Litigation Release No. 17881 / December 6, 2002.
SEC v. John E. Brinker, Jr., Gary J. Bentz, et al., Civil Action No. IP01-0259 C-H/G (S.D. Ind.).
The U.S. Securities and Exchange Commission ("Commission") announced today that on November 15, 2002, a federal judge convicted Gary J. Bentz ("Bentz") of criminal contempt and sentenced him to three months of imprisonment for violating an asset freeze order. Bentz, a resident of the Cincinnati area, violated the order by secretly spending funds frozen by the court.
In February 2001, the Commission sued Bentz and others for operating a fraudulent Ponzi scheme that raised $20.3 million from over 600 investors in a "prime bank" trading program. At the same time, Hon. David F. Hamilton of the U.S. District Court in Indianapolis issued a permanent injunction that prohibits Bentz and other defendants from engaging in fraud and other misconduct in violation of Sections 5(a), 5(c), and 17(a) of the Securities Act of 1933, Sections 10(b), 15(a), and 15(c) of the Securities Exchange Act of 1934, and Rules 10b-5 and 15c1-2 thereunder. The defendants consented to the injunction order without admitting or denying the allegations in the Commission's complaint.
The injunction order also froze the assets of Bentz and the other defendants. In previous civil contempt proceedings, the Commission alleged that shortly before the asset freeze, Bentz obtained approximately $142,000 by borrowing against his assets, and that after the freeze, he spent all or part of the borrowed funds in violation of the freeze. The court ruled that Bentz violated the freeze, held him in civil contempt, and referred the matter to the United States Attorney, who then initiated the criminal contempt prosecution. (For more detail on the injunction and contempt proceedings, see Litigation Release Nos. 16915, 17512, and 17534.)