U.S. Securities and Exchange Commission
Litigation Release No. 18431 / October 29, 2003
SEC v. CDH & Affiliates, Inc. and C. David Hallman, Civil Action Number 3:02-CV-017-JTC (N.D. Ga.)
Court Permanently Enjoins CDH & Affiliates, Inc. and C. David Hallman
The Securities and Exchange Commission announced that on October 23, 2003, the Honorable Jack T. Camp, permanently enjoined CDH & Affiliates, Inc. and C. David Hallman from future violations of Sections 10(b) and 15(a) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder.
The Commission's complaint alleged that from September 1997 through at least June 1999, Hallman and CDH, a corporation that Hallman controlled, fraudulently raised more than $2.2 million in fees from at least 27 customers, purportedly to prepare corporate bond offerings and sell the bonds for its customers. According to the complaint, Hallman and CDH misappropriated the funds for their own purposes. The complaint also alleged that in an effort to avoid detection of their scheme, Hallman and CDH continued until at least July 2001 to tell their customers that the customers' bond issues would be funded and made other misrepresentations to encourage the customers to believe that funding was imminent.
In granting the SEC's motion for summary judgment against Hallman and CDH, the Court found that Hallman made numerous misrepresentations to CDH's customers, including false claims that he had sold bonds for some issuers, that bond sales were imminent and that the high yield investment programs he described to investors would generate large returns when, in fact, those programs did not exist. The Court also found that Hallman and CDH operated as unregistered brokers while selling this investment scheme to CDH's customers.