Litigation Release No. 18068 / April 3, 2003
Securities and Exchange Commission v. Dianna Blairtorbett a/k/a Dianna Blair Torbett a/k/a Dianna Blair-Torbett, Individually and d/b/a McMinn Consultants, and McMinn Consultants, Limited, Civil Action No. 1:02-CV-384 (E.D. Tenn.)
Federal Court Enjoins Promoter in Securities Fraud
The Securities and Exchange Commission ("Commission") announced today that on April 1, 2003, the Honorable R. Allan Edgar of the United States District Court for the Eastern District of Tennessee entered an order of permanent injunction and other relief against Dianna Blairtorbett ("Blairtorbett"), individually and d/b/a McMinn Consultants. Blairtorbett was ordered to pay disgorgement, prejudgment interest and a civil penalty in amounts to be resolved upon motion of the Commission at a later date. Defendant McMinn Consultants, Limited ("McMinn") was not affected by the entry of this order. Blairtorbett and McMinn operated as promoters in a large multimillion-dollar, prime bank type and other securities fraud. Blairtorbett consented to the entry of the permanent injunction without admitting or denying the allegations contained in the Commission's complaint.
The complaint in this matter alleged that Blairtorbett, a Tennessee resident and McMinn fraudulently offered and sold unregistered securities by promising extravagant rates of return derived from a variety of investments, including purported prime bank trading programs. The defendants raised approximately $7.7 million from nearly 100 investors in thirteen states and the funds were pooled into accounts owned and controlled by McMinn. The complaint also alleged that the defendants made misrepresentations and omissions of material fact to investors concerning, among other things, the touted risk free nature of McMinn's investments, the use of investor funds, expected returns and the false representation that McMinn's investments were secured by approximately $7 billion in gold and other precious metals. The precious metals did not exist. Furthermore, the complaint alleged that Blairtorbett falsely represented that an initial investment of $50,000 would be worth approximately $1.7 million in three years and $22 million in five years, but that she had no basis for these representation, and that she knowingly or recklessly failed to disclose that a significant percentage of investor funds would be used to pay the "returns" of earlier investors.
Judge Edgar's order permanently enjoined Blairtorbett from further violations of the antifraud provisions of Section 17(a) of the Securities Act of 1933 ("Securities Act") and Section 10(b) of the Securities Exchange Act of 1934, and Rule 10b-5 thereunder, and from further violations of the registration provisions of Sections 5(a) and 5(c) of the Securities Act.
See also: L.R. 17919 (January 7, 2003)