U.S. Securities and Exchange Commission
Litigation Release No. 17931 / January 14, 2003
SEC v. First Choice Management Services, Inc. and Gary Van Waeyenberghe, Civil Action No. 3:00CV0446RM (N.D. IND.) (Filed July 26, 2000)
The Securities and Exchange Commission (Commission) today announced that on January 8, 2003, the Honorable Robert L. Miller Jr., United States District Judge for the Northern District of Indiana, entered a Final Judgment (Final Judgment) as to Defendants First Choice Management Services, Inc. (First Choice) and Gary Van Waeyenberghe (Van Waeyenberghe) and an Order Liquidating First Choice Management Services, Inc. (Order of Liquidation). First Choice and Van Waeyenberghe consented to the entry of the Final Judgment and Order of Liquidation without admitting or denying the allegations in the Commission's Complaint.
The Final Judgment permanently enjoins First Choice and Van Waeyenberghe from future violations of Sections 5 and 17(a) of the Securities Act of 1933 (Securities Act) and Section 10(b) of the Securities Exchange Act of 1934 (Exchange Act) and Rule 10b-5 thereunder. The Final Judgment also orders First Choice and Van Waeyenberghe jointly and severally to pay $31.3 million in disgorgement and prejudgment interest and imposes a $110,000 civil penalty on Van Waeyenberghe. The Order of Liquidation requires the court-appointed receiver for First Choice to liquidate First Choice's remaining assets in order to satisfy, at least in part, First Choice's disgorgement obligation in the Final Judgment.
The Commission's Complaint, filed on July 26, 2000, alleged that from November 1999 through July 2000, First Choice and its President and Chief Executive Officer, Van Waeyenberghe, persuaded at least 200 investors in 29 states to invest more than $21 million in an ongoing nationwide investment fraud entitled "Enhanced Automobile Receivables." Investors were allegedly told that their investments would be used to buy high-interest automobile loans and were guaranteed to yield an 11% return. Investors also allegedly were told that their investments would be managed by "a highly successful and seasoned management team, most of whom have maintained positions with top-level corporations for almost 20 years" and would be guaranteed against default by Lloyds of London.
The Complaint further alleges that First Choice and Van Waeyenberghe failed to disclose to investors that Van Waeyenberghe was enjoined for his role in a securities fraud in 1984, had twice been convicted of felonies including mail fraud, conspiracy to defraud the United States and preparing false tax returns and had been indicted for bank fraud while selling the Enhanced Automobile Receivables. The Complaint also alleges that First Choice and Van Waeyenberghe misappropriated millions of dollars from investors, failed to purchase automobile loans as promised, did not insure the investments against default through Lloyd's of London or any other insurer and could not guarantee an 11% return.
Shortly after the filing of the Commission's Complaint, the Court issued a Temporary Restraining Order and subsequently a Preliminary Injunction freezing First Choice's and Van Waeyenberghe's assets and appointed a receiver to manage First Choice's assets during the pendency of the litigation.