U.S. Securities and Exchange Commission
Litigation Release No. 18140 / May 16, 2003
SEC v. Pension Plans of America, Inc. and Lloyd Benton Sharp, Case No. CV03-5269FDB (U.S.D.C, W.D. Washington, Tacoma Division)
SEC Files Lawsuit against Pension Plans Of America, Inc. and Its Chairman, Lloyd Benton Sharp
The SEC filed a settled civil action filed May 15, 2003, in U.S. District Court for the Western District of Washington, Tacoma Division, against Pension Plans of America, Inc. ("PPA") and its chairman, Lloyd Benton Sharp, a recidivist violator who has an extensive disciplinary history, including a criminal conviction and two federal court injunctions for fraud on investors. According to the complaint, Sharp conducted his latest scam under the name of PPA, which he claimed was a non-profit organization created to assist investors, particularly retirees and senior citizens, in finding safe and secure investments providing "heightened" returns. In approximately October 2002, Sharp and PPA commenced publicly offering interest in a limited partnership that supposedly would grow and market "paulownia" trees. PPA and Sharp represented that the investment was extremely safe (comparing it to "gold in Fort Knox") and would provide a "very secured 16% annual return" because it had an "iron clad" $81.8 million contract with another company to purchase the matured trees.
In reality, according to the SEC's complaint, the PPA offering was a complete sham. Among other things, the third party company obligated to purchase $81 million in trees was controlled by Sharp and had no funds or assets with which to purchase the trees. Further, undisclosed to investors, approximately 42% of investor funds were earmarked for commissions and management fees. Sharp and PPA also failed to disclose to investors Sharp's extensive disciplinary history involving investment fraud.
According to the complaint, the SEC staff learned of the fraudulent PPA offering in late January 2003, and by that time, two investors had invested approximately $86,000 in the PPA offering. At the SEC's staff's insistence, Sharp and PPA halted the offering and returned all investor funds.
Simultaneous with the filing of the SEC's complaint, PPA and Sharp consented to the entry of an order of permanent injunction for violations of the securities-registration, broker- and dealer-registration, and anti-fraud provisions of the federal securities laws, specifically Sections 5(a), 5(c) and 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. Sharp, individually, also consented to be permanently enjoined from violating Section 15(a) of the Exchange Act. The proposed order also directs Sharp to pay a $120,000 civil penalty and bars him from offering or selling unregistered securities in the future. The settlement terms are subject to court approval.
Sharp further consented to the entry of an administrative order by the SEC barring him from associating with any broker or dealer pursuant to Section 15(b) of the Exchange Act based upon the entry of the above-described injunction.
The Commission acknowledges the assistance of the Texas State Securities Board, the Pennsylvania Securities Commission, the Oregon Department of Consumer & Business Services, Division of Finance & Corporate Securities, the Arizona Corporation Commission Securities Division, and the Washington Department of Financial Institutions Securities Division in the investigation of this matter.