Litigation Release No. 18282 /August 11, 2003
FEDERAL COURT ENJOINS McMINN CONSULTANTS, LIMITED AND ORDERS DISGORGEMENT, PREJUDGMENT INTEREST AND CIVIL PENALTY
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.)
The Securities and Exchange Commission announced today that on August 1, 2003, the Honorable R. Allan Edgar, United States District Judge for the Eastern District of Tennessee, entered a judgment by default against McMinn Consultants, Limited ("McMinn"). The judgment permanently enjoined McMinn from further violations of Sections 5 and 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The Court ordered McMinn to pay disgorgement in the amount of $747,000, plus prejudgment interest in the amount of $198,153.29. The Court also imposed a civil penalty against McMinn in the amount of $25,000.
The complaint in this matter alleged that Dianna Blairtorbett ("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 and Blairtorbett. 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 representations, 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. The entry of this judgment did not affect Blairtorbett, who was permanently enjoined by the Court from further violations of the federal securities laws in an order of April 1, 2003.
See also: L.R. 17919 (January 7, 2003); and L.R. 18068 (April 3, 2003).