U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 17851 / November 20, 2002
Securities and Exchange Commission v. Merchant Capital LLC, Steven C. Wyer and Kurt V. Beasley, Defendants, and New Vision Financial LLC, Relief Defendant, United States District Court for the Northern District of Georgia, Civil Action No. 1:02-CV-2984
On November 4, 2002, a complaint and an application for temporary restraining order were filed by the Commission in the United States District Court for the Northern District of Georgia against defendants Merchant Capital LLC (Merchant), Steven C. Wyer (Wyer), Kurt V. Beasley (Beasley) and New Vision Financial LLC (New Vision), as relief defendant.
The complaint seeks to permanently enjoin Merchant, Wyer and Beasley from further violations of Sections 5(a), 5(c) and 17(a) of the Securities Act of 1933, Sections 10(b) and 15(a) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The Commission also seeks disgorgement of all ill-gotten gains received by the defendants and prejudgment interest thereon, and the imposition of civil penalties against Merchant, Wyer and Beasley. The Commission further seeks an accounting of all funds received from the scheme by Merchant, Wyer and Beasley and an accounting by New Vision of all assets that it controls.
The Commission's complaint alleges that violations of the antifraud provisions of the securities laws by defendants Merchant, Wyer and Beasley occurred from October 2001 through the present. The defendants raised approximately $20 million from more than 350 investors through a scheme involving the sale of general partnership interests in Colorado registered limited liability partnerships (RLLPs), formed to purchase and collect pools of freshly charged off consumer debt. Unbeknownst to investors, Merchant delegated to relief defendant New Vision most of its duties as managing general partner, including buying, collecting and selling debt for the partnerships. Merchant further misrepresented to investors the fees to be charged in connection with the operation of the RLLPs and the independent nature of the partnerships. No registration statement has been filed in connection with any of the partnerships and no exemption is available, making the sales unlawful.
On November 7, 2002, the Honorable Marvin H. Shoob, United States District Judge, entered an order restraining the defendants from offering or selling the securities, and freezing certain of the defendants' assets, pending a hearing on the Commission's motion for preliminary injunction.