licensed securities broker at the time he defrauded his clients, previously entered into a plea agreement with the United States Attorney for the Northern District of Texas, Dallas Division, pursuant to which he pleaded guilty to one count of securities fraud and one count of mail fraud. These violations are the subject of the Commission's pending civil action against Hill, filed in the Northern District of Texas, Dallas Division, in December 2001. In its action, the Commission is seeking a permanent injunction, disgorgement, and a civil money penalty. Previously, the Commission obtained a Temporary Restraining Order against Hill, individually and doing business as Financial Investments and Mike Hill, Inc., and an asset freeze and other relief against the him and his wholly owned company, Stalwart Financial Investments, L.L.C. The court further appointed a receiver over Hill's assets and the assets of his company.
In its Complaint, the Commission accuses Hill of offering bogus certificates of deposit (CDs) to his elderly clients and to the general public through newspaper advertisements. Hill lured his investors with promises of above-market rates on 30-month CDs purportedly issued by a Dallas area bank. In fact, Hill never purchased the CDs for his investors. Instead he pooled about $4 million of investor funds in a bank account in the name Mike Hill, Inc. (MHI), which he controlled. From there, Hill transferred a substantial portion of the funds into a brokerage account, also in MHI's name, in which he traded risky securities. Hill also used investor funds to make ponzi payments of interest and principal to investors and for his own personal benefit, including more than $500,000 to purchase an office building complex.