United States Securities and Exchange Commission
Litigation Release No. 18215 / July 7, 2003
Securities and Exchange Commission v. Benjamin Franklin Cook et al. #3-99CV05701-R, USDC, NDTX (Dallas Division)
The United States Securities and Exchange Commission announced that on June 25, 2003, the United States District Court for the Northern District of Texas granted ex parte emergency relief, including expansion of an existing Receivership and a freeze over additional assets in SEC v. Benjamin Franklin Cook [3-99CV05701-R, USDC, NDTX (Dallas Division)]]. The additional emergency relief permitted the Commission and the North Carolina Securities Division, on the same day, to conduct a joint action aimed at halting an alleged ongoing fraudulent scheme, securing evidence and assets for the reimbursement of defrauded investors, and obtaining the arrest of the alleged perpetrators, Robert Burr and Daniel Burr, two brothers residing in Wilmington, North Carolina. Robert Burr, 40, was arrested and charged with six counts of felony securities fraud and two counts of felony obtaining property by false pretenses. His brother, Daniel Burr, 53, was arrested and charged with two counts of obtaining property by false pretense.
Burr and a company he controlled, Cornerstone Management, L.L.P., are both already subject to judgments in excess of $4 million in the Dennel matter. These judgments arise from Burr's participation in the Dennel Finance Limited fraud, a Ponzi scheme master-minded by Phoenix, Arizona resident Benjamin Franklin Cook ("Cook"). The Dennel scheme, which centered around the offer and sale of non-existent prime bank securities, bilked investors of approximately $46 million before the Commission halted it in March 1999 through an emergency action in District Court.
On June 22, 2000, District Court Judge Jerry Buchmeyer of the Northern District of Texas granted the request of the Commission and the Court-appoint Receiver to place in receivership all assets of Burr and several entities he had created to conceal funds and property obtained through the Dennel scheme. As a result of this Receivership Order, the Receiver seized a house and other assets owned or controlled by Burr. Recently, however, the Commission and Receiver learned that Burr had continued his unlawful conduct through the subsequent offer and sale of fraudulent investments similar to those offered and sold by Dennel. Moreover, it appeared that Burr and others were again misappropriating funds and accumulating assets, including homes and automobiles, in the names of various entities controlled by Burr, family members and associates.
On June 25, 2003, Judge Buchmeyer granted a freeze of assets obtained as a consequence of Burr's additional fraudulent conduct and expanded the Receivership to include new entities created by Burr and other persons involved in the additional fraud. On the same day, while the Receiver seized real estate, vehicles and other property accumulated by Burr and others, agents of the North Carolina Securities Division arrested Burr and his brother and served search warrants at the homes of Robert and Daniel Burr.
In addition to the charges brought by North Carolina, Burr still faces sentencing in connection with criminal charges brought against him by state of Arizona for his participation in the Dennel scheme. Burr pled guilty to two counts of Fraudulent Schemes and Artifices and agreed to make $4.9 million in restitution in the Arizona case.
Burr was also briefly incarcerated in Seagoville Federal Detention Center in Seagoville, Texas, based on an order of contempt issued in the Commission's action. The Commission and Receiver have since discovered that Burr was apparently perpetrating a $5 million fraudulent transaction during the period of his incarceration in federal prison.